We always talk about how to get more customers. But what do we do about bad customers? We must admit, we have all talked about "firing customers". But how do you do that?
It's a fact: All customers are not equal in terms of their value to your business. Sometimes you measure that by how much they spend, but in some cases, it's determined by how much they cost! I define a bad customer in two ways:
- A bad customer doesn't pay their bills. These have got to go. Hopefully before you get burned too badly.
- A bad customer is one who is more trouble than they're worth. That could be because of the amount of time they demand vs. the amount of money they spend. They could be too picky or demanding. They could be abusive or hard on your staff. Or they could be chronically giving late notices and demanding unreasonable delivery schedules.
So what do you do if you have a customer in that you feel is costing you more than they are worth? We've heard of "firing a customer", but I'm not sure that's what you should do – at least, not until you have tried to change their behavior. Doesn't always work, but it's worth a try.
Understand the problem. Have one of those "heart-to-heart" talks. Sometimes the conversation starts with "We may not be the best supplier to meet your needs…". It might fix the situation of the good or run the customer off. Make sure you're ready for the later.
Make the customer worth more. Raise prices! One of two things will happen. They will go elsewhere to find lower prices and that accomplishes the "firing" purpose. Secondly, they pay the higher prices and are more valuable to you for all the trouble. Dave Fellman calls this the "Parking Meter" approach. As long as bad customers keep putting money in the parking meter, they get to stay.
More likely it's a combination of the two. A good conversation will help you both understand more and clear up miscommunication. Higher prices allow you to spend the time needed to service the customer. But remember this: Bad customers prevent you from spending time gaining new good customers. This weakens you as a company.
Let the bad customers weaken your competition.
Advantage Printing is a commercial print and marketing service provider serving small to mid-sized businesses, nonprofits and churches.
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