Choose your customers carefully!


Angry Customer

One of my favourite characters is Bill Cosby, not only because he is a legendary comic, but because he is also a serious academic in his own right. He once stated (paraphrasing) “I’m not too sure what the key to success is, but I’m convinced that the key to failure is trying to be all things to all people”.

Too much of something can kill you – even water. Everything should be done in moderation and the same goes for how far you will go to please all your customers.

According to societal norms, this is a controversial statement at best. But our norms have been moulded and influenced by having the fear of God instilled in us that if we don’t bow down to all customers, our businesses will fail. In fact, there are a plethora of consultants, corporate speakers and authors who make a lot of money re-enforcing this ideology. They all have one fundamental fault in their thinking however, and that is the definition of a customer.

Is someone who walks into your business and starts being rude to you and your staff a customer? Indeed, is someone who has even purchased from your business but comes back with unreasonable demands a customer? The late great Peter Drucker said that the purpose of a business is to create satisfied customers. I would like to simply add ‘profitable customers’ to the statement because if we are not careful, we could serve ourselves out of business.

The Pareto effect describes the 80/20 principle. We apply the principle to just about anything from employee performance through to the value of customers. What we neglect to do is to re-engineer the Pareto effect to see the other side of the consequence it has on profitability. Consider that 20% of your customers account for 80% of your profits, but 20% also cost you a substantial chunk of the profits the original 20% gave you. I would like to see the Pareto effect expanded to the 20/80/20 principal so that we do not lose focus on the detrimental effect 20% of our customers have on the business.

At the risk of insulting the customer satisfaction at-all-costs pundits, I ask the question: Are you a business or a non-profit charity organization? As harsh as this may seem, we need to look at what is best for the business, not what the consumer-bible bashing consultants tell us. At this point I can hear the howls of disapproval from many quarters and you are probably thinking that I am against customer service. But you would be wrong. I firmly believe that without great customer service you are dead in the water. But I also believe that we have become so enslaved to certain customer service practices that we have become disingenuous about it. Serving customers has become a real grind and is taking its toll on most of the people who are at the coal face of customer service. I just don’t buy into what we are being told about it.

The concern that I have is that we are so intimidated with the concept of creating satisfied customers that we will do anything, at any cost to please them. And that is wrong for the business. What I am about to suggest is not for the faint hearted. It is not easy to implement and of critical importance, your business needs to have all its ducks in a row to do so. But if you get it right you will have a very profitable business with happy repeat customers; and just as importantly happy staff members.

Let’s go back to our revised Pareto principal. With a customer who falls within the 20% category that gives you the bulk of your business, you need to do whatever it takes to assist them and resolve their issues. Make emotional decisions for them. These are your loyal customers who are generally profitable, pleasant to deal with and great ambassadors for your business.

With the middle 60% customers, make a business decision. Some of these customers may well fall into your profitable category and as such you again need to look after them no matter what. Others may tend towards being unprofitable and you therefore need to proceed with caution before spending money to assist them.

The last 20% category – the ones that cost you profits need to be dealt with a legal, contractual frame of mind. Be firm with them and learn to say no. An empty vessel makes the most noise and this is mostly applicable to these customers, so why would you even want to have them! This does not give you carte-blanche to be obnoxious with everyone and you need to be very certain that you are not the party at fault. But if you have done everything reasonable to assist them and still find yourself at the receiving end, show them the door.



Pareto Diagram

Again, many alleged customer service pundits will be hysterical with what I am saying here but consider the following: How much time do you and your staff members spend on putting out fires with unreasonable customers? How much money is it costing you to ‘make the problem go away’? Every minute you are spending time and money on these customers, could be better spent on the customers that count. In fact if you find yourself spending a lot of time pandering to the empty vessels you are neglecting your core profit generators – which is just plain insane.

By dealing with customers in a segmented way as discussed, you will find that you have far more time and energy to properly pamper your top customers. It doesn’t take a rocket scientist to see that these customers will in turn bring you more profitable customers and you will over time have a high base of extremely and genuinely satisfied customers. This way you are providing consistent first rate service to the people who deserve nothing less.

Do you have what it takes to provide genuine customer service or are you paying your way? Do you understand the difference between a consumer and a customer? Are you trying to be all things to all people? If you are, you now know which key you have…

Peter Viljoen

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  1. Peter!

    Your introduction to this community is this Great article coming from Kyalami-SA!

    A great point of view, applicable to the automotive but also in the real life, everyday! Yes, I agree: many alleged customer service pundits will be hysterical with what you are saying here; but many others I’ve met they agree with you!

    Beside this, the crisis will help the policy you pointed out and suggested: dealers and manufacturers they have always less and less time and resources to be wasted in unproductive controversies.

    And… you know my personal point of view: the Social Media will do everything else!!!

  2. Maurizio and Peter, your points of view are the real situation in all commercial area and, so, also inthe automotive field!
    Many thanks for yours contribution! 😉


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