Tip: Read this article once as it’s written. Then follow the suggestion at the end.
We’re told to be grateful. Grateful for those customers that we’ve got and grateful for those customers who choose us. Because after all, times are tough and there is little to separate you, me and the next person.
As such, we’re told to do our utmost to keep our customers at all costs, lest they depart for pastures new.
However, all customers aren’t created equal.
In fact, as much as there are those who lift contribution and spirit there are also those who drain resources and enthusiasm.
Land, pea pods and bad customers
In 1906, an Italian economist, Vilfredo Pareto observed that 80% of the land in Italy was owned by 20% of the population. He developed this principle by concluding that 20% of the pea pods in his garden contained 80% of the peas.
Over 100 years later and this principle is still one of the most commonly applied economic theories and states that, in many circumstances, roughly 80% of the effects are determined by 20% of the causes. Pareto’s Law is also known as the 80-20 Rule, the Law of the Vital Few and the Principle of Factor Scarcity.
But sometimes the law gets skewed – less people own more of the land; fewer pea-pods contain more of the peas – and we operate in extremes.
And this is often the case when we apply it to customers. Not in terms of the proportion who create the majority of your value, rather the small minority who create the majority of your problems and only a tiny proportion of your value – the bad customers. In this instance, it’s likely that the law is skewed and that 15% of your customers create 85% of your problems; or 10% create 90%; or worse still, 5% create 95% of your issues.
In these cases, what should you do?
Keep them? Maintain them? Try to develop them? Just keep going and follow the herd no matter what because you’re a good person?
That’s what most people do.
It’s easy to put up with bad customers, not because we want to or even because we think it’s the right thing to do, but because we’re worried about being the one to pull the plug. Concerned what the people around us will say and worried they’ll think we’ve finally lost our minds.
But ironically you might be the only sane person around; or at least the one person with the foresight to see that no long-term good can come from some relationships. Like the troublesome ex from school you knew wasn’t right from the start, but whom you stayed with in the hope that maybe, just one day, it would work out. Like the so-called friend who never had anything good or positive to say to contribute or create significance for you.
The problem is that we get so entrenched in managing and solving problems for these people. Not real problems which genuinely exist which would make a difference to the majority if solved. But one-off problems – exceptions, borne of issues which occur for the individual, which are more a reflection of them than you or the way you operate. Those who are never happy, will never be happy and who create a hobby in being unhappy; those who re-direct your attention and focus away from where real value and significance lies.
You know who these customers are as you can usually answer ‘yes’ to many of the following questions.
Does it cost more to look after them than the contribution they generate to you?
Do they negatively impact on the perception of you amongst other customers?
Do they negatively impact on the perception of you amongst other stakeholders?
Do they pay late, consistently late?
Do they have a detrimental impact on morale and energy?
Do you miss other opportunities due to your involvement with them?
So what’s the alternative?
Of course I’m not saying you should go around recklessly and sack any customer who causes a disruption. That would be both intolerant and foolish. However what I am saying is this: There are a handful of customers we all have that we could do without; in whose absence our margins, time, energy and focus would increase.
Depending on your particular circumstances, the actual number could vary – If you only have ten customers then it could be just one. On the other hand, if you’ve got 1,000 customers then it’s more likely to be fifty or so. But regardless of the actual numbers, there are a small proportion who are draining a disproportionate amount of your resources. They’re sucking the time, energy, life and profit from you. They’re not necessarily doing it to be awkward, or demanding, they’re just doing it because they just don’t have the awareness to be any other way.
But those aren’t the customers for you.
Imagine the efficiency which could be created by freeing up your time and energy by dropping these customers, in favour of work and activity which actually makes a difference?
So my thesis is this: take your bad customers and give them away to someone else; let other people deal with their negativity and be drained by them; be brave and make a tough call; free yourself to spend more time with people with whom you have a better connection, a better relationship and who can contribute more to your success.
To GO NAKED is to be brave. To be willing to go against popular opinion and to make tough decisions. Sometimes that means saying ‘thanks but no thanks’, leaving people behind and moving on – even when they’re customers.
Tip: If you’re interested in a slightly different application of these ideas, re-read this article, this time substituting the word ‘friends’ where you read ‘customers’.