Sometimes it’s better to fire a customer
Some customers are more trouble than they are worth. In my last article I talked about companies like these. We discovered that these types of customers can be very costly to printing companies. Many printers do not realise the true cost implications clients like these have on their business.
Sometimes it’s easy to spot a difficult customer from a mile away. Other times, problematic customers hide beneath the radar. It may be that they are being looked after by one person in your company. This person can sometimes keep quiet about the fallout from this particular customer – fearful to be responsible for losing their business.
It’s worth reviewing your client base
Every four to six months you should consider reviewing your clients. Are they still achieving what you want them to for your business? Are there any that you might wish to consider getting rid of?
This may seem like a strange strategy. After all, many printing companies are desperately seeking new customers. Why would you consider getting rid of some of your existing client base? However, it is important that your customers are profitable. If they are losing your business money than they are not the right clients for you.
How do you decide which customers to fire?
There are four main indicators that you should look at when reviewing your customer base:
- Profit level
The most important factor to consider is whether they are making you a profit or not. It is worth keeping detailed records of all the extra costs associated with your customers. Make sure that all staff knows to record:
- Reprint costs
- Costs of any credits issued
- Costs of meetings
Your management information system should record the actual profit of every job. Set your extra costs against this profit figure to get a true idea of the actual margin you are making on a customer. There is one other factor that also needs to be taken into account when considering profitability: that’s time.
- Service time
It is also important to consider how much time it takes to service a client. How much time are you spending on a particular client? You should measure time spent in all departments: customer services, sales, estimating, studio and even despatch and accounts. If a client is demanding far more than the average time, consider the opportunity cost to your business.
Naturally, some clients may be worth spending more time on. It all comes down to the size of the account.
The next thing to consider is the turnover of the account. You may wish to retain some difficult clients because they give you a large amount of work. You may need this volume (although you should always look at finding new, easier clients to replace the difficult ones).
Interestingly, many of the most difficult clients actually have a very small turnover. You are unlikely to really miss them if you get rid of them. However, you should always bear the future in mind.
- Potential for the account
You may wish to consider keeping a difficult client if there is potential for serious growth. Before you make a decision on this basis, remember to consider two things. Firstly, is that potential really there? Many sales people have high hopes of their clients that are not really realistic. It’s important to be honest here.
Next, think about what will happen if the client does grow substantially. Are you suitably staffed to deal with the extra service that this will require? Do you really want the stress of dealing with a large client like this?
Here’s what to do next
- Put in place suitable measurement systems for your clients
- Draw up a shortlist of clients that you might consider firing
- Have a discussion about this with your colleagues. Do they see this in the same way as you?
By the end of this discussion you are likely to have one or two clients where you need to take action. But how do you go about firing a client? That’s what I will deal with in my next piece.
Editors Note: This post is part of a larger series on managing your customers:
- Why an Uneducated Customer is Great for your Business
- Why you Should Fire a Customer Today
- What Types of Customers Should you Consider Getting Rid of?
- How to Fire your Customer
PS – If you’d like more ideas on how to engage with today’s buyers, download my free e-book “Ten Common Print Selling Errors and What To Do About Them”. You’ll also receive my regular “Views from the print buyer” bulletin, full of ideas on how to sell print effectively.