Sales management requires more than using your overall knowledge; it also requires continuing day-to-day analysis and tough decisions. One of these tough decisions – one that maybe shouldn’t be so tough after all – is the decision to fire certain customers even if it means losing them (and their revenue) to a competitor. Here’s how to recognize your worst customers, why it makes sense to fire them, and how to do it:
Just Who ARE These Bad Customers Anyway?
Contrary to the time-worn adage, the customer isn’t always right. Sometimes even a customer who contributes substantially to the bottom line is problematic and not worth the effort to support and serve their excessive needs and demands. These bad customers tend to be high maintenance. VERY high maintenance. They take such a disproportionate amount of your time and energy that you end up underserving your better clients, and that puts those customer accounts at risk.
Frankly, these terrible, horrible, no good, very bad customers are never satisfied. They want – no, they demand – more, more, more! They require more attention, more time on their projects, more communication, and more hand-holding. They are controlling, domineering, and they micro-manage. They demand better pricing and more flexible payment terms. They are often critical of your company, your products or services, and your people, too. What’s more, they can be so ill-tempered that your staff hates dealing with them. (Can’t you just picture the eye-rolls when Bad Customer Benny is on the line again?)
And don’t forget that the customers you serve can affect how the public at large views your brand. You are the company you keep, so keeping a high-maintenance and high-profile irritant as a customer sends the message that your organization has a high tolerance level for bad behavior. It also might convey (rightly or wrongly) that your company is in such dire financial shape that it must put up with undesirables.
Why You MUST Fire These Bad Customers
When you recognize the bad customers and their impact on your organization, it’s easy to see why you must fire them. While setting them free will remove their revenue, you might be able to replace that income with one or more new customers who pay quicker and argue less.
Setting a bad customer loose can empower you to dedicate resources to serving other customers better. It can remove a certain level of stress from your staff, too. It can even enhance your brand by sending a message to the public that yours is a quality organization serving quality customers.
Finally, as a matter of good sales management, these bad customers must be fired because they aren’t as profitable as they might first appear. No matter the size of the account, you must consider and evaluate the time, energy and expense of serving that client. And this deeper dive usually leads to the discovery of what your gut already told you: they are eating you alive, one financial bite at a time!
How to Set Your Worst Customers Free
The first step in setting your bad customers free is to use data to confirm how much they are costing your organization. You might even compare them to customers you perceive as being more profitable. If your customer service data isn’t set up to quantify and reveal problem areas, make sure you start recording time spent on customer interaction and account servicing activities. This could be in your CRM or another system, but make sure you have the data to support your suspicions. (When you dig into the numbers, you might even discover other bad customers in hiding!)
Next, share your concerns with the customer and explain why, from your perspective, the relationship is not working out. With an open and constructive dialogue, you might find ways to improve the situation and rescue the relationship. For example, you might learn of a critical flaw in your processes that frustrates the customer. Or you might figure out that changing customer interface personnel on your side makes a world of difference. Even if simple changes are not obvious, letting the customer know they are close to being let go can often improve the arrangement. After all, change is stressful and will force the customer to find a new provider. And THAT might be tough to explain to their boss!
Finally, if the customer relationship doesn’t substantially improve based on this open dialogue, go ahead and sever the business ties. It won’t be easy. It might not be pretty. But it will almost certainly benefit everyone in the long run and make overall sales management easier.
Eliminating the Problem Before It Becomes a Problem
Of course, whenever possible, it’s best to fire a bad customer before they become a customer in the first place. That requires first understanding what your ideal and acceptable customers look like. In a recent survey we conducted here at Sales Xceleration, only 55% of respondents representing small- to medium-sized businesses said they have a well-defined target market. Keep in mind this is about market-level insights, but it would be hard to imagine that such businesses who don’t understand their markets in the first place would have a better idea of their ideal individual customers.
Also, make sure you recognize red flags that signal a customer relationship is going sour. In most cases, there are warning signs along the sales management path. If you can identify and address these problems early, minor adjustments can be made that could minimize the need for a total break-up.
The Bottom Line:
Nearly every business relationship begins with the hope that it will mutually benefit all parties. But at some point, for various reasons, the relationship can go off the rails. Even if you can’t avoid engaging in a bad customer relationship up front, you might be able to take corrective action early. If that doesn’t work, fire your worst customers. At Sales Xceleration, our licensed Advisors have helped many small- to medium sized businesses identify and remediate bad customer relationships. As a result, these businesses have been able to concentrate on providing better service to better and more profitable customers.
To learn more about how to recognize your worst customers and improve your sales management practices, click here to connect with a Sales Xceleration Advisor in your area. Or you can contact us today at 1.844.874.7253.