How differentiating Clients and Customers affects your Bottom Line
We were last talking to Randal about the importance of psychological profiles and how it can help target your ideal client. He continues his discussion on Clients and Customers and why finding clients can increase your bottom line and reduce your stress.
In this Interview Learn:
- Clients vs Customers
- How to find clients through your Books
- Why Client just don’t care, and why it’s good for you.
- Major differences between clients and customers
Every business needs customers. But sometimes it’s better to find clients, rather than customers. If you have business offering services, you’ll want to find clients instead of customers.
The reason why is that customers are always looking for a product or service to treat like a commodity. They want the lowest possible price. If you have the lowest price today, you have their loyalty, until somebody else has a lower price tomorrow.
Clients seek professional advice on how to approach an issue. They listen to all the steps and advice given carefully. If the client likes and trust the professional, they will do what they say. Even if they object to the given counsel, they may still do what they say because they like and trust them.
They may become loyal, lifetime clients under the care and protection of the professional.
So how do you find clients?
That’s a very long answer. Here’s a short version.
In QuickBooks, you pull up “Job Profitability by Customer Report.” This is the first “hint” at finding clients.
You see who has the highest percentage of job profitability. Once you identify that, you take the top 20% of those clients. Then we do research on who they exactly are.
An example is to look at the profile of John and Jane Doe living in Scottsdale, Az.
You go to Quickbooks and learn as much as you can about John and Jane.
Looking into the report in depth, patterns begin to emerge.
For a contracting business, they called 5 times in the past 8 years. They call when they’re about to put up Christmas lights. They’re calling because their kids just graduated high school and are moving out for college. So now they want to convert their child’s room into a sunroom. They call to ask for referrals on other jobs that they need done. You can discover all the different projects they’ve done. We can see all the things they’ve done.
Afterwards, we can put together a little narrative on what we call the “Prime Client”
You can figure out that: “Your Prime Client is between the age of 35-55. A white collar worker in management, owning a home between 2,000-5,000 sq/ft.”
After dialing it down tight, we can do a specific marketing campaign, targeting the prime customer.
True story, one day this guy came in saying, “I clean pools and need help with my taxes.” Now mind you there aren’t a lot of pools here in Washington state. He needed help with his accounting and taxes.
So we sat down together to go over his paperwork. I saw that he lived in a good neighborhood, being curious, asked him how he was able to afford living there when he only make $30,000 a year cleaning pools? He replied that his wife had a high position at Amazon.
I asked him, “How would you like to make more money than your wife?”
“Who wouldn’t? What are you selling, Amway or something?”
I told him he could make more than his wife, if he was interested.
So we go through his paperwork and I could immediately spot his problems.
“Looking at your books, I see you’re going 45 min north and 45 min south of Everett. That’s too wide a circle and you’re competing with everybody out there. Why don’t you focus on a different niche?”
He asked what I meant. “Looking at the way you dress, speak and carry yourself, you went to private school, right?”
“How’d you know?”
“I can just tell by your mannerisms. You have the language, vernacular and inflection. Let’s put together a marketing plan and have you start doing pool maintenance on the east side.”
On the east side there are nice neighborhoods, like the one where Bill Gates lives.
“Before you do this, you have to get rid of your foreign made truck and get yourself an american made, white truck. Clean up your act, get rid of you torn jeans. Get some khakis and dress shirts.”
After a year, he only maintained pools in the east side. He had an assistant, codes and keys to a bunch of mansions there. He would maintain the pools and charge a monthly fee that was absolutely insane.
At first when I told them what to charge, he couldn’t believe anybody would pay that. I told them they would because the people in that area think differently.
Let’s say a 40 year old has $30 million cash, which is pretty low for that neck of the woods.
When they turn 70, they just don’t care anymore. So they have to be cognizant of their time. If they invest wisely, getting a 12% return, every year of their life they would get $3.6 million off of the interest to do what they want.
As they get older, time becomes more important than money. To someone in their 60’s with $100 million,
“Time is everything. Money is nothing”
If you tell them, “I will maintain your pool, handle any problems, everything, for a flat monthly fee. Anything that goes wrong with pumps, valves, excess things, I’ll arrange contractors to take care of it. I’ll pay them, you pay me for the extra markup. I’ll handle it all.” They will hire you.
That’s what they want.
He followed directions and he did great in a short period of time, well over 6 figures from his initial $30,000 a year.
What are commonalities and differences between the top clients and customers?
There is a Fact of life. Clients just don’t care ……
The extremely wealthy people, don’t care about color, race, religion, sexual orientation, political affiliation, etc. Those are the people who are clients.
They will choose a provider based on their ability to perform a service. They couldn’t care less about anything else. They’re all about the results.
Customers on the other hand want their providers to share as many of their personal affinities as possible.
Here is a prime example of a Customer named Bohunk Bob.
Bohunk Bob is in his early 30’s, raised in the bayous, believes Natural Ice is the only beer worth drinking, doesn’t care for millionaires, and has his mind made up on everything.
By the time Bohunk Bob was 8 years old, he had his core beliefs in place.
One day Bohunk Bob visits Sam the Man Dentist. As a passionate gun owner, he walks into the dental office and sees a magazine with anti gun control on the cover. Being a customer, Bohunk Bob is going to immediately turn around and walk out the door. He only wants to deal with somebody that looks like him, thinks like him, and talks like him.
Customers are narrow minded, and want to impose their beliefs and views upon others. If others don’t agree with them, they won’t like them. If they find any information they don’t agree with, they can’t and won’t finish reading it. They are unable to analyze the information objectively before making a decision. Their decision is already made, their mind is made up before giving any person or information a chance.
Clients are the exact opposite. In the course of their life will re-examine their beliefs, expand knowledge, horizons, and see things differently. They are open minded. They don’t care if somebody else doesn’t look like them, acts, or thinks like them. As long as they can perform the service well, they’ll have their business.
So it’s not about socioeconomic and educational backgrounds. But it’s really about being narrow minded vs open minded?
How many times have successful people grown up in a tough, low income environment and become very successful? Or people growing up in affluent family end with their life going down the drain.
I grew up in a rough neighborhood, literally right next to the railroad tracks. I didn’t have a lot of goodies growing up. Just a roof over my head, food, clean clothing, and shelter. I grew up in a low income family, only because my step father, who was great man, just didn’t know how to run a highly profitable contracting company. But with determination anybody can be successful.With grit, determination, and the right direction, anybody can become successful.Click To Tweet
Continue to – “Bookkeeping and Embezzlement“
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Randal DeHart, PMP, QPA
Randal DeHart is a Certified Project Management Professional with several years of construction project management experience. His expertise is in construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others.
He is the co-founder of Business Consulting and Accounting in Lynnwood, Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, QuickBooks For Contractors Expert and Xero Accounting Specialist and Bill.Com Certified Guru.
This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and construction accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and Xero accountants to the benefit of all of the construction contractors he serves across the USA.