Are Any Of Your Customers Unprofitable?
It is very difficult to turn down potential customers or stop working with existing customers. However sometimes you may find that some of your customers are costing more to your business than they are generating and they may also be diverting your attention from more profitable clients. You may not have looked at your customers in this way before but you may have noticed signs from your customers and potential customers that all is not well.
So what are the warning signs that you need to look out for and that may indicate that you don't want to work with a particular customer any longer or not take similar customers on in future?
Want everything done very cheaply. Often the customers who want the lowest price, become the biggest problem further down the line. Watch out for customers who try to negotiate your prices down dramatically.
Complain constantly and are never satisfied. Customers who complain constantly and are never satisfied can be a real problem for the business. They will take up a lot of time and become very costly.
Contact you at all hours. Customers who contact you at all hours can be extremely disruptive to your business. They will email or phone you at any time of day or night with their demands.
You feel a sense of dread at the mention of their name. This is a very obvious way to notice potentially unprofitable customers as they are impacting how you feel and you don't want to deal with them.
Set impossible deadlines. Unprofitable customers are often those who set impossible deadlines and want everything done immediately. This is not only disruptive but may cause you to delay work for other clients.
Pay late or not at all. Where a client does not pay your invoices within the payment terms or doesn't pay without lots of chasing, they are probably unprofitable to you as you will be spending lots of time chasing their payments.
Try to get you to do extra work for the original price. Customers who try and say that they thought extras were included or expect you to do more than was agreed for the original price may become unprofitable as you will be spending much longer than you are charging for.
Don't take your advice or listen to you. Customers who are paying for your help but are not taking your advice or listening to you can take up a lot more of your time than planned. They may also end up trying to pass responsibility back to you for problems they have created.
Take up a disproportionate amount of time. Unprofitable customers often take up a disproportionate amount of your time to what they are paying you for. They may be contacting you a lot, asking you to do lots of extras, changing their mind a lot, not meeting deadlines and not doing as you ask, which can all result in extra work.
So if you notice any of the above warning signs you may want to consider whether or not you want to continue working with a particular customer. Don't make a hasty decision. Understand what is actually happening and if you feel that your business will be better off without them, maybe it is time to stop working with them. This can actually be very liberating and result in you being much better placed to service your other customers and to take on new clients.
This article first appeared in the November 2010 edition of the Makin It Happen - Coaching, Mentoring and Stress Management newsletter.
To find out more information or to use any of our business coaching, business mentoring or stress management services, please call Liz Makin on 01780 765270 or email her at Liz@makinithappen.co.uk to arrange a free no obligation consultation.
