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
- 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.
- 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.
- 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.
- 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 offers help desk software to streamline your customer service, but we also want to help you learn how to better take care of your customers even if you don’t use our software. While you’ve more than likely heard the adage that the customer is always right, what do you do when you feel without a shadow of doubt that the customer is wrong? Do you call them out on it, half blame them, run away or do you take the full blame?
Who’s the Boss?
No matter how far up the ladder you might be or how many bosses or managers you answer to, you have to remember that your “big boss” will always be the customer. Without your customers and their financial support, there is a good chance that your business wouldn’t be here today. Just like you have to answer to your boss for your mistakes, the same rules apply to your customers.
There Is No Right or Wrong
Instead of focusing on whether or not the customer is right, your time will be better spent simply rectifying the situation. No matter if you have a large business or a small business, every single customer is essential to your overall success. Treat the customer with respect even when it’s obvious they are placing the blame where it doesn’t belong. Sometimes the customer simply wants someone to listen to them and doesn’t know how to go about it or express their grievances the right way. Don’t make them feel bad or unwanted because their communication skills aren’t great because you never know what type of day or problems that the person had to deal with prior to talking with you. Maybe there was a death in their family, maybe their car broke down and they don’t have the cash to repair it, whatever it was, be the bigger person and show compassion. You will be rewarded for it in the long run.
Should You Fire the Customer?
If you truly feel that a customer is wrong in their complaint and has been wrong before, then it may be time for you to let that customer go. Just like you have to let go of employees who don’t contribute to the success of your business, the same is true of unprofitable customers who seem to do more complaining than anything else. While you might feel uncomfortable letting customers go, sometimes it’s the only option that you have. This is not a decision that should be taken lightly and if you do decide to fire a customer, make sure to have documented reasons to do so because the last thing you want is a social media hell storm on your hands (Help desk software like Cayzu can help track customer history).
Educate the Customer
When the customer is genuinely wrong, be open and honest and show them why they’re wrong in a tactful and professional manner that will help them rather than embarrass them. Your customer probably isn’t as familiar with your products and services as you are, which means that they probably aren’t as knowledgable about the full capabilities of your product or services as you are. Treat the customer with respect and view every complaint as a learning opportunity for the both of you. Remember how essential true customer support truly is for the success of your business.
Keep the Customer Around
Before you respond to a customer complaint, remember how powerful your customers are. Word of mouth is an effective marketing and advertising tool, but it’s a tool that can turn against you. Make sure that your customers have nothing but great things to say about how you treat them when they talk with friends and family. If you seem unwilling to help a customer who has a genuine complain, they won’t hesitate to tell others about their awful experience, which can keep you from expanding your customer base because when it comes down to it, customer service is the new marketing!
Let’s face it, everyone at one time or another has wished that they could tell that pain in the rear customer to go fly the proverbial kite! I’m talking about that customer that is never happy, no matter what you do for him! These unprofitable customers will usually fall into the 80/20 rule, where 20% consume 80% of your time. This poses a serious dilemma for most businesses in this situation. Can you afford to fire a customer and even worst, have them spread negative feedback to other current or potential customers?
You’ve fired employees who either violate company policy or who represent the company in a negative way, so couldn’t you go about firing your customers in the same way? In the age of social media it’s easy for one customer’s complaint to be read by hundreds of people in a matter of minutes so be cautious. Just like there’s a right way and a wrong way to fire an employee, the same applies to firing a customer.
Reasons to Fire a Customer
It’s one thing for a customer to have a genuine complaint or grievance about your products or services, but customers who seem to complain just to complain or always trying to get something for free need to be addressed. Profitability is required for any business to survive and if a customer is WAY more trouble than they’re worth, why keep them? Spending time on unprofitable and unappreciative customers keeps you from pursuing valuable money making business opportunities so always keep that in mind.
When I say “fire a customer,” I mean terminating any type of agreement that the two of you might have together. I will be the first to admit that it’s very unsettling to treat a customer this way, but if you know that you’re providing a top notch product and or service coupled with stellar customer service, than you’ll be doing yourself and your business a favour by cutting these types of customers loose.
Firing Customers the Right Way
The first thing that you’ll want to do is make sure that you carefully and thoroughly document any problems that you’re having with the customer, which is similar to how you’d write up an employee. This is always easier with a help desk solution like Cayzu, which allows you to track internal notes that customers don’t see. You aren’t doing this to complain about the customer on social media like they might do with you, but instead so that you have legitimate proof if it comes down to actually having to fire the customer.
Next, remember that you’re a professional and conduct yourself as such. What this means is that you want to be respectful and refrain from using negative terms while breaking the relationship with your customer. Simply try your best to find a diplomatic way to show that the relationship between the two of you isn’t working and that this is for the best for both parties (this is important because the customer will see you as the aggressor so make sure to take the blame and don’t point fingers!).
Never fire your customer through a letter or email. It’s best to do it over the phone or in person. Firing someone through a social media message or email is the equivalent of breaking up with someone over a text message. If the situation demands it, don’t hesitate to ask the customer to sign a non-disclosure agreement. This step might seem extreme, but it’s sure to help you avoid any headaches in the future. Finally, you should also give the customer a parting gift (or refund) to show that there aren’t any hard feelings no matter how you might otherwise feel. This makes you look like the bigger person and makes them feel as though they got something out of the deal which will also limit your exposure to negative feedback about your business on social media.
Disclaimer: Firing a customer is NEVER easy and I would NEVER suggest you do it unless it is absolutely your last resort. Explore all options to work things out first, even an unprofitable relationship can turn around or spawn into an introduction to a more profitable customer.