Firing unprofitable clients
post # 460 — October 30, 2007 — a Client Relations post
I had a question I wondered whether you or your blog readers had any opinions on.
Many companies have unprofitable customers. This situation may arise for many reaons including:
* Poor pricing controls – offering large and multiple discounts
* Historic overservicing and undercharging long-term customers
* Lack of understanding of the true cost to serve
Nonetheless, whatever the reason, when companies do find unprofitable customers they need to manage them. They can be made profitable or they can be “fired”.
Do you have any ideas or strategies for actually firing customers? Does anyone have any examples of how their companies (or others) have done this and what the results were?
Regards. Daryn, Sydney, Australia
Well, gang, what say thee?
Nick Mallett said:
I have used a combination of the following propositions:
We are not set up to provide the service you require at a price you can afford. We have certain minimum client care standards and are not prepared to compromise them, even in the short term. Our reputation is everything to us, and to our clients. Clients cannot afford to be associated with a firm which does anything less than its best. I would like to introduce you to somebody whose set-up is more suitable for you at your current stage of development.
It takes sensitivity, but if done well it benefits your firm, the soon-to-be-ex-client, and the referee. The client appreciates your judgment of his problem and the fact that you have suggested a solution, and may well come back when he’s able to afford you.
posted on October 30, 2007