Optimizing Business Success by Regularly Reviewing and Purging Non-Profitable Clients
Optimizing Business Success by Regularly Reviewing and Purging Non-Profitable Clients
Imagine your local McDonald's, where the automated kiosks and self-serve machines run 24/7. When a customer behaves badly or is a time-waster, they are promptly moved to a less preferred machine. This is a seamless process; the machine doesn't care. Similarly, leading e-commerce platforms like Amazon and eBay employ automated systems to handle such clients efficiently, ensuring that human resources are channeled towards more valuable interactions.
No business should be nickel-and-diming their time and resources on poor, non-profitable customers. These clients consume unnecessary bandwidth, leading to a devaluation of your core business services. In the long run, rotating through these unprofitable clients ensures that your valuable human and digital resources are better focused and utilized.
Strategic Review: A Non-Negotiable Aspect of a Business Cycle
Regularly reviewing your customer base is not just a good idea but a critical component of running a successful business. While it's essential to establish benchmarks, the act of periodically revisiting and re-evaluating these metrics is key to sustainability. Poor, non-profitable customers can exact a toll on your business in ways that are both direct and indirect.
Sentence time: The more time you invest in time-suckers and complainers, the less time you have to engage with valuable, profitable clients. When you successfully remove these customers from your pool, you're not only freeing up resources but also offloading the burden to your competition. This allows you the freedom to focus on those who genuinely appreciate and value your services.
Moreover, consistently unhappy and difficult customers are the ones most likely to cause damage through negative word-of-mouth. Rather than risking damage to your reputation, it's often better to have a customer complain about being dismissed by your company than being repeatedly unsatisfied. By ensuring that lesser clients are purged, you protect your brand and customer loyalty.
A Personal Journey in Business Revitalization
Years ago, I had the daunting task of managing a company on the brink of failure. In the first 90 days, I took a decisive approach, firing one-third of our clients and referring them to our competitors. The results were profound. The remaining customers provided a respite during the next period, proving that the culling process was right for the company's survival and growth.
I couldn't help but think of a dear friend who inherited his father's heating and cooling business. Frustrated with his clients, he sought my advice on raising rates. Initially, he showed little interest in implementing changes. But in our third conversation, he reported a complete transformation. He had raised his rates, and the best clients stayed, while the worst left. He was now looking forward to future success, rather than being consumed by the disappointments of meeting unmet expectations.
These experiences highlight the importance of setting clear expectations and consistently meeting or exceeding them. By doing so, you not only retain your best clients but also ensure that your business remains resilient and profitable in the face of challenges.
Conclusion
Companies must periodically review their customer base to ensure that non-profitable clients are not dragging down their operations. By implementing the principles of regular review, strategic culling, and setting clear expectations, businesses can thrive amidst market fluctuations. Ultimately, prioritizing the engagement of valuable, profitable clients is key to long-term success.
Remember, there is such a thing as a bad customer, and sometimes, letting them go can be a good thing for the overall health and profitability of your business.