Unprofitable customers

Should You Spend Time Supporting Unprofitable Customers?

No matter the size of your company, some of your customers will be more profitable than others. Although it can be tempting for business owners to focus their attention and resources on acquiring more profitable new customers, research has shown that 70% of companies says it’s cheaper to retain a customer than acquire a new one.

Promote Less Expensive Support Channels

The skyrocketing costs of acquiring new customers and the complexities of cross-selling to different market segments continue to make customer retention imperative. It can become expensive for your company, however, to provide top-of-the-line support channels to unprofitable customers. Instead, focus your efforts on providing them with less expensive support channels, such as:

 

If you can determine which customers are using a large portion of your support resources, you may be able to explain to the customer that he or she is exceeding their support contract and will be charged overage fees. If you choose this route, however, be sure that this is clearly stated in your customers’ service contracts.

How to Let Go of Unprofitable Customers

In some cases, reducing the costs of unprofitable customers’ support services does little to improve your company’s bottom line, and you may have to think about ways to ‘fire’ them.

Before you decide to ‘fire’ a customer, however, make sure that you’re doing so for the right reasons.

Four Reasons to Let Go of A Customer

  1. Declining profitability of specific customers: If you notice that certain customers have become less and less profitable over time, it may be best to ‘let go’ of them by talking with them individually over the phone or in person. Keep this conversation as professional as possible, and stay away from social media or email.
  2. The lower productivity of employees as they deal with unprofitable customers: If unprofitable customers are lowering employee morale and causing frustration among your staff, it’s best to let go of the customers at the root of this problem. In the long run, it’s best to keep your employees happy so that they can serve your profitable customers and foster growth in your company.
  3. Changes in the capacity to serve large volumes of customers: If your company is unable to handle a significant increase in sales volume, it may be time to shift your focus from your unprofitable customers to your profitable customers. Some of your unprofitable customers will likely leave on their own.
  4. Shifts in a company’s business strategy: Every business is unique, and when you change your company’s business strategy, the move may create an opportunity to eliminate some of your least profitable customers in favor of making your profitable customers even more profitable.

 

As always, businesses need to remember their courtesy and professionalism. Otherwise, their actions may backfire, and they may have to rebuild their reputation. For tips on how to ‘fire’ your customers, see this article from Cayzu.

Let Us Help You With Your Customers

Cayzu can help you set up a plan for monitoring your online interactions with your customers so that you can provide outstanding customer service. With our online help desk support software, you can manage all of your customers’ help requests from a single portal no matter if they origination from the phone, email, chat,  your web site, or even Facebook and Twitter.

Cayzu Helpdesk – Make your customers happy!

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