Back in the Spring of 2003, the news media was positively orgasmic with a story about the ambush of a US Army convoy in Iraq. The capture of Private First Class Jessica Lynch and the hospital raid that lead to her rescue of was on the tip of everyone’s tongue. We heard on full, 24 hour news cycle repeat how this private, finding herself under attack by enemy forces, picked up a rifle, resisted capture, and held her position down to her last bullet.
I was in love.
Pentagon press releases had created a superhero and found a beautiful face to put on a war that was already clouded in controversy. The story they wove was of a true American woman. She was their goddess wrapped in camo with an American flag in one hand and an AR-15 in the other. The war had it’s muse. But instead of pulling on my patriotic chords, all I was thinking was how goddamn amazing this Jessica Lynch was.
Now of course, during the subsequent congressional hearings after her rescue, Jessica Lynch corrected the colorful narrative created by the Pentagon and news outlets. Instead of grasping for a few moments of glory, she told the stories of others in her group that she considered far braver than herself. Even after I heard her version of the events, my sense of awe about this woman was untouched. Her courage under duress while captive and strength of character when correcting the media narrative were outrageously attractive.
A good friend and mentor offered some insightful advice when he learned about my infatuation. He told me that to have a mate of that quality, my own character needs to be at least close to her same level.
Wow. What could I say to that? He was right.
How This Story Relates to High Quality Customers and Clients
You can probably see where I’m going with this. If you want all-star clients then you need to be an all-star. You and the way you do business need to be at that their level. Everything I’m writing in this article applies equally to customers and clients. For my own ease, I’m going to refer to customers and clients as simply customers rather than writing both over and over.
Before we get too much further along, I want to explain how I define a “high quality” customer. To begin with, I use three metrics. My high quality customers will:
- Highly value my product or service
- Request ongoing or repeat services
- Be a source of referral business
I have a few customers that have all of these traits but there are others that might only have one or two of them. At the very least, everyone I work with or sell to needs to have number one. They absolutely must value me and what I sell. There is no joy in working with customers that don’t value you.
I appreciate my relationships with my high quality clients. We have mutual respect for one another. Because of my track record of successes with them they take my suggestions seriously. Be aware, this respect is not a permanent state. Like any relationship, it needs ongoing reinforcement.
If I stop delivering results, these customers will start ignoring my recommendations. How long would a friend or spouse stick around if you kept disappointing them? How long would you stick around if your spouse or friend kept letting you down?
The nature of my work with these high quality customers generally leads to ongoing business. The main benefit of ongoing business is consistency. Discover ways to make business with these customers almost a given. You keep delivering high quality results and they keep coming back for more. One way to do this is to understand what they need.
Two Questions To Ask About Your Customer Relationships:
- How can you help make their lives easier?
- How can you help them make more money?
If you provide services to businesses as I do (among other things) this means learning how those businesses work. I need to know how they operate inside and out. This intimate knowledge makes me extremely valuable to my customers. By investing my time to learn about them I demonstrate my interest in their business and, even more importantly, I’m able to provide them with insightful and actionable advice.
For product based businesses, consider the model popularized by Kevin Kelly. Find and cultivate your 1000 true fans. Learn about your best customers, create a relationship with them, provide a quality product, and they will buy everything you sell.
Seeking 1000 true fans also creates a referral base for your business. If you respect their value, your fans will talk about you. They’ll mention you in conversation with friends. They’ll make comments about you on Facebook, in blogs, and on Twitter. This is true whether you sell services or products. When their friends are looking for what you offer, your name will be on the tip of their tongues.
The Pareto Principle and the Value of High Quality Customers
Vilfredo Pareto was until recently a little known 19th century economist. These days his insights that led to the development of the Pareto principle, also known as the 80/20 rule, and the Law of the Vital Few are referenced regularly in marketing, business, and startup circles. Regardless of its en vogue status, the Pareto principle has genuine value for our purposes. It states that approximately 20 percent of inputs are responsible for roughly 80 percent of the output. One example he found was that 80 percent of land in Italy was owned by 20 percent of the population.
Generally, 80 percent of your business will come from just 20 percent of your clients. I expect that you’ll want to verify this on your own. Your results may vary from the 80/20 distribution but it will be close. Currently, my distribution is closer to 70/20. That means 20 percent of my customers are responsible for 70 percent of my income. How closely your business gets to 80/20 isn’t my point. Instead use this as a guide to segment your customers.
Group your current high quality customers. Which few are responsible for most of your income? For a product based business, you’ll want to cohort types of customers based on how much they buy. Look at repeat customers. Look at demographics like geography, age, education, and shared interests. For product based businesses it could be that your 20 percent is composed of 20-30 year olds that spend over $100 yearly. A volume based product business could have thousands of people in a segment like this.
Identify these things about your best customers:
- What do they have in common?
