Not Every Customer is Worth Your Time!
As a business owner, you will eventually come to understand that customers are both the thing that keeps your business going and the bane of your existence. The old saying " The customer is always right" is certainly not true for all businesses. While customers pay money for your product or service, they can also be very demanding, sometimes to an unreasonable degree. For many businesses, the best customers are the ones that are consistent, pay well, and cause the least amount of trouble. On the other end of the spectrum, bad customers are the ones that cause trouble and are simply not worth the revenue. Today, we are going to examine three reasons why a customer might not be worth your time as a business owner and what you should do to remedy the situation.
Reason #1 - Energy and Resources
Your business only has a certain number of resources that it can devote to serving customers. Customers that take more than their fair share of a business's energy and resources aren't ones you want to keep around for very long. These customers could be difficult to schedule, always have snarky feedback, or just difficult to please in general. While this characteristic might not seem too detrimental at first glance, it's important to understand that every minute spent on these customers is a minute lost for a different customer. The opportunity cost of overserving a needy customer is the experience of a potentially better customer. Periodically, businesses need to evaluate their offerings and customers to see if they're going in the right direction and these customers are typically the first on the chopping block.
The way to deal with this type of customer relationship is to set boundaries. Limit the amount of time and energy that you and you and your employees devote to serving customers beyond their scope. While this may upset some customers, it's important to remember that being able to better serve all customers is better than having to constantly reallocate resources from an overly needy customer.
Reason #2 - Low ROI
A low return on investment for certain customers is a common problem for growing businesses. Over time, businesses will evolve their offerings as a result of changes in capabilities and capacity. This often leads to a set of legacy customers that have lower price points for outdated offerings. These arrangements might have worked for the first set of customers, but they are no longer compatible with the current iteration of the business.
The way to resolve customers that have a low ROI is to restructure the offerings. This can be a tricky task because no business wants to lose a customer and the conversation is not easy. As the business owner, you need to take ownership of the client relationship and tell them that their pricing or level of service needs to change in order for you to maintain them as a customer. This conversation will go one or two ways:
The customer will accept the new arrangement because the business owner gave compelling reasons why the change is needed.
The customer will not accept the new arrangement and the business will be able to use that capacity to service another customer.
Either way, the business is going to increase it's ROI on the customer and ultimately support a more healthy and sustainable business operation. It's important to remember that this strategy is not advised if there are no other customers to fill this capacity.
Reason #3 - Employee Turnover
What do you think is more important, a business’s customer or its employees? I would argue that without employees, a business can't serve any customers, which makes the employees the number one priority in a sustainable business operation.
Some customers cause employees undue stress because they simply aren't great to work with. This could be because of their communication style, structure of the engagement, or clashing personalities to name a few reasons. It's important to remember that in most cases, a good employee is worth much more than a good customer. If any customer is causing your employees to reduce their efforts or quit, then that customer needs to be fired as soon as possible.
The customer isn't always right! And more importantly, the customer isn't always right for you! As you and your business grow, so will your customers. It's critically important for you to understand the customers that are worth keeping and the customers that need to be fired, and understanding these three potential negative impacts is an important first step in refining your customer list!