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Fire customers

You can see more about my company at www.osullivanassociates.ie or if you want to make an appointment to see me you can phone +353 1 283 4123.

Okay – you’ve looked at your customers, and you have tried to increase the profit you make from each one of them.  You’ve tried all the tips and tricks you think are appropriate to your business, and you find at the end of that process that you are stuck with some unprofitable customers.

 

Now I want you to assess these customers again.  I want you to factor in some cost of servicing these customers, and then try to assess what profit you make from each of these customers.

 

I know that for most businesspeople even thinking about firing customers is painful, but you have to look at these customers to see if you want to keep them or pass them on to your competitors i.e. fire them.  But to get you past the first step, there must be one customer that you’d dearly like to get rid of, perhaps one customer that everyone agrees, from the shop floor up, that you’d be better off without.

 

It is now your job to manage that customer and ‘fire’ them, by asking them to take their business elsewhere.  You can tell them that you are focussing on the corporate market, that you are  focussing on the consumer market, or are focussing on the rural market, or the urban market.  Let them down gently, but let them down some way.

 

Once you have fired one troublesome unprofitable customer, you will notice you have freed up your time and the time of your staff.  Your sales will become more profitable and you will send out the message that you are no longer prepared to tolerate unprofitable customers.

You can see more about my company at www.osullivanassociates.ie or if you want to make an appointment to see me you can phone +353 1 283 4123.

 

 

Before you take this drastic step, you need to measure the profit that you make from each customer, and this is where good records and an ability to analyse them comes in.  Any accounts staff you have should be able to help you in this regard – they can analyse what is sold to each customer, how much it costs to service each customer and what profit is made from each customer.  Effectively you are looking to do a profit and loss account for each customer, to decide whether you want to keep them.  

If you have too many customers to analyse each individually, you may want to think about stratifying them into classes, where you identify customers by certain traits and you decide whether you want to continue to deal with these categories of customer.  So for example customers that use a petrol station that don’t buy anything other than petrol have to be discouraged in some way.

You can see more about my company at www.osullivanassociates.ie or if you want to make an appointment to see me you can phone +353 1 283 4123.


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