Compost Customers and Rake in the Profits this Fall
As we settle back into “business as usual” this Fall, it’s a practical time to redefine what “business as usual” is for your company. A critical area to focus on is your customer profitability, by taking the time to identify which customers are unprofitable, and instead of taking the conventional approach to firing them, find a way to restore them to profitability.
Firing your customers can be like throwing your Autumn leaves in the garbage. You can rake up your leaves in the Fall and throw them out. It feels like an accomplishment and a relief to have them gone. But what if you put those leaves to work for you by composting them instead, resulting in sustainable growth by enriching your garden next year? Composted customers provide a medium in which your business grows and flourishes.
5 Ways to Compost Customers and Rake in the Profits this Fall
1. Talk to them. Find out if they love you, tolerate you, or hate you, and examine what’s making them unprofitable. You may be in for a surprise… when I go through this exercise with business leaders and their teams, we often find that self-inflicted wounds on the part of the vendor company are the true culprit. Identify your customers’ problems and tailor unique solutions for them that are practical for both of you. Perhaps most importantly, determine what their future needs will be and help them reach their goals.
2. If your self inflicted wounds are the cause of the issue, fix the problem. In many cases, you may be over-servicing them. Find more cost-effective ways to serve them or change your pricing to better reflect the value your customer is receiving.
3. But if the problem is their bad behavior, you need a different strategy. If they love you or tolerate you, it’s worth jumping into that pile of leaves to see if you can make it fun and profitable for both of you by having a “how do we make this work for both of us” conversation to correct bad behaviour. Customers can act like over-indulged children. You could be facilitating that behaviour by giving in to continuous demands for lower prices, special services, or by letting them control the payment process. Customers should guide your relationship with them, not dictate it.
4. If they hate you and the challenges with profitability stem from their bad behavior, it may not be worth investing the time and effort to turn them around. This is a great group of customers to test your Fall price increases with! You may be able to tweak prices just enough to get them back to profitability, or else they’ll fire themselves and take their tantrums to the competition. Either way, you have everything to gain, and nothing to lose but the red ink.
5. Touch base with customers you haven’t heard from in awhile. Determine if they’ve moved on or if they need something more from you. Knowing where you stand with them will reveal if more marketing time and money is required, or if that time and money would be better used elsewhere.
Get in the habit of Identifying unprofitable customers before they do business with you, by understanding the kinds of behaviors on your part and theirs that turns them from a great new account into a vampire customer who’s bleeding you dry. It will save you “firing” them later.
Autumn is the gateway to the lucrative holiday season. Tweaking your customer base for high performance now could make this your most profitable year ever. The practice will continue to grow your company into a healthy, sustainable business for years to come.
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