Axiom CPA, P.A. - Axiom CPA Blog

In last week's blog we talked about finding your sweet spot, that area of the business that represents the greatest area of satisfaction and as a result the area of greatest earnings potential in your business. In this entry we'll discuss spending time in that sweet spot. Usually a business is already spending SOME time in its sweet spot. There are generally a few customers that the business really enjoys working with and that represent where the business wants to expand.

If I can get the client to identify the sweet spot the next question I ask is "Give me the customer names or a description of the type of customer you're talking about, AND tell me how much revenue you are deriving from that customer." It's usually the case that businesses only have 5% of their customers in their sweet spot. This 5% will generally be responsible for 10-15% of revenues. Our goal is get this group up to 20% of your clients and 80% of revenues. The first part, increasing the number of ideal customers, we address with targeted marketing efforts. The second part, increasing revenues, we address with pricing.

Marketing is often said to be more art than science. I can understand that. True marketing geniuses possess an insight into the customer psyche that is very valuable. However, we're not trying to assembly a marketing plan that will turn around General Motors. Often the only questions my clients need to answer to get great marketing returns are "Who is my ideal client" and "Where am I most likely to run into them". Knowing those two answers enables us to spend time wisely to reach the people that will be receptive to our pitch. That's it...even a CPA can do it.

Pricing is very much an art when it comes to generating maximum revenue. It usually turns out to have as much to do with branding as it does with product or service delivery. Most businesses under price their ideal clients because that's not where they perform most of their work. Ideal clients represent a fringe group that they would like to spend more time with but because it's not their core client base they don't pay as much attention to pricing as they should. To price effectively you really need to understand how much value you are delivering to the customer. Customer interviews and pricing experiments are most effective in determining this.

Once you understand your sweet spot you really need to take it to the next level and measure how much of the business is focused on that group of customers. Then use the 80/20 rule to set a goal for new client business in your sweet spot and total revenues for that segment of the business. That is pretty much it. There's nothing much new here. However, you must execute to achieve success.

Execution is most often a bi-product of accountability. Once you do all of this measuring and planning you need to let some people know about your plans for your business. You need to put it out there so you'll be embarrassed if you don't make some progress. Then you need to find someone who can hold your feet to the fire. We do this for clients all the time, but sadly we're usually the only people who care enough about those plans to hold them accountable. It requires time, it requires effort and it requires a level of honesty most of your friends and family will find uncomfortable. Finding your sweet spot may turn out to be easy. Figuring out how you'll spend more time there can be a little more difficult. Making the changes to actually pull it off may seem nearly impossible. Just make sure you have some good people in your corner to help you get there.