𝗧𝗵𝗲 𝗛𝗶𝗱𝗱𝗲𝗻 𝗖𝗼𝘀𝘁 𝗧𝗿𝗮𝗰𝗸𝗲𝗿: 𝗙𝗶𝗻𝗱 𝘁𝗵𝗲 𝗪𝗼𝗿𝗸 𝗬𝗼𝘂'𝗿𝗲 𝗚𝗶𝘃𝗶𝗻𝗴 𝗔𝘄𝗮𝘆 𝗪𝗶𝘁𝗵𝗼𝘂𝘁 𝗥𝗲𝗮𝗹𝗶𝘇𝗶𝗻𝗴 𝗜𝘁 (Downloadable worksheet below) A customer requests one small change. An employee spends another 20 minutes answering questions. You personally step in to resolve a scheduling issue. Someone makes an extra trip because the original instructions weren't clear. Individually, these things may seem insignificant. But what happens when they occur repeatedly, across dozens of customers and hundreds of jobs? Your business can be giving away hours of labor every week without anyone recognizing the financial impact. Yesterday, we discussed the Customer Profitability Blind Spot: the difference between what a customer pays and what it actually costs to serve them. Today, we're going to put some numbers behind that conversation. 🔎 𝗧𝗵𝗲 𝟭𝟱-𝗠𝗶𝗻𝘂𝘁𝗲 𝗛𝗶𝗱𝗱𝗲𝗻 𝗖𝗼𝘀𝘁 𝗔𝘂𝗱𝗶𝘁 Choose ONE customer relationship or recurring service that seems to require more work than expected. Now look for four things. 𝟭. 𝗨𝗻𝗽𝗹𝗮𝗻𝗻𝗲𝗱 𝗟𝗮𝗯𝗼𝗿 How much additional time is your team spending beyond what was included in the original price? Think extra visits, revisions, callbacks, or work that falls outside the agreed scope. 𝟮. 𝗔𝗱𝗺𝗶𝗻𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝘃𝗲 𝗗𝗲𝗺𝗮𝗻𝗱𝘀 How much time goes into rescheduling, repeated questions, correcting information, or coordinating exceptions? Administrative time is still a business expense, even when it doesn't appear on a customer invoice. 𝟯. 𝗢𝘄𝗻𝗲𝗿 𝗜𝗻𝘃𝗼𝗹𝘃𝗲𝗺𝗲𝗻𝘁 How often do you personally intervene to keep the relationship or project moving? Your time has economic value, even if you're not paying yourself by the hour. 𝟰. 𝗥𝗲𝗽𝗲𝗮𝘁 𝗣𝗮𝘁𝘁𝗲𝗿𝗻𝘀 Is this an occasional situation, or does the same type of extra work happen repeatedly? A one-time courtesy may be a sensible customer-service decision. A recurring pattern deserves investigation. 💡 𝗣𝘂𝘁 𝗮 𝗡𝘂𝗺𝗯𝗲𝗿 𝗕𝗲𝗵𝗶𝗻𝗱 𝗜𝘁 Imagine a service regularly requires: - 30 extra minutes of technician time - 20 extra minutes of office coordination - 15 minutes of owner involvement

𝗧𝗵𝗲 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝗣𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗕𝗹𝗶𝗻𝗱 𝗦𝗽𝗼𝘁: 𝗪𝗵𝗮𝘁 𝗬𝗼𝘂𝗿 𝗥𝗲𝘃𝗲𝗻𝘂𝗲 𝗥𝗲𝗽𝗼𝗿𝘁𝘀 𝗔𝗿𝗲𝗻'𝘁 𝗧𝗲𝗹𝗹𝗶𝗻𝗴 𝗬𝗼𝘂 One of the most expensive mistakes an established business can make is assuming that its highest-revenue customers are also its most profitable. Yesterday, I asked you to consider whether your biggest customers are actually your most valuable. Today, I want to show you how to examine that question more strategically. Because a revenue report tells you what a customer paid. It doesn't necessarily tell you what the relationship cost your business. And that missing information can influence everything from pricing and staffing to which customers and services you should be pursuing. 🔎 𝗧𝗵𝗲 𝗙𝗼𝘂𝗿-𝗣𝗮𝗿𝘁 𝗖𝘂𝘀𝘁𝗼𝗺𝗲𝗿 𝗣𝗿𝗼𝗳𝗶𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗥𝗲𝘃𝗶𝗲𝘄 When evaluating a customer relationship, I want you to look at four areas. 𝟭. 𝗥𝗲𝘃𝗲𝗻𝘂𝗲: What does the customer actually generate? Look beyond the largest invoice. How frequently do they purchase? How much revenue have they generated over the past year? Is that revenue dependable or unpredictable? A customer who spends $15,000 once may be less valuable over time than one who consistently purchases $5,000 annually. But we need more information before deciding. 𝟮. 𝗗𝗶𝗿𝗲𝗰𝘁 𝗖𝗼𝘀𝘁𝘀: What does it cost to deliver the work? Consider labor, materials, subcontractors, travel, and other costs directly associated with serving that customer. Here's a simplified example: A customer generates $20,000 in annual revenue. Direct service costs total $14,000. That leaves $6,000 in contribution toward overhead and profit. That's useful information, but we aren't finished. 𝟯. 𝗛𝗶𝗱𝗱𝗲𝗻 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗗𝗲𝗺𝗮𝗻𝗱𝘀: What else does the relationship consume? This is where many businesses have a blind spot. Does the customer require repeated scheduling changes? Additional administrative work? Unplanned service visits? Excessive owner involvement? Frequent exceptions that weren't included in the original price? Imagine that same $20,000 customer also requires $3,000 in additional, previously unaccounted-for service and administrative costs.

Are You Keeping Your Best Customers, or Just Your Busiest Ones? Here's a question I want established local business owners to think about today. Is your biggest customer actually your most valuable customer? We tend to pay attention to the customers who generate the most revenue. The large contracts. The frequent buyers. The customers who keep the schedule full. And understandably so. But revenue alone doesn't tell you how valuable a customer relationship really is. Consider two customers. Customer A spends $20,000 annually with your business. But they require constant attention, request frequent exceptions, negotiate every invoice, and create scheduling disruptions that affect other customers. Customer B spends $12,000 annually. They pay on time, value your expertise, purchase consistently, and rarely require unnecessary intervention. Which customer is more valuable? You can't answer that question from revenue alone. You need to understand what each relationship costs your business to maintain and how much profitable value it creates over time. 🔎 𝗧𝗵𝗲 𝗤𝘂𝗲𝘀𝘁𝗶𝗼𝗻 𝗕𝗲𝗵𝗶𝗻𝗱 𝘁𝗵𝗲 𝗤𝘂𝗲𝘀𝘁𝗶𝗼𝗻 When evaluating customer relationships, I want you to look beyond the amount they spend. Ask yourself: 1. Does this customer generate healthy margins? After accounting for the actual cost of serving them, is the relationship financially worthwhile? 2. Does this customer consume disproportionate operating capacity? Are they constantly requiring exceptions, additional labor, rework, or owner involvement that wasn't included in the price? 3. Is the relationship sustainable? Do they pay reliably, respect reasonable boundaries, and have legitimate reasons to continue doing business with you? 4. Does serving this customer strengthen or weaken the rest of the business? A large customer can create stability. But if too much revenue depends on one relationship, that concentration can also create risk. 💡 𝗛𝗲𝗿𝗲'𝘀 𝘁𝗵𝗲 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗗𝗶𝘀𝘁𝗶𝗻𝗰𝘁𝗶𝗼𝗻 I'm not suggesting you abandon customers who require extra attention.