How to determine good customers from bad customers (Part 2)
As business owners and managers we have seen how bad customers can have a negative impact on your staff. It is a sight that is all too familiar to anyone who has worked for a service-oriented business to see the painful look of resignation that etches the face of a staff member who inadvertently gets a phone call from one of these bad customers. It is a fact that it is necessary to work with these types of customers but there are also available alternatives.
Customers and clients can be divided into four distinct categories:
A. Excellent clients
- Values work you’ve done
- Pays on time
- Never argues about prices or fees
- Wants quality service
- Refers other good customers
- Always seen in your establishment and buys often
- Friendly, your staff looks forward to working with them
- They offer a potential for growth
B. Clients that are quite similar to Client A but miss one of the cited characteristics
C. Clients that are okay to work with and pays their fees – but not really profitable and will not offer new sources of revenue growth.
D. These are clients who do not pay on time, argue about the fees, overly demanding of your business’ resources but refuse to pay for the true value of the effort that was expended on them. They can also be unpleasant in their dealings with your staff.
From these categories you can easily determine that the A clients are the best of the bunch, the B and C clients could be the main sources of your business revenue, while the D clients are the worst clients.
After identifying these categories you should then proceed to do the following:
- Arrange a meeting with your team with the task of classifying your clients based on the categories given above. Let them classify the clients individually. Keep their focus on the job because these meetings usually deteriorate into a griping session.
- After having done the individual classification, unanimously agree on who the D clients are.
- Never argues about prices or fees
- Discuss among yourselves how to service the A clients, B clients and C clients differently. It could be a good idea to offer different “service” levels for each.
- Then discuss how to deal with the D clients a lot of creative ideas usually come out during this part of the discussion but some of the more successful tactics that can be used are: increase the prices to D clients – this way you either drive them away or move the client up to the C category. Another tactic is to sell these clients to your competitor. This can be a good way to generate extra revenue on your D clients.
Periodically review the client classifications and ensure that any decisions that you make are rigorously implemented by the team.
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