July 9, 2007 | Category: Marketing |

As entrepreneurs, we are facing different kinds of customers with different needs and wants every day. Some are very difficult to deal with while others are quite friendly. To improve the profitability of your small business, Geoffrey Colvin, co-author of Angel Customers & Demon Customers: Discover Which is Which and Turbo-Charge Your Stock, suggests you segment your customers accordingly.

Colvin gave an overview of Angel and Demon Customers during an interview by SalesVantage.

In our experience across a wide range of industries, companies typically find that the best 20 percent of their customers account for 150 percent of total profits! The worst 20 percent typically lose money equal to 75 percent of profits, while the remaining 60 percent of customers account for the rest.

Business people often think their biggest customers are their best, but the biggest customers often negotiate the deepest price discounts and require the most time and attention from managers and sales people, which can seriously reduce or even wipe out their profitability.

A recent case about demon or annoying customers is the decision of Sprint Nextel to drop 1,000 out of their 53 million customers who made excessive calls to their customer service department.

However, the most difficult part is quantifying how much money you’re making for a particular customers. Even many established businesses do not know much about this aspect. If you are just starting your business, this is relatively easier. So, start your profiling as early as possible and identify your consistently angry customers.

Via Brand Autopsy