“Dear” clients

There was tense silence in the office of the director of one of Russia's largest energy companies.? “Do I understand correctly, that you will not supply us with your generators?”? he politely asked my director, after a pause.? "That's right," my boss replied.? “Unfortunately we have to refuse your offer.? Let me explain.? The fact is that if we agree, then we will have serious obligations before you, and you will demand their unconditional fulfillment.? The team and I will work day and night to complete your order, but the problem is that our reward will not change in any way.? This is how the wage system in our corporation works.? It provides for a reward if we fulfill an already approved sales plan, and that plan has already being fully contracted.? Simply put, with you, we will get twice as much hassle for the same money.” On this we parted, refusing a very large deal.

This may have been one of the most important business lessons I've ever learned: not every potential client is your client.? We are looking for clients for our business in order to earn money by selling them goods and services.? But sometimes, seemingly very profitable deals will bring business (or you personally) more problems than benefits.

Here is another example.? Bestselling author of The 4-Hour Workweek, Tim Ferriss, talks in his book about the "dear customers" in his own online supplement business.? Tim analyzed how much time he spends working with clients, which clients take up most of his time, and how much revenue these clients bring.? It turned out that he spent 80% of his time on 2-3 clients, and the total revenue from sales to these clients was less than 5% of the total revenue of his company.? What did he do? He stopped working with these clients, freeing up a lot of time for himself? and his projects.

How to determine which client to work with and which not?? Which order to take without hesitation, and which one is better to refuse?? For myself, I divide projects, transactions and clients into three groups.? The first group includes clients and deals, the work with which does not require great effort or expense on my part.? It's like selling a product off the shelf in a store or online.? In my case, these are small consulting projects, where you can bill by the hour. In this case, I am ready to conduct many such transactions, since the "transactional" costs of these transactions are low, and the benefits they bring are tangible.

The second group includes projects that I call “F..k, yeah!” projects.? These are projects that I want to do because they are fully consistent with my personal strategic goals.? I am ready to spend much time and effort on them.? Another example of such projects is when your entire business depends on one or two large customers.? This is clearly seen in the example of public-private partnerships, where the only client is the state.? Negotiations on such deals can drag on for years, and their implementation itself can be associated with constant complex communications with the state. However, the payoffs are also substantial.

All other projects fall into the third group by elimination, namely, projects that should be refused, no matter how attractive they seem.? The costs in such projects, including those that are not direct and not obvious now, can bury not only this project, but also all other projects, including your ”F..k,, yeah!”? project.? Therefore, if the order / project cannot be completed quickly, and if the inscription “F..k, yeah!” does not light up in your head, then the project / order / client must be refused.

A key element in this decision-making mechanism is understanding your strategic goals and understanding the cost of your core product/service.? Without this, it is impossible to prioritize projects.? Therefore, I always ask myself - is this project / client / order exactly what I really need?? What will this mean for me?? Seneca has an excellent aphorism for this: "If a person does not know which port he is sailing, no wind is favorable."