Posts Tagged ‘customer’

In the course of running my business, I have fired customers three times.  Firing customers works in the same way that they may decide to fire or end the relationship with you. . . just because it is no longer working out for them.

There are various reasons why you may need to fire a customer.  These can include:

• They are low paying, and you are trimming the low payers to make room for higher payers
• The  work they need you to perform no longer fits with the work you do or want to do in the future
• You are uncomfortable with the company – it could be down to what the company does (whale Killers Incorporated), their politics or how they operate
• A personality clash with somebody in their management team
• You are just bored working with them

Trimming the Low Payers

The reason I fired all three of the customers I no longer work for is that they had turned into low payers.  Whilst they may have generated revenue in the past which I was happy with, the amount of work they offered, the money this generated, compared to the amount of effort to retain the relationship meant that it was costing me money to service them.

The one thing that we all have a limited amount of is time.   If I have a customer demanding I work for them for a day for £200 and this stops me working for another customer at £300, the first customer is actually costing me money.   I will end up resenting that customer, and so will not end up doing my best work.

Sometimes we need to cut ourselves free from customers that will pull us down or hold us back.

Methods of Firing Customers

There are several ways of firing customers – several reasons you can give.   I would always advise that when you fire a customer, do it face to face.  Firing a customer by email or over the phone never works out well.

Some reasons you can give (which may or may not be true, but you need a reason) are:

• Your team has changed and you no longer have the skills you need to service the customer
• You are taking your company in a new direction, and you are no longer a good fit for the company
• You have to reduce costs, and therefore are no longer offering any customers your {whatever} service
• You are discontinuing your product or service due to lack of demand and therefore can no longer support them

The reason has to be about you.  Your customer does not want to hear that the reason is because they kill seals, have an aggressive line manager or just are not paying you enough money.  The bonus of the above reasons is that there is also no comeback.  They can’t say “but can’t you just hire someone with xxxx skills?” – Because if you could, so could they which means they don’t need your service.

The Price Rise Gambit

The other option you could consider is a sudden and unprecedented price rise – just for them.  Using an excuse such as “Because of the harsh economic conditions, we have been forced to raise our prices by 35%” is sure to have those customers you don’t want running for the hills.

One word of warning, do expect some people to accept the rise.   I have fired 3 customers, but I did try to fire another customer using this technique.   Surprising to me, they agreed to the price rise and they are still a customer today, just paying a lot more than they were (which returns them back into being a profitable customer).

Don’t make Enemies or Burn Bridges

The big golden rule of firing a customer is – don’t make an enemy.    The customer is going to feel aggrieved and let down when you fire them, so don’t make matters worse by making it personal – keep it professional and apologetic.

If possible, have alternative options to hand.  Have an alternative company details who can carry on the work, offer to train their staff (or replacement contractors) with the skills needed to keep going, suggest alternative products or alternative strategies.

Two final thoughts

One thing to bear in mind is, business is business.   If a customer is holding you back or making you feel uncomfortable, do not let guilt hold you back and stop you growing your company.   Sometimes firing customers is the only way.

And lastly, don’t forget to re-read any paperwork you have produced for the customer prior to the ‘Your Fired’ discussion.  The last thing you want to do is fire a customer, when you have a contract which says you will support them through thick and thin for the next 10 years.

Can I help you?   It’s a common enough question.   You meet with a potential client (or speak with them on the phone), you do the introductions, a little small talk, and then to get the ball rolling you ask the question – “So how can I help you”.    I know…. I use this question all the time – but apparently, it’s a big mistake.  According to psychology weekly, it’s a mistake for a number of reasons:

• Not everybody is looking for help
• The word Help causes the brain to panic and stall
• Help is linked to problems and solutions – again not everybody has problems (assisting the launch of a new product is not a problem)
• The words Help and Problem have negative connotations

Instead, it is suggested we ask growth questions such as “What are you looking to achieve” or “What is it your looking to change or improve?”.  If both of these seem a little false, cheesy and hard to use, you can fall back on the “So, how can I assist you”?   Assist implies teamwork.

