Many of us have heard the expression, “the customer is always right,” countless times. Truthfully, I think sometimes the customer is probably wrong, but as business executives, we focus on retaining their business, so we act as if they are right even when they are not. Along with the notion that the customer is always right is the idea that, as business managers, we have to work hard to keep every customer.
Lately, I have been wondering about both those things and have spent some time contemplating whether every customer is, in fact, worth keeping.
To be clear, no one likes to lose a good customer, but if we are being honest, every business has a customer or two who make too many demands, consume too much of your time, don’t generate enough revenue, or prevent you from serving other customers.
To find out how valuable your customers are to your business, I suggest you periodically review your customer roster. Look at how much they are spending with you and also how much of your staff’s time, effort, and energy goes into servicing each account.
You may be surprised to find that you are spending a great deal of your resources on customers that are not very profitable for your business. All too often, it is the customer who spends the least with you who demands the most in terms of extra services and attention from your staff. Remembering the Pareto Principle, take an extra hard look at the customers that are not in the 20% that generate 80% of your business.
Obviously, your efforts and energy are best spent ensuring that the top 20% is served properly. Evaluate the other customers to see whether the money they spend with you and the time you have to dedicate to keeping them happy make sense. In other words, ask yourself what the value of that customer is to your operation.
When evaluating your customers, also look at their impact on your employees. If customers are disrespectful or rude to your employees, count that as a strike against them. You don’t want to lose good employees because of “bad” customers.
Once you have decided to stop doing business with a customer, you need to inform them and provide an explanation. Share the facts on why you think the relationship is no longer working and why you are not a good fit for them. The goal is to part on good terms, and that may mean you have to take the blame for the relationship not working out.
While it can be difficult to overcome years of believing you had to keep customers at all costs, you may find that firing a customer is the best thing you can do for your employees and your business.
