The VIP versus non VIP debate is something that I find in almost every single business that I coach or consult with, and it’s the sameness type treatment that goes on, right?
It’s well, “all of my customers are the same coach. You don’t understand, I have to treat them all fairly.”
That’s just not how business works. And today, I’m gonna give you three litmus tests if you will, on how you can determine if a client is VIP or non VIP. What I mean by this is a very important client, right? And so let’s hop right into this.
The first one is obviously how much money are they spending with you? Are they a big spender or are they a little spender, right? Is it Mrs. Jones who’s spending 150 bucks with you or is it the Acme Corporation that’s spending 10,000, 100,000, 10 million. That’s the first identifier that I always look at. Is it big money or is it little money?
Secondly, is it now money or later money? Do I have to carry terms on this? And if you’re new to business, this is something that you may have never heard of before. It’s called net 30. And what that means is that you’re essentially giving them 30 days net to pay you. So after services are rendered or after the invoice date, they’ll have 30 days to pay you without any penalties. Now, what happens to most small business owners or when I start getting into business, a B to B type business, and they start offering terms. You’ll start getting what’s called an accounts receivable. And so now you’re essentially becoming a bank. So you thought you were a painting company, now you’re a bank. You thought you were a plumber, now you’re a bank. And you’re carrying this money most likely without any interest. So the problem here is that you can literally do a whole month’s worth of work, called a hundred thousand dollars, you build that money how, and then if you don’t do any work for the following month, that’s cash basis, money coming in, you could get an, a cash flow bowl, right? Cash flow is the lifeblood of the business. It’s how much money is coming in versus how much money is going out. It’s all about the cashflow baby. So now I’m looking, I’m saying, all right, I’ve got this customer, they’ve got big money, but they’re telling me it’s net 90. I’m gonna have to carry this for 90 days versus I’ve got big money and they say, they’re going to pay upon completion. So how big is the money and how long are the terms?
Lastly, what’s their sphere of influence? What’s it look like for them? As far as getting you more projects, more prospects, more leads, more clients. For us, I know in my ad tech business, if we’re working with insurance agents, if it’s a top dog at an insurance agency and they’ve got 60 agents, then that person has a lot more sphere of influence. And they’re going to be obviously more of a VIP client. Well, what’s it mean by a VIP client? What’s the difference? Right?
VIP clients have my cell phone number. They can reach me whenever they need to. They can send me a text message. I’m going to give them more access to me than I would a non VIP client. And so by doing this, it’s going to help you with your time management, help you be more efficient. But if you’re looking to start your business, or if you’re just getting started, you need to understand that there is definitely a difference between VIP’s and non VIP’s. How big is the money? How long are the terms you pay an hour later? And then what’s that sphere of influence look like.
You know, I had a client one time stretched me out 120 days, 120 days! That’s right. 4 months they went without paying me. That was supposed to be net 30 terms, but they stretched it and stretched and stretched it. I try to add on late fees, they wouldn’t pay them. I eventually got my money, but, you know, I carried that money interest free for over a quarter. And that’s just something that you gotta be mindful as a small business owner. If you’re just getting started in this doing that with too many clients at too many times can really stretch you and could even potentially put you out of business because maybe you can’t make payroll and things like that. So very important. Those kinds of customers, they’re not VIP or non VIP, those become fired clients.
And so hopefully this will help you solve some cashflow problems, solve some time management problems, make you a little more efficient and then ultimately help you close deals because you’re focused on the right type of prospects. Only go after those VIP prospects and your business will be better because of it.
Here’s to your success.