The next stage is of course the most important.  Once you have asked the question, its to shut up and listen to the answer.

We have all had those days.  Days when it seems the planets align, the black cats dance across our paths, the gods test us, and we are inundated with problems and screaming clients.  I call them my grenade days – its as if clients spend the morning throwing in virtual grenades into my work pattern either by support issues, problems, emergency changes and the other high priority ‘fixes’.  And for whatever reason, when grenade days arrive, it’s as if all my clients have pre-arranged to make sure I am kept on my toes as problems come in from all directions.

Problems can range from software or products that suddenly, without out input from me, stop working.  Or suddenly has faults that were not there yesterday.  Where there are no obvious problems, I can get emails or calls letting me know that the clients are suddenly not really happy.  This can include calls where they want to spend an hour or so on the phone running through the problems to try and obtain an immediate solution, or that they just want to meet to discuss the problems (without saying what the problems are, resulting in an unpaid meeting).  The worst I have encountered is the 4 word grenade which takes the form “not fit for purpose” – a general ‘it’s all wrong’ call to action.

In case you ever hit such grenade days – either from a multitude of sources or from a single client/project, can I offer you my 5 tips for dealing with these grenades:

Stop and Think
Sometimes, asking them for more information can make matters worse, so the first thing I do is stop and think about the likely causes of any problems described, put them into order or likelihood, and then step through them to see if any are likely.  If so, can any be checked without the customer involvement without too much effort, for a quick win?

What has changed
Products and software do not just stop working or develop faults all by themselves (well, they can, but lets assume that’s not the case).  So the next question to ask is; what has changed?   The common knee-jerk response from customers is generally ‘nothing’, but now run through the list compiled from the thinking stage, and see if anything has changed such as linked products or systems, configurations, data use, etc 

What needs to change
When problems occur, customers will generally tell you what is wrong in fairly dramatic terms, but what they won’t tell you is what they need to fix it.  So ask the question “what needs to change to make you happy again” (or words to that effect).   This puts the issue back on their side of the fence to tell you what to do – you can then decide if the requested action (come to site, fix it so we cant do such-and-such, work out where the data went, etc) is required, urgent and chargeable. 

Remember, they are Human
Humans love stories – and the more complex the story, the better.  Therefore when the customer contacts you with a problem or complaint, it may sound like the end of the world, but it may be fairly small and simple in real terms.   I recall one customer who called to say that the “whole system was reporting rubbish data”, and when we cooled him down and got him to explain in detail what the problem was, it was one figure in one cell of a report which was wrong (and this was down to the data being supplied from another system).  Also, remember that your contact may have the information 3^rd or 4^th hand from their own people, and problems tend to grow in size and importance as it moves up the chain of command. 

Document what is wrong
The final thing I have customers do (after they have finished their rant) is to calmly document the issues in a short (1 page) report which I can respond to.   This puts the emphasis back on them, giving you time to breath.  It is also a great way to make sure that you fully understand the problem, and it gives you something real and tangible to work with.  I have also found that my making a customer go through the document stage, they have worked out the cause of the problem themselves and its something they did.

Is it right to take something you have done, and charged a customer for, and give it or sell it to somebody else?  That’s the question on my mind today.   Let me explain…

Take as an example the car that you drive.   You have purchased that car.  But the design, the specifications, the look and the feel… well that is owned by the motor company.  You buy the metal and the plastic, but you don’t own the design.. or do you?

But what about the web page or the code or the design you put together for your customer?  What are they buying – are they buying everything including the ideas you have and the design, or are they buying the end result  – the car if you like – that they can use, drive and work with?!?

