SMB News: 2 Reasons to Fire a Bad Bad CustomerTuesday, January 27, 2009
Posted by Brawlin Melgar
by John Beagle
I just got off the phone with a client, or should I say 'former customer.'
As a SMB business owner, it irks me to have to listen to someone downgrading my staff.
Being rude isn't enough to fire a customer. But it is a symptom of a customer who may just cost you other opportunities because they take so much time to satisfy.
Half Truth Tellers
Unreasonable customers tell half truths. They try to make you feel bad about your product or employee or both.
Being rude AND telling half truths STILL isn't enough to fire customers.
The Only 2 Reasons for Firing a Customer
There really are only two reasons for FIRING a Customer. One, they don't pay their bill and the second reason is they cost more to service than not servicing them at all. Either way, if you lose less money by firing a customer, then you just made your firm more profitable.
Profitable Client or Loser Customer?
Pure microeconomics comes into play here.
You have to ask yourself, is there significant future business on the horizon? Or has this account shot its wad and there is nothing left but low margin transactions that require a greater amount of customer service than the profit margin affords.
When its time to cut costs, reduce staff, you probably should reduce marginal customers too.
Long Term Benefits
What you have left is an easier to work with client base that can generate higher profits and also provide a greater work atmosphere for your staff.
Don't waste your resources on unprofitable customers, concentrate your efforts on those good clients who make you the most money anyway.
About the Author:
John Beagle is a 22 year small business veteran with all 22 years in the Computer industry and the last 10 years in both computer services and Search Engine Optimization and Marketing.
Major clients include major TV news networks, international corporations, US and foreign governments, movie studios, presidential campaigns, telecommunication companies, pharmaceutical corporations and nearly all fortune 500 companies.
In-house Media products include numerous blogs, discussion forums, trade magazines, websites and social media initiatives.
Company Specialties include: Technology Installation and on-site technicians for conferences, company training, trade shows, conventions, sales presentations, temporary offices and other corporate events.