The Biz of Pacelinebiz

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Your Customer List Should Be Like A Baseball Lineup

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The Babe and Ted Williams

The Babe and Ted Williams are great in any lineup

In baseball there are 9 starters in the field. In REAL baseball, the National league, all nine players in the field also must bat.   Today’s topic is not about the abomination that they call the designated hitter, it is about how to construct your starting lineup the way a baseball manager does.  I assume that right now you’re a thinking I have some explaining to do, and you are right.

This is what I am talking about. Every business, especially a business that has other businesses as their customers, need to manage their “roster”.  What I mean by this is you have to make sure you have a diverse customer base.  Would a baseball lineup do well with only home run hitters?  It might sound like a good idea but probably not since they usually don’t hit for average and are slow on the base paths and strike out a lot which is an unproductive out.  They also typically cost more and would send the payroll well into the “luxury tax” stratosphere. It is better to fill your lineup with singles hitters, hitters with “doubles” power and a home run hitter or two who can change a game with one pitch.

This is how you have to think about and try to construct your customer base. The singles hitters are the smaller customers that allow you to spread your risk around geographic and industry type.  You should probably have a lot of these in your line up.  They aren’t particularly profitable but if you can weed out the ones that are batting at the Mendoza line (a .200 batting average is not good) and get ones that are batting say .275 and up then you are doing well.  The .275 batting average customers are characterized by paying on time and are not much of a headache.  They don’t complain and are not too demanding so despite their smaller size they are good for your line up.   The hitters that are around the Mendoza line are the opposite so don’t take them as customers or ditch them once they become one.  Sorry, but this is the big leagues.

The doubles hitters are the customers that are a little larger in size and more profitable. Perhaps they have grown from the single hitter category or shrunk in size from the home run hitters but you need some of these too.  They give your line up some punch and can soften the blow if you lose a home run client.  They can also grow into a home run hitter so cultivate them and help them get to the next level for your sake and theirs. You need a decent amount of these in your line up but you must be careful about them since they might be a little volatile either growing or shrinking and it may affect your relationship.  It they become a problem they might be worth trading to another team.  It might be addition by subtraction.

The next category of customer you need is the home run hitter and these are the best but you have to make sure they don’t lead you down a path of dependency. A concentration risk in your customer a base is a problem you must manage.  Typically the customer will account for a large percentage of revenues or it might be a single industry.  Think about the building supplies company that catered to new construction when the bust hit in the late 2000’s.  Many small businesses are automatically going to have a concentration risk geographically since they only sell to a small area.  A wholesale distributor whose business is limited to deliveries in one county or a couple of counties is an example.  A retailer who has one store and has little or a zero online revenue stream is another example.  Keep the home run hitters but make sure you have a good base of other customers to offset when a home run hitter signs with another team.  Free agency is always going to be a risk.

I hope this will make you consider adjusting your lineup if it is needed. Have a great week.


One Response

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  1. As always, I really enjoy your blog. This one was interesting to read and certainly true.


    November 16, 2015 at 10:32 am

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