Your customer list is worth nothing
A few years ago I heard a prominent figure was leaving one of my company’s big competitors.
He wasn’t leaving amicably. There had been tension for a while. Furthermore, he wasn’t leaving the industry for something new – he would become a competitor to his now former employer.
If you were the boss, what would you do in this situation?
Put them on enforced leave?
Shut down their access to all company IP and communication tools?
In this case, the boss openly suggested he take the entire customer list with him.
Why would he do this?
Surely this is one of the prized assets of a professional services business?
The boss knew the list itself was worth practically nothing. The relationships behind it were where all the value was. The cost of allowing the customer list to leave the building was, in reality, tiny.
Sure, to build the list again from scratch would take a while, but did it really matter?
In that business (like many others) you were really only as good as the service you were selling, and whether customers wanted to buy at a mutually agreeable price.
I wish I learnt this lesson earlier.
When I was starting out I would spend hours trying to find contact details for potential buyers of my company’s services. My analytical brain loved the quest and the sifting of the data. I’d leave no stone unturned – I’d know the name of every relevant person from Slovenia to Sydney. My mind was playing a trick on me that volume would generate returns.
This shotgun-style approach did work to a point, but became drastically less effective over time, especially as the industry consolidated, the value of the services being offered were more measurable, and I realised the importance of segmentation and buying power.
One other piece of advice I received around this time was to only focus on the top 3 relevant buyers in one location, and if none of them were interested, to ignore that territory and move on.
This is effectively the Pareto principle at work. 80% of the peas in the garden come from 20% of the plants. 80% of the output comes from 20% of the input. 80% of the problems come from 20% of the clients.
I still see many early stage companies using the shotgun strategy – amass email addresses of prospective buyers even if they’re outside the key target audience, perhaps slightly customise a sales pitch and then pull the trigger.
When you’re starting out it seems logical – you just want, need, to get out in front of people.
But if you’re in a relationships business, and the vast majority of us are (if you don’t think you are then ask yourself again), forget about frantically building about the customer list.
Focus on building relationships, and if in doubt ask what Pareto would do.