eoincostello

Identifying the sweet spot for the services you offer is essential to growth in early stage businesses, here’s my guide…

In Advice for Start-ups on January 24, 2012 at 8:52 pm

Below is an extract from our former sales manual which I wrote for my business. Up until I wrote this document we had been trying to accept every incoming sales request. As a result was that we were un-differentiated, stretched and our internal processes were not optimal. After adopting the “Sweet Spot” approach we become much more focussed.

Identifying the sweet spot for our offerings

This is the process whereby we identify the type of customers we want to do business with in this business area. By doing this we can save a lot of time on sales quotes that are not going to turn into orders. It also means that we do not take on clients that are going to be more trouble than they are worth.

Guidelines for our ideal client:

  • We want to target clients with a minimum spend of E2,000 per annum.
  • We want clients that typically have some technical ability(i.e. will not be a massive drain on support)
  • We want clients that need us to perform some managed services for them(which are higher profit)
  • Client is in urgent need of the solution (i.e. we want to avoid spending a lot of time on clients that are only browsing or looking to screw their current provider at the renewal date with a cheaper quote).
  • We want to make a minimum gross profit of 50% on all services provided to the client. In some cases we will accept lower than this where we are not involved in much of the work(e.g. backups by Serve Centric).

What industry sectors would our ideal client typically be in:

    • Web developers
    • Media/advertising/PR
    • Software development
    • Web services providers
    • Clients that understand the quality proposition (i.e. that you get what you pay for) and are prepared to pay for a quality, reliable service.

What sectors would not represent our ideal client at this time

  • Slow decision makers/long sales processes such as government departments.
  • Low tech companies with no internal IT function.
  • Single server colo clients with low bandwidth usage and no scope for selling additional services.

 Devising the list of core versus custom features in dealing with sales quotes

 It is commonly accepted that when clients are considering a purchase they indulge their fantasies and dream up everything they would ideally like in the new service. However the client’s customer requirements list will rarely take account of how practical it is or how much it will cost to provide to them.

Therefore when assessing incoming sales quote requests it is important that we have a clear idea in our mind of which of the list of requirements are on our core list of supported items (e.g. hard drives, server space, bandwidth, power) and which are custom (load balancing, RAID 5,JSP, custom software installs etc). Having a core list enables us to turn around sales quotes faster and helps us standardise our offering.

What we need to do is draw up a list of Core Features that all clients would typically benefit from. Any requests that deviate from the Core Features list are then considered Custom Features and quoted for accordingly.

When deciding how to proceed in the case where the client has requested Custom Features the following will decided on whether we provide it or not:

1. Is the client prepared to pay a commercial price for it?

2. How many clients are seeking the same feature? If a lot of customers are requesting the same feature we may need to consider moving it to from the Custom list onto the Core List and pricing it accordingly.

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