Don’t
Fire Your Customers! Try
Upgrading Them First
All over the world I teach people how to serve,
surprise and delight their customers – how to
keep them coming back for more.
But once in a while a client asks, ‘Should we keep every customer, no matter what they do, or what they cost?’
My answer: Absolutely not!
Some paying customers cost more to keep than they contribute to your bottom line. Perhaps they cost too much to acquire in the first place. Or they prove too expensive to care for over time. They might purchase the minimum while extracting the maximum from your systems and your staff.
There may be nothing malicious about these people. They
are simply unprofitable customers.
Your first approach should be to upgrade these
patrons to become more valuable customers.
For example, you might impose an administrative fee on below-minimum balances. But if your customers increase their volume, you agree to waive the fee.
You could offer no-charge delivery for orders over a certain amount, but impose a shipping and handling charge for small (and otherwise unprofitable) orders.
You might provide bare-bones service to customers who rarely visit or only purchase a small amount. But if these customers come more frequently or spend more money, you can agree to enhance the service they receive.
This is a constructive win-win approach to an otherwise win-lose situation.
But be careful! Implementing this strategy requires
carefully and well-planned scripted communication with
your customers before you make the change.
Present the upgrade path as an opportunity to get more
benefits and greater value, not as a penalty for their
low-volume business.
But what should you do with customers who choose not to increase their business with you? Easy. Either charge them enough that they become profitable to keep, or guide them to alternative service providers who can meet their needs and budget.
Note: There are special cases where this ‘upgrade’
approach should not be applied.
1. Unprofitable customers
may be related to very profitable customers, and hence
quite sensible to keep. For example, small children
might buy very little, but their grandparents might
buy them quite a lot!
2. Government agencies may
be required by law to serve everyone equally. Public
charities may not even track the cost of service from
one individual to the next.
3. Your company might serve
low-income customers regardless of their profitability
as a social contribution and valuable community service.
Key Learning Point
Unprofitable customers
are just waiting to help you make a profit. What are they
waiting for? An attractive offer to upgrade – from
you!
Action Steps
Figure out which
customers cost more to serve than they generate in profits.
Decide how much more you want them to spend, and how much
more you are able to give for it. Extend an invitation
and seek their increased business. Let them know what
they will receive and what they must give for this win-win
exchange of service.
Next Article in Customer Service Partners >>
Are Your Frequent Customers Free-Loaders, Scoundrels or Cheats?
First Article in Customer Service Perception Points >>
You Have Leverage. Use it
Did you appreciate this customer service training article?
Get more like this at no charge. Subscribe now to the UP Your Service! newsletter.
YOU MAY USE THIS CUSTOMER SERVICE TRAINING ARTICLE IN YOUR FREE NEWSLETTER OR YOUR WEB SITE
as long as you include this complete statement:
Copyright, Ron Kaufman. Used with permission.
Ron Kaufman is an internationally acclaimed customer service training educator for quality service.
He is author of the bestselling series "UP Your Service!" and founder of
"UP Your Service College".
To enjoy more customer service training articles,
visit www.RonKaufman.com and www.UpYourService.com
FOR COMMERCIAL USE of this article in a paid newsletter, publication, or training program, please refer to our Terms of Use.
|
