30 40 30 rule to increase your revenue

If you're running a service business or agency and you're not making enough to stay afloat and fund your life, I have a solution for you. The challenge you are having is the customer base you have. The action I'm going to propose will be radical and a little difficult to implement but if you follow through, you'll be in a better position within the next six months in terms of business profit.

Watch the video summary under 3 minutes

Lets begin by breaking your customer base into 3 different categories

Category 1: top 30%

These are the customers responsible for the most revenue your business generates. These are high value buyers and mostly buy in bulk.

Category 2: middle tier 40%

This category of clients keeps your business afloat. They may not be bulk buyers but they are frequent enough to give you breathing room when things are tough. 

Category 3; bottom 30%

These guys are responsible for the least amount of money your business makes. They are not frequent buyers and they price you rock bottom. You probably spend a lot of time servicing these bottom buyers.

I recommend collecting this data over a period of one year. 

Now that we have the customers broken into different segments, time to do the hard things: cut off the bottom 30% of your customers. The thinking behind this is that you spend a lot of valuable time attending to these customers, time you could have spent improving your skills or providing services to your high paying clients. This is difficult to pull off but if you are serious about growing your service business, it's a step you want to take.

For the middle 40% of your customers, increase your price with 20%. Do this systematically over the course of 3 months so you don't experience mass exodus. What this will help you do is to filter out the bottom from your middle category. You only want to focus on customers who are willing to value your time and customers who take their business seriously by paying well for services rendered to them.

Now, the sweet part, your top 30% responsible for the most revenue in your business. create a referral system that will offer perks and rewards to them when they refer new customers to you. What this will do for your business is massive; these high spenders will refer people who are also high spenders - like attracts like. By implementing this right, the top 30% of your client base will be responsible for attracting new clients to your business. 

After one year, repeat the process, group your customers into 3 categories again, rinse and repeat.

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