Louis XVI of France, Charles I, and many other kings have shown that there are limits to the king’s power.
Every business has its good customers and its customers from hell. Often both are given the same prices and the same effort is given to service them. This continues even though the unliked customers require more time and effort to manage. They are constantly complaining, withholding payments while their complaints are being addressed and when the other customer calls with a genuine problem the resources are unavailable to serve them. This results in your best customers getting the worst value for their money.
There are two tactics that will help you re-establish value proposition being offered to customers:
- Make the bad customer pay for the extra effort. Charge the customers that require the most effort extra – they cost more. Do this upfront. Charging late fees will only give them something more to contest and may cost you more than fees earned. If they complain, say this is the cost of the service you are offering. Detail the efforts you make, without complaining.
- Stop investing in them. Exclude the bad customers from marketing campaigns, stop making courtesy calls, and let them come to you with their orders.
These tactics will probably cause you to lose some of these customers; however, chances are these are not profitable relationships. The Pareto principle would suggest that 20% of your clients are taking up 80% of your resources. Take the savings in time and money and invest it were the profits are – your better customers. You will also have more resources to find new customers. When the poor customers say they will go to the competition, let them and enjoy knowing that they are about to get an unprofitable customer.
The argument the customer is king is often used as an argument to justify meeting the unreasonable demands of clients. The fact that the customer is king does not give them the right to abusive. Just like anyone who abuses power will find himself out of power, your customer’s power depends on your wanting to be his supplier.