Know your customers or you can lose some

[tloonya]

I want to warn some of you new business owners from a possible mistake you can make.
I had responce to one of my posts:
"When they got rid of lousy, unprofitable customers, and devoted their energy to serving the most profitable customers, their income almost doubled. Fundamentally, some people just are not worth having as customers."

So here is the stories...

One of the women coming to my store gets free paper and leaves.
I was annoyed until she came to the store with her husband who shops here twice a week and spends good money.

Another man comes and buys a tomatoe or roll for 50cents...my husband hated him because he was squeezing all the fruits on the way to the roll. As it appeared later his son shops at our store for the family of 9 INCLUDING a 'cheap guy' who buys his snack/roll/apple on the way to the park!

I can go on but you haver no time to read.
So be carefull of who you are throwing out of the store.
They might be related to your best customers!!!

[Deleted]

I agree- I've had "upscale" stores ignore me when I came in with DS when he was little. I left one after being treated as if I'd brought a pet monkey on a leash and went elsewhere. I was looking for a special occasion dress and spent $300 on one in a place that was far more welcoming- around 1990, when that was real money.

[zibazinski]

There was a store in Tarpon Springs, Florida that flat out said no children allowed.

[Deleted]

Jun 11, 2011 11:48:43 GMT -5 zibazinski said:

There was a store in Tarpon Springs, Florida that flat out said no children allowed.

That's crazy. I still have fond memories of a jewelry store in Ridgewood, NJ- so ritzy that they went to the auction of the Duchess of Windsor's estate and got an item for a customer- where they were wonderful to DS. He asked them once what the most expensive item in the store was and they actually pulled out a ring with a big-azz diamond and showed it to him. I went there every year to squander a bit of my bonus and my engagement ring came from there, too. They told me one man always came in every year with his two little kids to pick out Mommy's Christmas present.

I suppose that by banning kids you avoid some problems and you pander to those who won't tolerate them, but I worked for a living and on weekends DS and I were pretty much joined at the hip. I'm not going to give up time with my kid for the privilege of spending money in your store.

[Savoir Faire-Demogague in NJ]

So be carefull of who you are throwing out of the store.
They might be related to your best customers!!!


You've just discovered customer profiling and CRM. This is elementary business intelligence that big retailers engage in.

[zibazinski]

I always wondered if it was legal and if they lost business because of it. Their rationale was that children touched the fabrics/clothing with their dirty, sticky fingers. I went in once (childfree, of course) and the clothes weren't all that great.

[Gardening Grandma]

I've gone car shopping alone and was pretty much ignored because DH wasn't with me. I was OK with that because I didn't get the hard sell. They didn't realize that I was shopping for myself. DH had already tols me to figure out what car I wanted to buy.

[gawgagranny]

I hear ya, GG! I've had the same experience more than once...at a time when my salary was higher than most of their male customers, too!

[jarhead1976]

Business is all about building relationships.

[IPAfan]

Perhaps it depends what type of business you're in. I have a law practice, and I've definitely found that it's best to avoid cheap clients at all costs. There are one or two limited exceptions, but only if you can see a great reason for taking the case.

Here are some of the problems I've found with "lousy unprofitable clients":

1) Even though they pay less than all the other clients, they want more, and end up taking more of my energy than my good clients;
2) Good clients refer more good clients. Cheap clients refer more cheap clients that are inevitably a PITA, demand more and want to pay less.
3) Taking cheap clients means I need more work and therefore have less time to devote to each client. Therefore, the quality of my work decreases when I take cheap cases.

So I've been making a concerted effort to get rid of my lousy, unprofitable customers. So far it's paying off, but I'm still suffering through many of those bad cases I took to begin with.

[buster]

Jun 11, 2011 19:20:14 GMT -5 IPAfan said:

Perhaps it depends what type of business you're in. I have a law practice, and I've definitely found that it's best to avoid cheap clients at all costs. There are one or two limited exceptions, but only if you can see a great reason for taking the case.

Here are some of the problems I've found with "lousy unprofitable clients":

1) Even though they pay less than all the other clients, they want more, and end up taking more of my energy than my good clients;
2) Good clients refer more good clients. Cheap clients refer more cheap clients that are inevitably a PITA, demand more and want to pay less.
3) Taking cheap clients means I need more work and therefore have less time to devote to each client. Therefore, the quality of my work decreases when I take cheap cases.