For me one of my biggest work assets is the tools that I use – I have in my Evernote account, a thousand little snippets of code that do all kinds of things – from complex searches in SQL Server, to universal date conversions, through to full applications to do data quality reporting.  As I am forced to develop something new for a customer, if its useful, I clip the code to Evernote and its there for the future.  And that clip means that instead of wasting 4 hours reinventing the wheel, I can find the code, paste it in and it only takes 10 seconds.   But is it right that the customer has paid for my time to do the work, and I am snipping it for use in the future – for future clients and projects?

My view is.. yes.  My logic is, ok I may be snipping something that they have paid for my time to develop, but in the majority of cases, I have saved them time and money by using the code clips on their projects– I haven’t spent 5 hours of their time working a problem in the past when I solved it from my evernote collection.  It balances out – I am not taking the entire package they are asking me to develop or design, just a very small part of it.

Where I am in doubt, I always say up front this is what I will be doing – and it’s never been a problem for any customer.

And it’s a massive saving of time, effort, and more importantly – my sanity through relief from boredom; doing the same thing over, and over and over again.

If somebody asked you to define your ideal (or target) customer, could you do it?  Have you even given it any thought, or is it one of those business concepts which are there for the big boys, and you are really looking for anybody, anywhere, that has money to spend and needs your service or product?

The reason I ask, is that earlier in the year, I had to define my ideal customer – for a number of marketing activities, and it was a difficult exercise for me.   I provide IT database software services to companies with… well…. databases.   Should that not do?  Does that not cover it (I asked)?  Actually, no – it turns out that being vague is one of the worst answers.   Without defining the target, how could I hope to know my customers when they come along, or hope to get my message across to the right people.

Take for instance, the concept of location.  That’s a fairly easy one I guess for most people.   They will say that their target customer is say, in their own country, or if you are completely virtual -anywhere in the world.   But let’s think about this.  If it’s anywhere in the world, do you want to deal with people in countries that can’t speak English?  And what happens if it all goes wrong?  Do you really want to travel around the world to sort out a problem for a few hundred pounds of sale value?

So I started to get specific.  I realised that because 90% of the time I have to meet the customer at some time, I didn’t really want to travel to Scotland, or Wales, or Ireland, or even spend 7 hours travelling too far north for a prospect sales meeting.   So I worked out that for me, my ideal customer lived within 127 mile radius from my home office.   I know that sounds specific – and it is.  127 miles from me, is 2 miles off of the French coast, yet includes major UK cities – London, Bristol, Birmingham, Southampton etc.  127 miles can be travelled in a couple of hours.   If I said 130 miles, I would be getting prospects in Northern France, if I said 120 miles, I cut off half of Bristol and Birmingham.

Once I had this concept sorted, the rest fell into place.   Other categories which I then defined were:

• Language – English speaking
• Company Size – over 30 people, but less than 200 (don’t want to waste time on small SME’s with little budget, nor go for the bigger companies that the big consultancy companies target)
• Industry – Private sector or NHS (my services don’t work for charities, or government offices, etc)
• Turnover – from £100,000 up to £5m – again see the company size logic
• Type of person I need to speak to – IT manager, information manager, Development Manager, CEO or MD
• Working Hours – Monday to Friday 9am to 5pm (don’t want to be working for companies that only operate at weekends, or out of hours)
• Requirements – Must use databases such as SQL Server or Oracle, maybe smaller databases like access, Informix or DB2

I could go on, but suffice to say that by defining as many categories as I could, and then refining them down as much as possible, when my ideal customer appears I know them and know that I can work with them.

Now it could be argued that by creating restrictions (such as location) I am reducing the number of potential customers, but then do I really want to travel 600 miles to Scotland or Ireland to try and sell my services, when there is a person 40 miles from the prospect who has a better chance of the sale and less costs to service them?

Tomorrow, I will talk about how I used the above information for land £10,000’s of revenue for less than a £100 investment.

If you haven’t spend the time to define your ideal or target customer, take 10 minutes and define them now.  I promise, it’s worth the effort.