Should You Fire Your Customers?

If high-maintenance, low-value customers are monopolizing your resources, it might be time to let them go.
August 21, 2012

Every company has a Bob. Bob comes to the showroom once a month, kicks a few tires, and says he’d like a new car but doesn’t know if he wants to pay that much. Bob wanders around the building until you promise him free car washes for life if he’ll just give you his business. Bob says he needs to think about your offer and leaves. 

My first question isn’t what the heck is wrong with Bob (although it’s a pertinent question). Instead, I ask: Why aren't you firing Bob?

You're Fired!

Companies are afraid to lose customers—let alone fire them. Businesses need volume in order to be efficient and keep production costs down. However, when you analyze your business to find where your profit centers are, you’ll sometimes find that your biggest customers aren’t delivering the most profit. In fact, they’re probably detracting from your ability to deliver excellent service and products to the people who are helping generate a profit.

Identifying Bob

The word “partner” is overused in business today, but you should think of your customers in those terms. There are clients who want you to win (partners), but there are also clients, like Bob, who are price-buyers. Differentiate your partners from your price-buyers; and place a higher value on partners who want to see you win. These partners realize that if their supplier is successful, they’re winning as well.

My company, Leggett & Platt, had a customer we went the extra mile for; we constantly brought the client innovative, exclusive products to help set them apart from their competition. Then, we had an epiphany: It’s not necessarily what you want your customers to be that matters—it’s what they are that’s important. We eventually realized that this customer was a price-buyer, stopped trying to push them outside their comfort zone, and simply let them be.

Invest Your Resources Wisely

If you had 20 percent more time to devote to sales and marketing, what would you do? How much more of an impact could you make? How much more effective could you be? What kind of business development could you invest in? The answers are invigorating, aren’t they? They could be game changers for your business. And here’s the secret: If you fire the customers who don’t pay you back, you’ll have 20 percent more time to spend on the ones who do. 

Let the competition deal with low-value customers. If your service and your team are good enough, you’ll gain that business back with stronger clients.

Why Stronger Clients Are So Valuable 

Not only do “partner” customers make you more profitable, they also make your company better. They’re the ones who challenge you, who work alongside you, who help you as you help them.

To be successful at targeting the right clients, you have to determine what a high-value customer looks like to your company. What’s most important to these people? How are you confident that you can offer products, prices, and services that are compelling to them? Rather than selling to everyone, you need to segment your customer base efficiently. You should be talking to each segment differently, anyway, but you’ll never get the return on investment you want if you’re not speaking directly to the people you can partner with.

Bobs can be distracting; it seems as if they’re endlessly dangling invisible carrots over your head. The truth is that Bob will never invest in you, so you need to reallocate the resources you’ve been devoting to him and spend them on the high-value customers who truly appreciate what you have to offer. Every other company may have a lot of Bobs on the roster, but yours doesn’t have to.

Mark Quinn is a Segment VP of Marketing with Leggett & Platt and has more than two decades of experience in the mattress industry. Quinn writes a bedding industry and marketing blog called Q's Views.