So I've been making a concerted effort to get rid of my lousy, unprofitable customers. So far it's paying off, but I'm still suffering through many of those bad cases I took to begin with.

While it's kind of a segway, when I used to wait tables in college the most demanding customers were generally the worst tippers (aka the cheapest). The customers that were friendly and easy to please were almost always the most generous. I'm not surprised clients in other industries behave the exact same way.

[MN-Investor]

Beerfan, when did your dollar become worth more than mine?

Looking at what Beerfan wrote, that doesn't even make sense.

[MN-Investor]

While it's kind of a segway

FYI - you ride a segway. The word you're looking for is segue. They're pronounced the same.

[MN-Investor]

LOL so it fits right into YM

Let me clarify. Beerfan made perfect sense. Rick made non-sense.

[IPAfan]

Not sure I understand either Rick.

My point is that the cheapest customers (the ones that want to bitch and moan about every cent) are also the most demanding. Therefore I work more and make less. Sometimes I've gone out of my way to get good results for these clients, and have gotten more of the same in referrals.

Not my cup of beer. My goal is to charge more than all my competition and provide better service than all my competition. Not there quite yet, but I'm working on it.

buster,

Good point. I'm almost sure that people are the same regardless of what industry you're in. I think if you're going to grow a good service business you need to learn how to focus on good customers. It might be a bit different if you're selling goods rather than services.

[buster]

Jun 11, 2011 22:20:30 GMT -5 MN-Investor said:

While it's kind of a segway

FYI - you ride a segway. The word you're looking for is segue. They're pronounced the same.

You know...when I wrote it out I knew something looked a little off. Unlike some people on message boards, I appreciate the correction

Karma 4U

[cronewitch]

I was at a car dealer trying to decide between a new car and slightly used car alone. I had to ask how much each used car was since they weren't marked. After about 3 the salesman gave me his card and said come back with my husband to see more cars. I kept his card and happened to be with my husband when I came back to buy a car since we were sharing one car. A sales woman asked if she could help us and my ex told her I was looking for a car. She ignored him while he went off to look at trucks and I picked my car. A few days later my ex asked if he could drive my car and I said no, he asked why not and I explained he didn't have a key. He never did drive my car and I took it when I divorced him.

[zibazinski]

Banks have done it for years. In the 70's when I worked for a bank, it was explained very clearly how small accounts waste the money and time that a bank could spend on profitable customers. Wonder why there are no kids accounts anymore?

[Miss Tequila]

Jun 11, 2011 22:46:54 GMT -5 IPAfan said:

Not sure I understand either Rick.

My point is that the cheapest customers (the ones that want to bitch and moan about every cent) are also the most demanding. Therefore I work more and make less. Sometimes I've gone out of my way to get good results for these clients, and have gotten more of the same in referrals.

Not my cup of beer. My goal is to charge more than all my competition and provide better service than all my competition. Not there quite yet, but I'm working on it.

buster,

Good point. I'm almost sure that people are the same regardless of what industry you're in. I think if you're going to grow a good service business you need to learn how to focus on good customers. It might be a bit different if you're selling goods rather than services.

beerfan, I understand what you are saying and my firm does the same thing (CPA firm). We don't want a small, personal tax client who we can bill maybe $1K for a return but are very high maintenance throughout the year (calling everytime they "hear such and such from their neighbor"). We net more having a $50K corporate client than 50 $1k personal tax returns....it's just the way it is. Instead of free phone calls throughout the year, we started charing our hourly rates for each call...the PITA clients went away which allows us to focus on our lucrative clients.

[qofcc]

beerfan, I feel your pain... I'm working on a project at work to move small PITA customers to another buying source for our products. 90% of the accounts make up less than 10% of the revenue. I have this one account who purchases about 10% of what we would require for a minimum purchase to open a new account and less than .0002% of what our largest customers purchase. Every month they were sending me forms to review and making demands about holding prices and warning if we don't comply than they won't purchase our products. I finally told the guy that I'll send him a new price sheet when prices change and he can place an order if he wants to but I can't devote any more time to him. He sent a LONG e-mail tirade about how he was the customer so he should be "right" and I was there to serve him. I had another account want me to calculate the price of their products into their selling unit of measure and hand write it on a green bar report and mail it back to them. Um... no. Another account told me that the document I e-mailed them was very long and it was expensive to use their printer so could I print it for them and fed ex it to them on the other side of the country. Really??

