Don’t Fire Your Customers, Yet

Times are tough. There’s too much work to go around and some days it seems like you’re spending all your time trying to please customers who never seem happy. If this sounds familiar, reading Seth Godin’s more, More, MORE! could put you over the edge:

“Firing the customers you can’t possibly please gives you the bandwidth and resources to coddle the ones that truly deserve your attention and repay you with referrals, applause and loyalty.”

If you’re going to “fire” customers, how can you be be sure that you’re only dumping those customers you can’t possibly please? You could try to segment with price deals, but that could be a very bad idea.

In When Customer Loyalty Is a Bad Thing, Timothy Keiningham and Lerzan Aksoy tell us that “only 20% of a firm’s customers are actually profitable. And many — often most — of a company’s profitable customers are not loyal.”

The authors continue:

“Profitable loyal customers on the other hand are almost always driven by differentiating aspects of our product or service offering. The key to a successful loyalty strategy is to become crystal clear as to what these are, and to focus on tangibly improving these elements.”

Seth is right: You want to focus your energy on pleasing your truly rewarding customers. If it’s not clear exactly who they are, make sure you’re spending enough time on your core points of distinction.

[Thanks to Arie Goldshlager, who posted a link on Twitter that led me to the HBR articles]

2 Comments On: Don’t Fire Your Customers, Yet

  • Jorge Guzman | March 2, 2010

    It seems to me a very thin line, as clients are hardly ever lone wolves who never interact with other potential clients, so in the end if you choose to fire a customer whom you know will not buy a peanut from you, you might as well be firing many other potential clients who could have been sent to you by the client you first chose to fire. I’m quite certain it has happened to me more than once and it’s not too far fetched to think that it will happen again. How can I be certain that firing a customer I can’t please will not backfire later?

  • almcfarland | April 26, 2010

    The original article misses the point. Loyalty isn’t the issue, profitability is. More on that topic at: http://bit.ly/b5N9tZ

    But as Mr. Guzman says, the issue isn’t even that simple since word of mouth spreads so easily today. “Firing” an unprofitable customer could be a step towards eliminating profitable prospects. Tread with care!

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