- Where did you find them? Or, how did they find you?
- How do you maintain or improve your relationship with them?
- Where could you find another high quality customer just like them?
Find the commonalities between your customers and use this information to maintain and improve relationships with them. Favor them. Give them better service. Give them the value that they deserve. After all, they’re footing the bill the next time you eat out.
Find the Troublemakers
You found the best. Now point the 80/20 rule the other direction and identify the worst. Find the 20 percent of your customers that are responsible for 80 percent of your trouble. I have had a few customers that were never satisfied. They’re not bad people but saying that they’re high maintenance is an understatement.
Some varieties of the troublemaker customer:
These customers make unreasonable demands on you and your time. This could be complaining that you didn’t reply to their Friday night email until Monday morning or asking for refunds long after their purchase.
The Challenger consistently second guesses your advice. These customers always think they know better and seem to forget that they hired you for your expertise.
3. Deadbeat or Accuser
These two are closely related. These customers complain about paying your invoice, are slow to pay, or, even worse, accuse you of cheating them. They take issue with every line item and question whether you’re worth the money they spend. Product based businesses are usually immune to this one since payment is collected up front. Though these types may often ask for refunds.
The Blamer holds you accountable for things that are outside your control. They may even consider you responsible for outcomes for which they are solely responsible. These customers use your product in an unintended way or might think that you’re responsible for the stress they feel from managing their business email (this one really happened to me).
5. Hostage Taker
This is a customer that tries to hold your reputation hostage. They threaten to complain about you on social media if they don’t get what they want. In product based businesses, the Hostage Taker might complain about your service and want discounts or free product to “make things right”.
Troublemakers vs. Dissatisfied Customers
I recommend some considerations when you’re thinking of firing customers. You might be inclined to think of a dissatisfied customer as a troublemaker. Don’t. They’re not the same.
Dissatisfied customers are not necessarily troublemakers but they might be. The negative reaction of dissatisfied customers could show you ways to improve your business. They’ve had some difficulty and are interested in discussing it with you. Their motivation to contact you shows that they value you enough to discuss the problem rather than launching into a tirade on Twitter or Facebook.
By taking their concerns seriously and making a sincere effort to address them you could transform a dissatisfied customer into a high quality one. One of my longest standing customers had a concern that troubled him early in our relationship. He had a point. I took it seriously and I improved.
A few ways that dissatisfied customers get confused with troublemakers:
If you’re uncomfortable with a customer pressuring you to reply to late night emails, it could be that you haven’t sufficiently established expectations for the relationship. Set boundaries by politely letting a client know that you only check email three times daily during business hours. Begin your reply email with something like this:
“Hello [Customer name],
Thank you for your email. I apologize if you were expecting an earlier reply. To optimize my productivity, I keep a rule that I only check email three times a day during business hours.”
Finish up your email with a reply to whatever they sent you late last night or over the weekend. You’ve just told your client that responses may be delayed and will only come during business hours. Expectation set. Now, keep an eye on them to see if the customer respects the boundary or keeps on demanding.
If you have this more than one customer like this, it might be that you’re not presenting you expertise effectively. They might not trust you.
- Have a look at your communication style.
- How effective are you at describing the rationale behind your advice?
- How well does your customer understand your advice?
- Are you able to succinctly demonstrate results from your advice? Did sales go up? Is there more site traffic? Show them.
- Communication is an area where improvement is always possible.
3. Deadbeat or Double Crosser
There are a few reasons why a customer makes late payment or refuses to pay. These reasons may have nothing to do with you. Regardless of the customer’s excuse, you still need to get paid. If this isn’t a pattern, the relationship can be salvaged.
- Make your payment policy clear before you begin work.
- If you charge a late payment fee, make that clear too.
- Use automatic invoicing software so you don’t have to trouble yourself with sending reminders.
- If all this fails, notify the customer that you’re suspending work until the late payment is made. Then consider ending the relationship.
Why you should fire your trouble making customers
- Once a customer becomes a troublemaker they will almost always be a troublemaker. It might not be possible to rehabilitate them or worth your time to try.
- Trouble making customers cost you money and time.
- The time you spend with troublemakers disappears. It’s simply gone. This is time that you’re not writing or developing a new product. Compare this to the the return on the time you spend with high value customers.
If you can afford it, then simply let them go. Tactfully and politely find a way to end the relationship. Apologize if you have to. If you provide a service, offer to refer them to someone else. If you sell a product and you’re dealing with a problematic customer, ask them to consider a similar product from another vendor that might better meet their needs.
One strategy that can work with both products and services is raising your prices. Your high quality customers won’t complain because they know that you’re worth it. High quality customers understand that value costs money. Troublemakers will balk at the increase. This gives you and them an opportunity to end the relationship.
How do you keep your high value customers happy? Have you ever had to fire a troublemaker customer? Tell me about it in the comments.