To determine which clients are most valuable, score them not just on profits, but on profits per effort, says business coach Yoon Cannon.
Use the worksheet below to calculate each customer's score value -- then rank them, with the highest being the best.
Total revenue from Client X: $______
Cost of acquiring client*: $_________
Total job costs**: $_______________
Profit for Client X: $______________
Total hours worked: _____
Profit per hour: _________
Relationship bonus:*** +_____
* Tally up all the marketing costs: direct mail, presentations -- even wining and dining.
** Include only materials, mileage, shipping, and labor (including your own) directly tied to that project.
*** Aggravation counts, but so do frequency of work, length of relationships, and number of referrals they bring. Score clients on a 1-10 scale, 10 being best. Then turn the bonus into a percentage (5 becomes 50% or 0.50, for example) and multiply by profit/hour. The example below is based on a score of 10.
Total annual revenue from Client X: $20,000
Cost of acquiring client: -$1,000
Total job costs: -$13,000
Profit for Client X: $6,000
Total hours worked: 100
Profit per hour: $60
Relationship bonus: +$6