If You Want A Profitable Business, You Need To 'Fire The Wrong Customers'

Business Insider

The key to dominating your industry is knowing exactly who the right customers are for your business. 

In his book  “ Exceptionalize It! ” Lior Arussy says that the  time that you're spending with the wrong customer is time wasted that you could have been spending with the right one. And the right customers are the only ones who will stick by you through good and bad times.

Although it may seem like  a good strategy to satisfy every customer that comes your way, unless they contribute to your long-term goal,  they will end up doing more damage than good.

Arussy,  who is the founder of customer research firm Strativity Group and  has worked with Mercedes-Benz, Capital One, FedEx and other industry leaders,  says you need to get rid of these  unprofitable people by recommending them to one of your competitors, or simply telling them you don't want their business any longer.

So how do you know who the wrong customers are?

The author says  that you first need to  pay attention to their expectations.

Does your business satisfy their needs? If their expectations far exceed what you can do for them, and right now you don’t have the resources to meet the level of value that they’re expecting every time, then perhaps it is better for them to be customers at a different company.

If they’re looking for a different type of service or product entirely,  you may lose a lot of the right customers by changing your business strategy to satisfy the needs of the wrong ones.

Second, you need to research your customers.  A few years ago, Sprint sent letters to a number of its customers and advised them to find new phone carriers because Sprint no longer wanted their business.  It turned out, the company decided to send these letters to people who called the call center 50 to 100 times on a monthly basis.

“At that point, it’s not that something is wrong with your product, but rather, those are abusive customers,” Arussy tells us. “They are taking resources away from the customers who are actually profitable.”

For example, if you spent a certain number of hours on the phone with these customers every month, your valued customers would not be able to get a hold of you. 

Marketing guru Seth Godin also discusses these "wrong customers" in a blog post  by calling them " angry cheapskates."  He writes:

"... when you find great customers, they will eagerly co-create with you. They will engage and invent and spread the word.  It takes vision and guts to turn someone down and focus on a different segment, on people who might be more difficult to sell at first, but will lead you where you want to go over time."

If you're a smaller company, Arussy says you can even do some research about your customers by checking out what they're blogging or complaining about. If you find out that someone is repeatedly bashing companies online, it might not be worth it to do business with them.

The bottom line is that “you need to get rid of the abusive customers,” he says.



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