How does the 80/20 rule apply to the employee benefit business? With most businesses, ours included, we derive 80% of our revenue from 20% of our clients. If that is an accurate assessment, why dont we focus on finding more of the 20% type clients?
Frequently, we dont take the time to analyze the characteristics of the 20%. Part of the exercise is purely financial. Which clients develop the greatest revenue? This superficial analysis does not accurately reflect the profitability of a client. In simplistic terms, the profitability of a client is determined by the revenue it generates less the expenses associated with managing the client, i.e. staff, overhead etc. The true cost can be measured in a variety of ways. I would suggest there is a more meaningful calculation that needs to take place. What is the emotional cost to you and your team to manage a dysfunctional client? This can be measured at the ownership, sales executive and the account management team levels. Im hopeful none of you have or have ever had any of these types of clients but, I know you have.
