Don’t Be Afraid to Fire Your Customers (Part 2)
Are you aware of the impact customers can have on your business? Unprofitable customers, no matter how long you have done business with them, wear down your teams.
My assertion last month that you should fire your customers may have shocked a few readers. It’s about looking at how you acquire, service and maintain customer bases. Look at the cost/revenue/opportunity ratio as a metric of the value to reevaluate your real profitability.
If your sales hunters are spending their time “servicing” demanding customers vs. introducing new concepts to do more business, you need to realign expectations, sales responsibilities or that customer.
You probably have legacy customers you don’t want. I always ask my audience in a sales talk or training session the following question: “Have you ever wished you didn’t sell to a customer three months after the signed contract?” I usually get a good show of hands. Why is that, do you suppose?
Perhaps they didn’t fit your desired customer profile, they do not respect your efforts, they typically have an I win/you lose mentality, and they don’t buy business value. They have lofty expectations, unrealistic demands and pay very low bucks. They typically suck up company resources at a disproportionate level and suck up support time and profitability.
Simply ask your sales or service teams and they will help you identify your “Dirty Dozen Customers.” Take a careful look at the “stress factor” to your teams and look at their profitability. Then take some action.
Schedule a “business review” meeting with one level above your current contact’s level of authority. Have a polite, professional conversation, and review your value system and theirs as you currently understand. Share your concerns and the need for a change to continue to do business together. If they truly value your services, they will offer to make some changes. If not, seriously consider cutting them loose and don’t look back. What happens next?
Lots of thunder, noise and empty threats. On a rare occasion they may shuffle back and ask for forgiveness. Don’t be fooled. Reset the relationship, expectations and customer contacts a few levels up. If senior management displays the same behavior, then run away as fast as you can and never look back!
Your vision and discipline will help you clarify who you want to do business with, why they value your expertise and this will relieve some quota pressures.
“Fatigue makes cowards of us all.” — Vince Lombardi
High maintenance, low profit customers fatigue us all. Unprofitable customers, no matter how long you have done business with them, wears down your teams. If they represent significant RMR or new installation work on a regular basis, I am not suggesting you commit Hari-Kari, but simply explore ways to do the one thing I always say can never be done … make them a better customer.
The chances of success are not great. However, it is possible if you have a process and a plan, and it is executed intelligently and with some serious backbone. You just might have a chance. Here is the Cliff Note process we use with our customers:
- Know their business; don’t guess; confirm and corroborate your knowledge
- Focus on the ways they make you money and lose you money
- Understand how your solutions help number one then mitigate number two
- Ask the right questions, then shut up and listen very carefully
The best approach to building profitable revenue streams is to focus on the right customers, then focus your resources on them to earn a customer that values your people and business commitment. You will need to reset your expectations of who you want to do business with. Each company is unique, yet start with the same basic questions of discovery for every potential client.
The questions will be more sophisticated for larger companies. Let me share a few of my favorites to consider:
- Do they represent a player in one of your core vertical markets?
- Do your values align with their stated values (website or CEO message)?
- Do they buy value or focus on low price (observe their facilities)?
- Will they represent a strong referral if we earn it?
- Are they an innovator, a leader, or follower in their markets?
- Has there been any recent management shake-ups in the last three-four months?
Answering these questions will help you get creative and develop even better ones for your needs.
Remember, all companies go through growth and low activity stages, so consider what phase they are in and who on the sales team can manage them most affordably and efficiently. Take time to evaluate your customer base of their buying and profitability profile. Schedule this on a regular basis to build your own resiliency.
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