Is the Customer Always Right?
Businesses often live by the mantra, “the customer is always right,” but customer evaluation can tell a different story.
For B2B relationships, smart managers understand that sometimes a customer is not right for their business. Sometimes you need to fire your customer.
Customer evaluation should be an ongoing process, and “clearing the decks” for the new year is an opportunity to review your customer base to see if you need fire your worst customer.
Here are a few questions to ask yourself:
- What is our gross income for each customer?
- What are our net profit and net profit percentage for each customer and how do they compare to other customers?
- How much time and effort are we spending on each customer and are we spending a disproportionate time on them compared to gross income and net profits?
- Do we have any customers who are disruptive to the business and/or depressing to company morale? These are the accounts that no one really wants to work with because of constant changes to orders, unreasonable deadline demands and more.
- What is our potential to get increased business from this customer?
Customer evaluation starts with asking these questions:
A – Winners: profile why they are winners and send your sales force out to find more like them.
B – Good performers: how can you take them to the next level?
C – Keep: however, if you can’t upgrade their contributions, you need to replace them. Your small accounts and new customers may start here if they are good customers but don’t generate revenue needed to justify the costs. Be careful that you don’t drop an account that has potential for growth.
F – Fire immediately
Customer evaluation can help you stay on top of who is good for your business and who is not. For the non-performers, consider making them someone else’s burden and focus your attention on finding winners.