1. Do You Value Your Customer? Presented by SCORE Boston Rob Wilson John Fanton SCORE ® Counselors to America’s Small Business

2. SCORE ® Counselors to America’s Small Business Is assigning a value a radical change? A tool for you as a business person – Goal is to understand the business better and make smarter decisions Not a radical departure from the way you work today! – Do slightly more of the things that work well and less of those that don’t

3. SCORE ® Counselors to America’s Small Business Why should you think about value? Better business – More profitable business – More stable business – Growing business – Less stress!

4. SCORE ® Counselors to America’s Small Business What do we mean by value? Value = revenue – cost (over time) Calculating value – Required some data (which you may or may not have) Revenue by client Costs associated with that client –Direct Costs –Indirect Costs –Allocation of Costs –Opportunity Costs (?)

5. SCORE ® Counselors to America’s Small Business Costs throughout the Life Cycle Cost to acquire a customer – Allocation of marketing costs – Cost per call Cost to deliver service Cost of collecting revenue Cost to terminate relationship Liabilities and contingencies Is the customer profitable from day one? Is the customer profitable over time? Are profits front-loaded or recurring (or at the very end!) Are certain product or services profitable and others not?

6. SCORE ® Counselors to America’s Small Business How much does it cost to win a sale?

7. SCORE ® Counselors to America’s Small Business So…What should you do? Make informed decisions about which customers relationships to develop and which to avoid or alter Consider bundled solutions and re-negotiation for add-ons Review your competitiveness (if you are not making $ but you are charging industry rates) – change your process Pricing as a means of discrimination – charge difficult customers more Can you better focus your business – understand characteristics of better customers Set quantitative marketing goals and objectives – cost to acquire a customer < value of a customer!

8. Thank you for attending! SCORE ® Counselors to America’s Small Business