marketing effectiveness

With all the marketing focus on getting clients, let us not ignore the clients you should get rid of.

“You’re crazy!” you say, “Why would I want to fire a customer?”

Here’s why:

The client is unprofitable or distracting to the rest of your business. They may have been good in the past, or perhaps you should never have taken them on.

Here’s the thing – it’s possible you’re putting way too much attention and effort into a small a number of customers that are never satisfied. This is at the expense of other customers who are happy and complementary of your work.

When your company is small, you take in any business to build it up. When times are good, perhaps you take on any customer. But as you grow, it’s prudent and profitable to become more selective. And as business slows, you should be less tolerant of marginal or unprofitable customers. They can actually threaten your business.

When to fire a customer:

  • The job is too small, and the cost of serving them takes most of the potential profit.
  • They are too large, and keep insisting that you lower your price — until the work is unprofitable.
  • They are too different. They buy something that you have been selling but you no longer want to sell. For example, a print shop wants to close its graphics department, or a landscape contractor wants to close its maintenance section.
  • The job is too distant. When you had a lot of customers in their area, it was worth serving them; but now that you only have a couple, you actually lose money on them.
  • They are more trouble than they are worth. These customers argue with you, are never satisfied, are slow to pay, or all the above.

Now, obviously it’s not easy to fire a customer. Here are some suggestions to soften the blow:

  • Refer them to someone else that you know would be more appropriate for them. Sending business to someone else may entice that person to send a good referral back to you. However, don’t send problem customers to your good referral sources!
  • Give them some warning. “After this next project, we won’t be able to work with you any more.” Tell them why.
  • Instead of getting rid of a customer, ask yourself how you can turn an undesirable one into a good one?
  • Then when you tell them why you can no longer work with them, they may be able to change something that will make them a good customer.
  • Raise your price. They will either leave, or it becomes profitable and more enjoyable.
  • Change the way you work with them. Instead of 1 on 1, get them into group workshops, or steer them to online programs.
  • Change the terms of your work. Instead of fixed price, charge for your time and materials. Make sure you get change orders for extra work they request. Overcome your timidity and be polite but firm: “Yes! We’d be delighted to do that for you, and it will only cost you an additional…$$.”
  • Require pre-pay or payment by credit card, to cure slow payers.
  • Be the squeaky wheel. Stay on them. Oftentimes we don’t hold clients to the agreements they make with us. We let them slide and then we moan about it. Remind them what the agreement is, and request firmly that they abide by it.

You have nothing to lose by doing any of these things. Bad clients lower profits and distract your business. Since you were going to fire them anyway, they just might work.

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What’s keeping you from growing your business to the size and profitability you want? Has your growth been slowed by things that keep dogging you? How can you smash through those barriers and move to the next level?

Here’s what I hear all the time from owners:

— You’re a solopreneur, and you want to grow beyond what you can handle by yourself.entrepreneurial vision

— You have a handful of employees, but everybody’s reporting to you, driving you to a frazzle.

— You’ve got managers, but you’re still running day-to-day operations, and you’d love to hand this off to a trusted top manager, to free you up to focus on growth—and a vacation!

If you’re nodding your head yes to any of these, check out our free webinar, Smash Through the Top 10 Barriers to Growth, on June 4.

I’m doing it jointly with two other small business experts: attorney Nancy Lewellen and productivity consultant Rosie Aiello.

Here are the details.On that page, scroll down to see the 10 barriers we will cover.

I will focus on three areas:

1. Management style for growth. Make sure you’re not the bottleneck to your company’s growth.

2. Profitability. See how you stack up against the 12 Principles of Profitability.

3. Marketing & Sales. Make sure your Magic Chain of Marketing has no missing links.

This free webinar will be an exciting tune-up for you, to help you quickly discover ways you can overcome your own growth barriers.

Check it out and sign up now while you’re thinking about it.

Call me at 415-491-1896 if you want to find out if it would be right for you.

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