[Phoenix84]

I know what you mean. I worked retail the summer after college at an office supply store. We were instructed to spend most of our time in the expensive electronics section rather than help people who wanted to buy $2 pens.

[Deleted]

Jun 11, 2011 11:48:43 GMT -5 zibazinski said:

There was a store in Tarpon Springs, Florida that flat out said no children allowed.

My natural food store just says... 'unattended children will be given coffee... and a free puppy.'

[Deleted]

A couple of other examples: my financial advisor started out with Edward Jones, which is very "personal touch". He literally went out and knocked on doors. I was disenchanted with my current advisor and this guy actually had many years of experience in bond trading so I invited him in. For over a year, I had about $30K in the account and it was all in munis. That's what I wanted, that's what he bought. He never tried to hustle me to buy anything else. As I grew to trust him and value his insights on the market, I rollded over $200K when I left a job, andother $200K when I moved out of NJ and made a profit on my house, another $200K when my company was sold and the merger meant I could roll over my 401(k)... the account is now well up over $1 million and is at Smith Barney and in a wide variety of investments. If he'd ignored me because $30K was too small an account, I doubt I would have parked the rest with him.

The author of "Selling for Dummies" started out in real estate. One day a couple in old, dirty clothes drove up in a pickup truck. The other agents in the office got very busy with important paperwork at their desks. The author went up to them, shook their hands, and introduced himself. It turned out they rehabbed and flipped houses for a living. They were dirty and dusty because they'd been working on one. He sold them many houses over the years, including the dream house they bought for themselves.

[telephus44]

I think that there's also an important distinction between "too small" customers and "PIA" customers. I work in account management, and as an example, last week I had to explain to one of them that his 2 carton stock order didn't make my $100 order minimum, while another I pu through a $200,000 order for another customer. And I like dealing with both accounts, small and large. It's truly the PIA customers I dislike - if you're placing a $200 stock order, call me 4 times because you need to add something on, you want to order it after my next day cut off time AND have it delivered to you tomrrow morning by 8am, and can I waive the shipping charges and match a competitor's price, and fax a confirmation to 3 places and include stock samples with an invoice - well, that's being a PIA and I don't care who you are, you are being unreasonable.

[Deleted]

Yes, you can tell right away some times... We often tack a 'PITA tax' on to an estimate/bid if we get that kind of a vibe ....

[tskeeter]

I want to warn some of you new business owners from a possible mistake you can make.
I had responce to one of my posts:
"When they got rid of lousy, unprofitable customers, and devoted their energy to serving the most profitable customers, their income almost doubled. Fundamentally, some people just are not worth having as customers."

So here is the stories...

One of the women coming to my store gets free paper and leaves.
I was annoyed until she came to the store with her husband who shops here twice a week and spends good money.

Loony is correct in her response to my comment. As a business person, sifting the wheat from the chaff in your customer base can be a tricky situation. Loony makes a good case for being sure you know your customers well enough that you understand who is tied to who. However, I stand by my belief that some people are not worth having as customers or clients. The real challenge is figuring out who you should be encouraging to take their business elsewhere.

[tskeeter]

My goal is to charge more than all my competition and provide better service than all my competition.

Beer, that is exactly the business strategy that my parents evolved to with their business. In the end, most my folks competitors who tried to compete on price went out of business. And Dad did them the favor of buying up the equipment they wanted to sell.

[tloonya]

/ It might be a bit different if you're selling goods rather than services. /

I think HERE is where drunk is perfectly sensible. Sorry beerlover - I could not resist.

[swamp]

Jun 13, 2011 8:04:18 GMT -5 oped said:

Yes, you can tell right away some times... We often tack a 'PITA tax' on to an estimate/bid if we get that kind of a vibe ....

We call it the ID-10-T Tax.

[moneymaven]

Perhaps it depends what type of business you're in. I have a law practice, and I've definitely found that it's best to avoid cheap clients at all costs. There are one or two limited exceptions, but only if you can see a great reason for taking the case.

Agreed. But that's a major difference between being a service type provider versus a retailer.