key brands, you have to also carry
the other 80 percent of the range.
Lack of Whitecap in stock also
negatively affects the sales of Tusker
and Pilsner. Full range also gives the
business a good confidence rating.
The other important way to
categorize customers is by volume
and credit. This helps a business to
establish a commercial rationale for
giving out discounts.
Volume customers should always
get a better price because they save
on transactional costs. Similarly,
cash customers save on overdrafts
and help on cash flows: give them a
better price.
Both volume and cash sales have
a quantifiable financial value they
bring to the business. Pass some
of those benefits to the attributing
customers in order to encourage that
mode of purchase.
Customers can also be categorized
by profitability. Some customers
have special transactional or delivery
demands that cost the business.
‘‘The other important way to categorize
customers is by volume and credit. This helps
a business to establish a commercial rationale
for giving out discounts. Volume customers
should always get a better price because they
save on transactional costs.’’
Others have c omplicated orders.
Customers like supermarkets
demand special attention. If costs
can directly be allocated to those
special needs, then pass them
directly to those customers.
Categorizing customers this way
ensures targeted costs allocation and
fair pricing. With technology, this
activity based costing and pricing is
now possible.
Retention and growth sales
strategies are never effective without
customer categorization. The
80-20 principle is a great tool of
categorization in order to prioritize
your commercial focus.
Staff with varied skills may also be
required to manage the 20 percent
category.
And by the way, the 80-20
principle is also applicable to staff
performance and productivity.
Only 20 percent of your total staff
contributes to the 80 percent of your
total company’s’ performance and
productivity.
Do you know the 20 percent? If not,
you should know “people”.
Herman Githinji is a Sales and
Marketing Consultant in Melbourne,
Australia. You can commune with him
on this or related issues via mail at:
[email protected] or read more
of his articles in his LinkedIn account