Five Undesirable Customer Types
Every businessperson knows that not all customers are created equal. Some customers are loyal, while others will stray if they’re offered a slightly lower price elsewhere. Some clients are demanding, while others only call when they wish to place an order.
Every business must deal with a variety of customers. But there are certain types of customers who do more harm than good to your business – they drain your resources while adding little to your revenue.
Here are five undesirable customer types that every businessperson should learn to recognise.
- The customer who returns most of their purchases. Return policies are intended to offer customers a reasonable period of time in which to reconsider the purchase decision. However, some customers abuse such policies. Some buy a product (such as clothing) with the intention of using it only once or twice and then returning it. Others buy two similar items with the intention of comparing them, keeping only one, and returning the other. Such customer behavior increases staffing costs and warehousing expenses, and it can strain your relationships with suppliers.
- The customer who makes unreasonable demands on your customer service staff. If every little problem that the customer encounters with a product (such as computer hardware or software) leads to a call to your customer care department, the resulting personnel costs may ultimately exceed the revenue resulting from the original purchase. Customers who behave this way – instead of consulting the instructional documentation and/or the frequently asked questions – also reduce the standard of service available to other customers by clogging the phone lines.
- The customer who complains publicly about your company’s products or services. The growing visibility and influence of social media have made this type of customer more dangerous than ever. This is especially true if your business is a large and well-known company. Social media sites like YouTube and Twitter give disaffected customers the means to broadcast their concerns to a very large audience.
- The customer who unreasonably takes advantage of special offers or incentive deals. If a customer repeatedly signs up for a service to take advantage of a low-price introductory offer, and then cancels when the introductory period comes to an end, the customer is not helping your business succeed. Such customer behavior may be perfectly legal, but it is nevertheless outside the boundaries of appropriate contractual interactions.
- The client in a B2B (business to business) supplier arrangement who constantly makes demands of your sales representative, takes advantage of free delivery by placing numerous small orders (in order to reduce inventory costs), or frequently threatens to take their business elsewhere if they don’t get special deals. At a certain point, it is necessary to acknowledge that such clients are more trouble than they’re worth.
After a businessperson identifies a customer (or client) as undesirable, the next stage is to develop an appropriate response. Where possible, try to educate the customer – in a respectful and courteous manner – about reasonable and acceptable interactions in the marketplace. If this fails, you may have to consider “firing” the customer.
Shedding your business of undesirable customers has multiple positive impacts – in addition to improving the bottom line, it improves employee morale and allows you to focus more resources on other customers.
Quantum Advisory is a business accounting and advisory firm that empowers family businesses to step up, scale up and sell up. Visit www.qagroup.com.au or call 1300 700 711 and start the journey.