Tweet

Get rid of your customers immediately

Written by: George C. Huang

Article Overview: If you want to build a better business, get rid of your customers. That is, get rid of your worst customers. Why? Your worst customers are most likely to be price-sensitive, the most labor-intensive, and the most likely to be dissatisfied and complain vehemently. So, if you get rid of them, then what? Read on to learn more...

Get rid of your customers immediately

Your worst customers are the ones who are price-sensitive, rather than value-conscious.

What’s the difference?

Price-sensitive customers buy based on who offers the lowest price for what they believe are comparable goods and services. They very often buy at the lowest price at the cost of quality, features, benefits, durability, longer-term value, and overall results.

For you, the problem with price-sensitive customers is that they tend to be disloyal when it comes to buying from you again. They also tend to be the toughest to please and the most likely to be easily dissatisfied.

Value-conscious customers, on the other hand, buy based on trust, relationships, quality, service, outcomes, and the ultimate experience they get from doing business with you. Over the long-term, you establish an ongoing relationship with these customers in which you’re both invested. As a result, they are more likely to be fiercely loyal and supportive of the longer-term success of your business. Though their expectations remain appropriately high, they are more understanding, patient, and forgiving when things don’t go as well as intended.

What’s more, value-conscious consumers:

• Are more likely to become evangelists, telling anyone who will listen about how great your business is.
• Naturally generate qualified and quality referrals to your business.
• Respect your values and approach to doing business.
• Are people whom you usually enjoy working with.
• Sincerely appreciate you and what you do for them.

In short, value-conscious customers give you what I call “enhanced customer lifetime value.” They will outspend your other customers and contribute significantly to the stability and expandability of your business. They are more likely to buy more from you and more often than anyone else.

Here’s a real-life example of enhanced customer lifetime value from my work with a new coaching client:

Bob has run a small business bookkeeping service for the past ten years. He employs several staff members to serve a variety of small businesses, ranging from solopreneurs to multimillion-dollar enterprises. In one of our first conversations, Bob shared that he was struggling with growing his revenue stream. This in spite of a loyal client base, some of whom had been with him since the start of his business.

I inquired about the range of fees that Bob charges his clients and what he provides to them in the way of service. Bob said that some of his clients have made comments such as, “I don’t know what I’d do without you.”

Given the value that Bob’s bookkeeping service provides, it was readily apparent to me that he has been undercharging his clients. When I questioned him, Bob replied that for the past two to three years he has been meaning increase his fees, but just hadn’t felt comfortable following-through.

Why? He said that he still needed to add certain offerings to his business before he felt good about asking his clients for more.

But here’s the real problem: Deep down, Bob didn’t believe in his own worth and, therefore, didn’t have an appropriate appreciation of the value he provides.

After only our second coaching session, my coaching to Bob was this:

1. Raise your fees.
2. Write a letter to your clients to acknowledge your true gratitude and appreciation of them.
3. Include a recap of all the new features you’ve added in recently and include reference to the value you provide them.
4. Include notice of pending fee increases and to expect a phone call from you to discuss the changes.

Naturally, Bob feared that he’d lose a lot of clients in the process. He was afraid of what his clients would think. But, with my guidance, he did exactly what I coached him to do.

The results?

• Bob increased his monthly cash flow by almost 15% after our second coaching call.

• After our third coaching call, he increased his monthly cash flow by approximately 25%--that is, recurring cash flow he can count on month after month without having to market to get new customers.

• In less than one month, he went from a negative cash flow situation (due to recent significant capital expenditures) to a significantly positive cash flow position.

Rather than being trapped by his limiting fears, concerns, and beliefs, Bob elevated his appreciation of the value that he provides his clients and he upped his confidence (and his bottom line) by charging based on value.

And oh yeah, he did not lose a single client.

Compared to attracting and acquiring new customers, it’s far easier and less costly to retain value-conscious consumers. In this case, Bob has a stable of value-conscious clients. And he proved it.

In fact, one of Bob’s clients said to him, “Raise your rates? It doesn't matter what you charge me, just do it—it’s worth it!”

As you know, I’m a big proponent of pricing based on value. And Bob executed my coaching to perfection. In the process, he accomplished in three weeks what he had been agonizing about and avoiding for over three years.

Even though Bob didn’t lose a single customer, I coached him beforehand that any client he lost would be a price-sensitive client. And I only want him to work with value-conscious clients.

Though this was an example of a service-based business, the same principles apply to product-oriented businesses.

To get rid of your worst customers, here’s what you need to do:

1. Overcome your own fears and limiting beliefs.
2. Clearly communicate the value you provide to your buyers.
3. Identify the characteristics of your best value-conscious consumers and know who they are.
4. Cultivate your relationships with these value-conscious clients and customers.
5. Provide great value to them.
6. Reinforce the value that they get from using your products and services by reminding them periodically.
7. And keep adding to it—then bill ‘em fairly and appropriately for it.

Related Articles
  Can Using Twitter Make You More Efficient?
  They all buy. Only some return time and again
  6 Great Ways to avoid Cold Calling
  8 Tips for Successfully Handling Customer Complaints
  8 Tips for Successfully Handling Customer Complaints

Article Tags: bookkeeping service, conscious consumers, conscious customers, cost of quality, customer lifetime value, doing business, durability, evangelists, expandability, quality features, quality referrals, quality service, relationship, small business bookkeeping, term success, trust relationships, ultimate experience



Related Forum Posts
Re: Gift Cards, Use 'em or Lose 'em - Jusst as a matter of interest, whenever I buy a giftcard for others, I always make sure that its one that doesn't charge a fee and doesn't expire. If it does, I don't buy it! On the other hand, whenever [i:421d9b5b]I [/i:421d9b5b]get a gift card, I don't wait, I spend it all immediately! Not because I'm afraid it will expire or something, but I can never resist spending free money immediately!
Re: Cash up front ... or Royalties? - I've had a friend who sold two inventions that were bought by private investors that intended to turn around and resell his idea. Unfortunately, many times the people who buy your patent are not intending to develop it immediately. They may look to hold and launch at a later time. He always negotiated a deal that had some upfront component, and some form of x year royalties to cover his butt in case they did not 'sell' immediately.
Re: August Contest Winners, New September Contest! - Hi David, thanks for the insight on talking about other forum. I think we need this kind of rule here. A lot of people come here and start posting adverts immediately. The other time someone posted a phonographic advert hiding xxx websites in his post. Moderators should be deleting this kind of post immediately. In Warriorforum that i belong if your post is not appropraite, it will be deleted in a jiffy
Re: When do you process online orders? - If the shipping takes longer - I'm find with that IF the seller made that clear on their sales page and IF they communicate about what's happening. Its the sellers who say they ship immediately and then send later with no communication that irritate me. I always pay immediately and expect quick turnaround. I ordered a PDA and no joking - it didn't arrive for 5 months and the seller never did communicate with me or respond to any messages. When it did finally get here, I looked at the ship date and once they finally shipped it out - I received it within a week. Shri
Note to Mods - Sneaky Spammers... - If you see anyone post in the forums (even if it looks legit) and they have a little blurb at the bottom of their post (not actually in the signature file) with a link that has "seo specialist" or something similar as the anchor text -- THEY ARE A SPAMMER! I don't care what their post says or how legit it looks. These guys are sneaky and they are hammering forums all over the place with their spam posts. They haven't hit this one hard yet but they are here so I suspect it will only get worse. Delete their posts immediately. And GT/Evan should ban them immediately (even though they will just come back under a new account).


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How do you keep it together on a daily basis?

Adjusting Your World

The Future of Online Marketing

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.