In Jeb Blount asks the question: Are all customers good customers? Learn when it is time to walk away.
I recently got a question from a Jeff, a business owner from Wisconsin, that got me thinking: are all customers good customers?
Here is Jeff’s Question:
After writing a very thorough proposal some customers ask for a line item breakout. I feel the only reason they do this is to go online and look for lower prices for the hardware. How do you tell them NO without offending them? I have tried explaining to that what we sell is a complete solution. My question is, if they insist on a line item break out should I just walk away?
Well Jeff, here is something to consider:
Are All Customers Good Customers?
The answer for me is no. Some customers see the value you and your company bring them. They appreciate your ability to solve their problems and they are willing to pay you for that service. These are also the customers who respect you and the people who work for you and who understand that as a business you are entitled to a fair profit.
Other customers nickel and dime you, run you and your people ragged with service demands that sap your time and your profits, are late paying bills, and show you no respect.
Fortunately for you, the Pareto Principle applies quite well in these situations. If you do some analysis, it is likely you will find that 80% of your profits are coming from only 20% of your customers. So is it really worth it to take on a new customer who starts the relationship off by discounting the value you bring to the table by commoditizing your service? Or are you better off finding customers who fit into that highly profitable 20%?
So answer #1 is yes – walk away. I do it all of the time. Of course it took me years to figure out that all customers are not good customers but once I did life got so much better. I’m not saying that it is easy to walk away from business. However, it is smart.