Client Ranking: How to Maintain Profit Margins with Client C & D Rankings

Profit Showing Business Success In Trading And Income

Ranking the client portfolio is an important process that assists the sales and collections departments in serving your clients. In our last blog, we described each category in the Client Ranking and talked about the respective policies for each group. Now we’ll cover how to maintain profit margins with Client C and D rankings.  Just as before, let’s think of client ranking as assigning a type of car to each client:

  • Mercedes-Benz SL Roadster for Category A
  • Jeep Grand Cherokee for Category B
  • Toyota Camry for Category C
  • Ford Pinto for Category D

 

With Client Rank Group C, you need to have efficient processes to manage the profit margin and minimize the time investment.  Some industry standard processes for this group are:

  • Order via website, automated telephone system, email form, or EDI
  • Set up repeat or automated orders
  • Take credit card, bank transfer, or wire payment
  • Communicate via order status proactively via email
  • Obtain electronic delivery signature

 

These clients should not be taken for granted. You never want to be rude to them or write them off. Think of them as being given a Toyota Camry as a gift: You’re elated, but what’s the most you’ll spend repairing and maintaining it?  This group can surprise you, though.  Like a dormant volcano, there is room for them to grow within the rankings. They have been known to blow up, skip B, and go straight to being an A ranked client.

With Client Rank Group D, you need to have even more efficient processes to effectively manage the profit margin and minimize the time investment required from your team.  You need carefully selected policies to manage this group and turn a profit.  Some industry standard processes for this group are:

  • Order via website, automated telephone system, email form, or EDI
  • Set up repeat or automated orders
  • Take credit card, bank transfer, or wire payment
  • Communicate via order status proactively via email
  • Obtain electronic delivery signature
  • Pull credit rating before shipping an order on credit terms
  • Require a deposit or payment in advance
  • Set up payment plans

 

It’s possible that these clients could turn into C clients.  Be kind, but be wary and wise about the amount of time that you are investing in this group of late and non-payers. Hey, it’s nothing personal.  It’s business!

Utilizing a collection strategy is extra way that client ranking can be beneficial. Having a collection strategy implemented for certain customers allows for the company to know how to contact the client and how often to contact them. For Client C the company could find themselves only sending one email and receiving their funds shortly after. But for Client D, the company may have to send multiple emails and phone calls in order to receive their funds. Collection strategies, reminder letters and collection letters can be all be easily implemented with an Accounts Receivable Management application.  Overall, the client ranking system allows for businesses to understand and guide departments on the best methods to receive payments.

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