TPMG Charleston Digital Corridor Presentation - Managing Customers Profitably

1. Managing Customer Profitability By David D. Bigness Jr.

2. Small businesses fail most often in the midst of economic crisis.

3. Small business owners must survive through these hard times.

4. Investing time in your clients can preserve and grow your revenue.

5. Understand your place with the “Leviathan”.

6. Your Leviathan client can hurt your business if you lose them.

7. Know The Five Percent Pattern

8. Know The Five Percent Pattern 5 Percent Of Your Customers Bring In Over 50 Percent Of Your Revenue

9. Find your place in the buy sell ladder. Contribute To Organizational Issues Contribute To Business Issues Good Support Good Product Commodity Source: The New Successful Large Account Management

10. Your client has different needs. Contribute To Organizational Issues Contribute To Business Issues Good Support Good Product Commodity Source: The New Successful Large Account Management Help them meet their business goals Help them run their business Go the extra mile Better quality than others Fulfill orders

11. Your client sees vendors differently. Contribute To Organizational Issues Contribute To Business Issues Good Support Good Product Commodity Trusted Advisor Salesman Source: The New Successful Large Account Management

12. Your barriers decrease as you move up. Contribute To Organizational Issues Contribute To Business Issues Good Support Good Product Commodity Source: The New Successful Large Account Management Decreases Increases COMPETITION

13. Your barriers decrease as you move up. Contribute To Organizational Issues Contribute To Business Issues Good Support Good Product Commodity Source: The New Successful Large Account Management Decreases Increases COMPETITION PRICE SENSITIVITY

14. Your barriers decrease as you move up. Contribute To Organizational Issues Contribute To Business Issues Good Support Good Product Commodity Source: The New Successful Large Account Management Decreases Increases COMPETITION PRICE SENSITIVITY IMPORTANCE OF FEATURES

15. See things through your customers eyes

20. Find bad relationships and end them.

23. Comparing each other can give you an objective view Level of business relationship 9 Understanding of customer’s business situation 8 Product fit to customer’s needs 5 Positioning in customer’s organization 8 Product/Service reputation 8 Prices 5 Helpfulness to customer 9 Sales trend (2 to 3 years out) 8 Their potential versus our strengths 5 How coachable its people are 3 Enjoyment in working with the account 5 Showcase or referral service for us 2 Recent trend in orders 5 How much it helps our business 5 Source: The New Successful Large Account Management 52 33

24. Look for the warning signs.

26. Your future revenues will be judged by your present projects.

28. A poor estimate will create client nightmares later.

29. Poor estimating sets your project up for failure. http://www.ibm.com/developerworks/websphere/library/techarticles/0306_perks/perks2.html

31. Not monitoring the project will create unpleasant surprises. Source: codebetter.com and Microsoft MSF

32. Poor software practices will cost you money. Source: http://www.rhombusconsulting.com/Rhombus_Consulting_Project_Management_page.htm

33. Risks come from everywhere and everyone.

34. Find risks, quantify them, and monitor them. Name Probability Severity Risk Score (P x S) Poor requirements 3 3 9 Budget cuts in the department force project to be cancelled 2 3 6 Oracle dba not fully dedicated to project. 2 2 4 Client staff cannot define interfaces to legacy system. 2 2 4 Project sponsor leaves department 2 1 2

35. Not managing cost can put the project at a net loss.

36. A Lesson In Earned Value… Earned Value Management is an approach for understanding and assessing what a project is achieving with budget dollars.

37. This is how most of us see a project. Client Approved Budget To Date vs Actual $ Spent Variance $500,000 $400,000 ($100,000) This does not accurately reflect the true status of the project! Fixed Price Contract Scenario GREAT! I'm $100,000 under budget!

38. You must know the work planned. 0 250 500 750 1000 1250 1500 J F M A M J J A S O N D Time Dollars (000’s) Time Now Total Client Approved Budget to Date

39. You must know the cost of the work. 0 250 500 750 1000 1250 1500 J F M A M J J A S O N D Time Dollars (000’s) Time Now Total Client Approved Budget to Date Actual Dollars Spent to Date (80% of Client Approved Budget)

40. You must know the work earned. 0 250 500 750 1000 1250 1500 J F M A M J J A S O N D Time Dollars (000’s) Time Now Total Client Approved Budget to Date Actual Dollars Spent to Date (80% of Client Approved Budget) Earned Value (based on 70% Complete)

41. And use it to find problems. Budget To Date Earned Value Actual $500,000 $350,000 $400,000 Schedule Cost Variance Variance ($150,000) ($50,000) Oh, boy, I better figure out what is going on. I’ve already spent 80% of my planned budget, but I’m only 70% complete. ($500,000 x 70%) (80% of budget to date)

42. What we really wanted. Budget To Date Earned Value Actual $500,000 $500,000 $400,000 Schedule Cost Variance Variance $0 $100,000 Life is good. ($500,000 x 100%) (80% of budget to date)

43. In a tough economy, your money and time cannot be wasted.

44. Evaluate your clients like an investment portfolio.

45. Your clients are more than customers. They are external assets that you must nurture.

46. Manage your clients, or they will manage you.