Daniel Sitter

Fire Customers As Neeeded for Profitability

Weeding out undesirable and costly customers may be difficult for some entrepreneurs, yet a necessary decision towards ensuring our ongoing successful operations. Just how do you go about firing those customers?

Do you really want and need every potential and existing customer? Is every customer right for your business? Perhaps not. I recently wrote concerning this topic in my article "When To Fire a Customer" and needed to further expand upon those thoughts. Seth Godin says "If you've got something worth paying for, you gain power when you refuse to offer it to every single person who is willing to pay you."

John Reese notified me over the weekend that my Idea Sellers blog made the final cut for participation in their popular Blogrush service. They personally reviewed all of the participating blogs and removed 10,000 from their ranks. Reese said that my blog "has passed our strict quality guidelines and criteria -- we believe you have a high-quality blog and we are happy you're a member of our network!" They fired 10,000 customers and believe that their company and all of their their remaining customers will benefit tremendously by this act. They exhibited bold and necessary decision making.

"Yes, breaking up may be hard to do, but when a client is costing you money or making you crazy, it can be a smart move. Severing unprofitable or exhausting relationships can, after the initial fallout, boost your company's revenues. Most people are not looking to get more than they pay for, but there is a group of people who will take and take with no respect for my time or my employee's time" says business owner Debra Brede in a recent Business Week article.

"Fire them. Politely decline to do business with them. Refer them to your arch competitors. Take them off the mailing list. Don't make promises you can't keep, don't be rude, just move on" says Godin.

CEO John Chisolm says "Customer satisfaction hugely affects the calculation of the customer's value. Satisfaction is a primary driver of customer behavior. In large part, it determines how the customer acts toward your employees and what he or she tells friends and colleagues about your products or services. Satisfied clients positively influence employee satisfaction and are more likely to spread favorable word of mouth about you. Because of these intangibles, a satisfied customer is worth much more than the nominal profit of that customerand far more than a dissatisfied oneeven if revenue from the two customers is identical. Consequently, companies should be particularly sensitive to any thought of firing satisfied customers." His thoughts and actions are right on target.

The bottom line is that we must be continuously monitoring our entire customer base. As the source of our revenue and the objects of our resource allocation management, the correct mix of desired customers is critical for the ongoing profitable operation of our company.

Being busy is not the same as being profitable! Weeding out undesirable and costly customers may be difficult for some entrepreneurs, yet a necessary decision towards ensuring our ongoing successful operations. Do not hesitate to make these types of decisions. Being selective is simply smart business.

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