Is All Business necessarily a Good Business?

‘Customer is the king’  goes the adage. During recessionary times sales managers  would like to close as many orders from all and sundry. But is that so? Would you  believe that IT majors  are letting go of the clients who do not contribute  more than a few hundred thousand dollars per annum are getting the axe?  Called as Tail Accounts, such clients neither add to margins nor are a strategic fit to the vendor’s business.

“We are knocking off many of our tail accounts which do not bring a value proposition” Says T.K. Kurien CEO of Wipro. Last year Wipro has dumped 40 clients who were providing   revenue of $ 8 Million ( Rs 45 crores) iGate is also not renewing contracts with 70 clients fitting the above category. The company in turn has reduced the number of active clients from 344 to 293.

The strategy behind such a move is to free up the limited Sales Force bandwidth to focus on winning large clients. Sometimes less can be more!

Do you have such customers who keep you busy, show a marginal revenue on your top line but do not add to your margins? Think it over.

(with inputs from Big IT Pulls the Plug on Small Fish – Companies Cut out tail accounts to focus on key customers.- Economic Times: 26/11/12 p1)

(Refer my article:  All Business is not Good Business : Contextual Selling p241,  visit http://www.paradigm-info.com for book details)

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