Step 1: Ruthlessly Evaluate Every Relationship

Written by Dave Lorenzo on December 10, 2015 / 60 Second Sale

This is step one in the free sales course. The title is: Ruthlessly Evaluate Every Relationship

Step one in our process is to ruthlessly evaluate all of your relationships. We’re going to break these relationships into four categories. I want you to look at everyone you’ve come into contact with in your business career and segment them into four specific categories. We’re going to call these categories suspects, prospects, clients, and Evangelists. I’ll explain what each of these categories means and then we’ll get into how you can segment them and make them more productive.

The first category, suspects, are people you suspect maybe outstanding clients for you. That’s why we call them suspects because you think they maybe good clients for you but you don’t actually know yet.

The second category are prospects. These are people who have raised their hand, they’ve taken some action and they’ve said, “I like what you’re saying. I’d like to hear more from you.” These are people who have the highest potential to actually become clients.

The third group, clients, they’re people who’ve actually spend money on your product or your service. They’ve invested in you in some way. Doesn’t matter if it’s a dollar or a million dollars, anybody who’s paid money to have an experience with you is a client.

The fourth category are Evangelists. These are people who are out there extolling the virtues of you, your company, your service. They’re people who are telling others about you even though they haven’t invested money in you at all. This is a little off putting for some people. Most sales professionals think that folks graduate from clients into the level of Evangelists. My focus for you is to work on always deepening your client relationships and not focus on how these people evolve. Those relationships over time will work out to be deeper, more profitable investments for the client into you.

The Evangelist relationship is something that’s completely separate and we need to address separately so that you can focus on growing those relationships. That’s a different approach which we’re going to work on together.

In step one there are three specific action items you need to focus on. The first action item is creating a database. This is the virtual home for all of these relationships. This database doesn’t have to be something complicated. If you use a client relationship management system, a CRM like sales force or some other type of office automation system, that’s fine. Use that to create your database. You can simply take an Excel spreadsheet and list out suspects, prospects, clients, and Evangelists.

Because you have different relationships with each of these types of people we need to list each type of person separately in the database. The suspects will have their own area. You’ll have a list of suspects there. You’ll have a way to put notes in about each of them. Prospects will have their own separate area. You’ll have a way to put in notes about each of them. Clients will have their own separate area. Again, you’ll have a place to write what you’re doing and how you’re working with them. Evangelists will have their own separate area as well.

The idea is to focus your approach on each of these groups and your database is a place for you to record what you’re doing, the actions you’re taking, and the value that these folks are providing to you on a regular basis.

Action item number two is to rank each of these clients and each of these Evangelists so you know who you’re most valuable clients are and who your most valuable Evangelists are. When you rank them I’d like you to use a color coding system. I prefer to use the red, white, and blue system because it’s easy for people to remember. Your most valuable clients are going to be in a group that’s labeled red. Your second most valuable clients are going to be in a group that’s labeled blue. Your third most valuable clients are going to be in a group labeled white.

I know what you’re thinking. You’re thinking how do I determine where I’m going to rank my clients and how do I determine what value my clients have. The system you use is client lifetime value. It’s very, very simple, very basic. What you’re going to do is you’re going to write down all the revenue you can attribute to each of these clients, and that’s how you’re going to rank them. The person who’s giving you the most money over the years, whether it’s because of longevity or one big purchase, doesn’t matter, rank it by lifetime value. Rank that relationship by lifetime value. Put a dollar amount next to the name. That’s how you rank them.

If you want to get more sophisticated you can come up with your own algorithm, but it’s really important that you know what value the clients have brought to your business. As we progress in the system we’re going to look to deepen those relationships. The ones we deepen first are going to be the ones where the most value is provided.

When it comes to Evangelists, I also want you to rank those folks in your database. That’s action item number three. Remember, and Evangelist is someone who’s never personally invested in you, but they’ve referred business to you. Perhaps you have someone who has sent you three, four, five, six clients, and the value of those clients over the lifetime that they’ve done business with you is in the millions of dollars. That person’s going to go into the red category of your ranking. People who are below the threshold that you set for your top grouping will go into white. People that are in the third will go into the blue. We’re going to break those down by red, white, and blue categories as well.

Let’s take a moment and recap those action items from step number one. Action item number one is to create a database and segment it. You’re going to segment it into four categories, suspects, prospects, clients and Evangelists. Action item number two is to take your clients and rank them by the lifetime value, rank them by the dollar amount that they paid you over the years. The top clients, the top ranking will be in the red category. The second will be the white category. The third will be the blue category.

Action item number three is to rank your Evangelists. The top category, your most valuable Evangelists will be red. Your second most valuable will be white. Your third most valuable will be blue.

That’s the recap for the action items in step number one. I’ll see you in step number two.