NEW YORK (TheStreet) -- Every organization has to do it: Decide which customers and projects have the highest priority and get the most resources. For some it is a matter of necessity; there's just not enough time, people or other resources to support each customer equally. Some customers are just "needier" (meaning "high maintenance") than others and want more attention and interaction. Other customers may have actionable items critical to their organizations, and when they call you need to respond yesterday with everything you have available.
Customers enable you to pay the bills, keep the lights on and grow the business, so realistically every organization has to decide where its limited resources are of best use (meaning make the most money). Organizations need to be careful that they don't miss opportunities for revenue, profits and referrals by oversimplifying how customers are prioritized.
All of these are valid, and each has its upside and downside. For instance, sales volume -- whether in dollars or units -- doesn't tell the entire story. What was the sales price? Were there discounts? How long does it take the customer to pay? From a financial perspective, looking at the net sale after the cost of the sale is deducted (sales price minus cost of goods/services sold) begins to let you see how much is left over from a sale after paying for other expenses.
The length of a relationship with a customer is an important element in decision-making and priorities. The life of the relationship with a smaller annual sales volume may be much more valuable than a large one-hit-wonder sale that produced little profit after deep discounts.
If you are setting priorities for clients (or prospects) in which to invest your limited resources, you need more than a single criterion to go by. In addition to the three above, you should look at a bigger picture that often extends beyond direct sales to a customer:
- Length of relationship: including lifetime sales and profits
- Annual sales and profits
- Profit margin on each sale and total sales
- Terms and speed of payment
- Referrals and references: pipeline to new customers
- Maintenance level: easy interactions (low need for attention) to high maintenance (high need to make sales and follow up)
- Credibility of the client: Some clients are worth the time, effort and investment because of their influence on other buyers, connections to the community and reputations. Some can make (or break) your business.