Are customers always right? Applying the 80/20 rule to boost loyalty, profits

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Betsy Kruger heads Strategic Power, a marketing consultancy committed to empowering world prosperity, one business at a time.
Business consultant Betsy Kruger tells why it’s OK to give priority to your most profitable customers. Photo courtesy of Strategic Power.

By Betsy Kruger

Guest columnist

In business, the squeaky wheel almost always winds up getting the grease. No one likes hearing a complaint, so when a customer complains, a business quickly rectifies the complaint.

The problem with this strategy is that disgruntled customers bring in less profit than loyal customers. Contrary to popular opinion, the customer is not always right. It’s wrong to reward complainers. A business should reward loyal customers since they reward it with higher profit.

Rewarding top customers

The 80/20 rule governs all results, including profits from customers. According to this universal law, the top 20 percent of customers will generate 80 percent of the profit. Conversely, the bottom 80 percent of customers will generate only 20 percent of the profit – and virtually all of the complaints. This means a business should reward the top 20 percent with a top strategy.

Any business can profit by implementing these steps:

Prioritize top customers. Distinguish the top 20 percent of your customers from the bottom 80 percent of your customers.

Strategize to attract more. Delight your top customers, discover similar prospects and discourage other customers.

Capitalize on a top market strategy. Replace less-profitable customers with highly profitable new customers so your profits from customers can quadruple.

Managers may feel it’s rude to consider some customers as less valuable than others, but I feel it’s rude to reward complainers since loyal customers deserve to be rewarded. Remember that a business is prioritizing profit when it prioritizes its most valuable customers.

Betsy Kruger heads Strategic Power, a marketing consultancy committed to empowering world prosperity, one business at a time. Business Expert Press released her book, “Top Market Strategy: Applying the 80/20 Rule,” in August 2011. Kruger writes articles, motivates groups, leads seminars and consults with clients on how to prosper from the 80/20 rule.

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