Total Relationship Value

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February 27, 2014- ISSN# 1545-2646


relationship value


   Total Relationship Value

Closing the sale is always a rewarding event.  You have worked hard to bring value to your client and they see your proposition as meeting their needs and within their budget.

One sale does not make a total value client relationship.

As business leaders we review financials of our companies.  We look at sales forecast and pipelines. We look at individual sales of sizable magnitude. We should also be looking at the total value of our client relationships if you are not already doing this action.

Your business provides various products and services to the marketplace and your customers. That suite of revenue producers fit into your clients needs in many fashions.  Some will have high margins and others will be promotional or lost leader sales.

The question needs to be – is the relationship with each client profitable or not?

You might sell one product with a 30% profit margin and another with a loss of 5%.  Some might challenge why anyone would sell something at a loss.  The reality is maintaining a relationship is a process of give and take.  Being too bull headed and not giving in on some profit margin on some ancillary products or services could lead to allowing the competition to gain a foothold in your customers purchasing habits.

The total value of the relationship is not only a mathematical calculation of the sales.  It is also the cost of maintaining and servicing that same client.  You might have a premium sales profit on the goods and services you provide but the support demands, time and resources could very well eat up all those profits and then some.

This week, identify if you have a way to look at the financial profitability of each client relationship.  Identify if you have a way to track the management costs of the relationship.  Over what timeframe will you evaluate that value and relationship – 1 year, 3 years, 5 years etc.

You might just find that annually you may need to help the bottom 10% of your customers find alternate vendors for the services you are providing.  Your cost of the relationship exceeds the commercial value of the relationship and you don’t even know it.  Your costs – time, resources, materials etc. go out the back door servicing these high maintenance customers at not just an expense on your books but at the expense of not growing your other existing clients and new prospects.

Wondering what are the total relationship values in your company? Give JKL Associates a call at (313) 527-7945.

Questions or comments – email us at or call our Office at (313) 527-7945

Copyright – JKL Associates 2014

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JKL Associates
18530 Mack Ave #242
Grosse Pointe Farms MI 48236

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