We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Wed 24 Feb 2016 03:20 PM

Font Size

- Aa +

Should I fire bad customers?

Many entrepreneurs advise learning how to distinguish a bad customer from a good customer having a bad day

Should I fire bad customers?

What would Steve Jobs do?

The founder of Apple, Steve Jobs was well-known for explaining to customers what they ‘actually needed and wanted’. Many believe that such a strong belief in his own decisions was one of the pillars of his success from the very beginning.

In an interview with Playboy in the 1980s he said that he and his team had built the Mac for themselves. “We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research.” A BusinessWeek journalist reported a similar but more famous comment from Jobs in the late 1990s when he said: “A lot of times, people don’t know what they want until you show it to them.”

Not many entrepreneurs have come up with a product that has redefined an industry or established a whole new product category as Jobs did. However, that does not mean that they should not protect the value of their business.

Where shall I start?

“If you’re willing to do business with just anybody, you’re going to have a terrible business,” said Anthony Robbins, an American entrepreneur, motivational speaker and author.

In one of his blogs, Robbins advised entrepreneurs to ask themselves whether they were running their business like salespeople or the owners of something truly valuable.

Are you an early adopter of the latest innovations in your industry? Do you invest in quality? Have you surrounded yourself with experts?

If these and similar questions define your business strategy, it is highly possible that you and your team are not the reason why certain customers are unprofitable or in any other way harmful to your business.

It’s about them?

Take a look at the people you want to target to sell your products or offer your services to, and set your criteria: do you require an up-front payment? Are you willing to agree to receive the full payment at the end?

Do you prefer a customer who is less interested in learning about the product’s characteristics? Is your team more motivated to work with a more engaged client? Do you target only one-time or seasonal customers? Are you interested in building long-term relationships with your clients?

Who is a good customer?

In general, many entrepreneurs rely on the Pareto principle – ‘the 80-20 rule’ – when it comes to customer profitability. It means that 20 percent of their customers provide 80 percent of their profits.

In addition to a customer’s revenue-cost that is in your favour, you can identify good customers as people who are not affected by a change in price, who understand the difference between an accident and negligence, who are patient enough to give you the chance to fix the problem, and more. Lastly, they are the ones who often say ‘please’ and ‘thank you.’

Who is a bad customer?

The most appropriate description of a bad customer includes a person who is time-consuming and financially draining on your small business.

Noticing a few behavioral patterns can help you identify a bad customer quickly. Those include situations when he or she buys your products only in moments of high promotion; contacts your staff more than an average customer would do; talks in a rude manner to you and your staff or makes unreasonable demands.

A final piece of advice

Don’t be afraid to fire customers who waste your time, energy and resources, but many entrepreneurs advise learning how to distinguish a bad customer from a good customer having a bad day.

Arabian Business: why we're going behind a paywall

Real news, real analysis and real insight have real value – especially at a time like this. Unlimited access ArabianBusiness.com can be unlocked for as little as $4.75 per month. Click here for more details.