Yet even the obvious escapes us. Sometimes we tolerate a lower standard because “that’s just the way it is.” This article and download will provoke you to make change. The Customer Quality Checklist asks 25 questions to uncover your Bad Customers. Then I outline a plan to erase and replace them with high-value partners.
What Is a Bad Customer?
There are always exceptions to the rule. A key account, for instance, could be an insane eight hundred pound gorilla. In that case, you take your lumps and enjoy their business. Then there’s the egotistical control freak that also sends a steady stream of referrals. I say entertain the ego and welcome the new business.
Some customers, however, are the perfect storm of problems. They lack redeeming qualities. These accounts are corrupted in multiple dimensions and offer no improvement. You may have even tried to make it work, but goodness eludes you. When it’s time to rate these Bad Customers, consider four metrics:
- Revenue: Bad Customers generate lower-than-average revenue.
- Strategic Value: They are not in a position to help you grow your book of business.
- Stress: Some customers are unreasonable, belligerent, or un-trustworthy.
- Maintenance: They are high maintenance and expect you to cater to every request.
Why Do We Keep Bad Customers?
By nature, Top Sales Reps are competitive. You maximize your income through customer growth. You instinctively avoid customer attrition. So why maintain Bad Customers? There are several possible reasons:
- Need to keep your complete book of business and preserve your territory.
- Don’t have accounts in the pipeline to replace the bad ones.
- Handcuffed to the account because of a friend, favor, or long term contract.
How Do You Acquire Bad Customers?
A high-maintenance, low-value client can sneak up on you. Before you realize what’s happened, they’re tugging at your pants leg. Little annoyances they are. You can acquire them in a multiple of different ways:
- You dropped your price too quickly and marginalized your perceived value.
- You are a giver. You set customer expectations too high too early and now you can’t go back.
- The champion who purchased your product or service has left. The replacement is an anti-sponsor.
- The customer made a purchase above their price range. You sold them something they don’t know how to use.
- The customer was acquired and/or their priorities changed.
- You inherited your book of business from someone else. (Either through a restructuring or new position)
8 Steps to Fire Your Bad Customers
If you have a problem, right now is a good time to fix it. The following is a eight step plan to prune the bad apples:
- Define (or re-evaluate) your definition of the ideal customer.
- Determine if you’re able (or want) to change the customer’s behavior.
- Evaluate your current customer base. Download the Customer Quality Checklist to facilitate the effort. You likely suspect or know who the culprits are. Regardless, give an honest evaluation.
- Conduct a time study on yourself. This is important to understand how you allocate your customer-related time.
- Identify the Customers you consider bad for business. After your evaluations, you need to narrow down your list to only the true delinquents.
- Present a case to management to eliminate the Bad Customers. Outline how the issues effect business. Demonstrate how you will spend your new-found time. Estimate what the revenue lift might be as a result of the change.
- Terminate your Bad Customer. Fire fast. Pick up the phone and talk to them. Explain your shift in strategy. Use this opportunity to refer them to a better alternative.
- Fill your pipeline with new prospects. Nurture relationships to generate referral business.