From “killer customers” to “killer profits”

One of the most damaging statements every made in the history of business is:

“The customer is always right.”

Why is this one of the most damaging statements ever? Because too many people take that statement and expand it in their minds until they think that they have to do anything and everything for every customer.

Not all customers are created equal!

We’ve all had customers that want everything in the world, but don’t want to pay for it. We’ve also all had customers that won’t actually listen to our advice, then get upset when they haven’t had their problems solved.

These customers are called Killer Customers, and you need to learn to identify them and deal with them appropriately, or they will suck the life out of your business.

This idea – that I could run my business without bowing down to every demand of every customer – was a revelation to me. I first grasped the concept when I read the book Killer Customers: Tell the Good from the Bad–and Dominate Your Competitors. It’s a great book; you should add it to your business library.

The point of the book is that you should get really good at telling the good customers from the killer customers, and then ditch the killer customers so your competition can have them and get bled to death (that may not be how the author would summarize it!).

How to segment your customers

In my experience, the keys to customer segmentation are the following:

1. Know your target customer very well
2. Train your salesforce to find target customers and provide incentive to make sure they don’t sign killer customers
3. Have a process for continuously reviewing your customers to weed out the killer customers that you accidentally let on board
4. Have enough service offerings to match the various needs of  your clients’ desired service levels

Doing any one of these things will help you out a lot, but doing all four will result in increased profits, happy customers, and happy employees – a combination that’s hard to beat.

And what happens when you weed out those customers that tie up all of your time, never listen to your advice, and pay you 60 days late consistently?  If you execute on the three customer segmentation practices described above on a regular basis, you will see profits rise consistently over time.

MRC