Are Your High-Maintenance Customers Worth Keeping?

You’ve done everything you know to do to remedy the situation, but there’s just no pleasing some customers. They waste your time, energy, resources, and stretch the accounts your team spends managing.

Do you dare fire them? Back in the day, there was much analysis and discussion about firing your least-profitable customers.

A prevailing school of thought counseled:

“Cull them out.”

“Free up resources to generate better margins and profit.”  

“Send them packing into your competitor’s arms and let them bleed.”

As one Operations executive told me, “I have been at this for many years. I quit working for ‘practice’ a long time ago.”

Today, when every customer and every dollar is considered precious, the banter about firing customers has subsided. But has the pendulum swung too far the other way? How do you assess your customer relationships and determine whether your high-maintenance customers are worth keeping?

These five steps will help.

Assess Your Best Customers

With bigger territories to cover and more competition than ever, it is imperative that you know how to make the most effective and productive use of your time. Start by asking yourself, “Who are my best customers?”

Three simple questions can help you arrive at the answer.

1. Is this customer profitable?
2. Is this customer strategically important?
3. Is this customer a high-volume, repeat buyer?

A top revenue-generating customer who demands weekly check-ins and hand-holding is a very different conversation than a low-revenue customer who demands the same. The volume of complaints matters less than what you’d actually lose if the relationship ended tomorrow. It’s easy to grow too comfortable with your best accounts and stop paying attention until a competitor doesn’t.

If your answer to the above checkpoints is “yes,” odds are good that you need to nurture these relationships. If the answer to two out of three is “yes,” take a hard look. And if the answer to the profitability question is “yes,” take a really hard look.

Put On Your Qualitative Thinking Cap

Now for a little analysis. Your best customers can tell you a lot about yourself. Here are a few examples:

• They may take you in new directions that are consistent with your firm’s business model (i.e., product or service extensions).
• They are kind enough and have the right to challenge you to improve.
• They ask you to do what you do well.
• They pay a fair price and recognize the value you bring.

The best customer relationships also mean you serve clients well even when they aren’t actively buying, not just when there’s a deal on the table.

If your best customers answered the following questions and you listened and responded, you would probably be a better selling organization.

• What attracted you to do business with us?
• What is important to you? How do we help?
• Where do you want to be a few years from now? How might we help?
• If you were to do more business with us, what would be the circumstances?

Answers to the above questions provide an even deeper set of benefits as you think about yourself.

They help you learn how to attract more customers like your best customers.

Do The Math

Now that you have learned some things about your best customers, it’s time to work on your least favorite customers. What makes them high-maintenance?

• They short-pay their bills.
• They are consistently slow-paying.
• They abuse your people.
• They take advantage of your business and ask for things that are not in the scope of your agreement.

Next, put pencil to paper and do the math.

• What are the tangible costs of servicing this customer—rework, time, unwarranted credits, plus basic service?
• What are the intangible costs—abusive language and general aggravation?

For example, a customer generates $3,000 a month in gross margin, but your team spends six extra hours a month on service calls, rework, and unbilled favors, at a fully loaded cost of $75 an hour. That’s $450 a month, roughly 15% of the margin. Putting that number against your most demanding accounts reveals if they are worth keeping.

Does it make sense to try to patch things up first? Can you make it without this customer? What would the consequences be? Can you reduce the cost of sales they inflict upon you, raise your prices, or do it more subtly by reducing your responsiveness? 

A little self-analysis is also warranted.

Good relationships with customers are built piece-by-piece, call-by-call, and experience-by-experience. They are based on value for the customer at every point of contact.

Before taking any action, make sure you are not the problem.

Ready, Aim, Fire

If your customer is not right—and you cannot make them right—then they should be someone else’s customer. How do you do it? Carefully and thoughtfully.

Some research suggests that a single disgruntled customer will share their experience with seven other people. And with today’s blogs, it can get viral.

A face-to-face meeting is a must. You don’t need a script, but you do need an opening line that isn’t an ambush: “I want to talk honestly about how this partnership is working for both of us.” That framing keeps the conversation collaborative instead of adversarial, even if it ends in a referral to someone else.

Use the opportunity to define your solution’s value to your customer’s needs and success. Offer alternatives to salvage the relationship. Could they buy more, buy differently, or pay differently? Can you establish fees for rework or late payments?

If they aren’t willing to work with you, nicely and professionally ask them to take their business elsewhere. Give them the names of alternative suppliers to contact.

Time To Backfill

Many salespeople chase too many targets with too few resources and do not make the best use of their time. You’ll realize long-term improvements when you backfill your customer loss with the right customer targets.

• What is your “sweet spot” customer profile?
• Which segment is most profitable or has the greatest potential for growth?
• Consider “trial contracts” for customers who are outside of your sweet spot.
• Review customer losses with an eye toward your selling operations and process.

The goal isn’t zero difficult customers. It’s making sure the difficult ones are also the profitable ones.

At the end of the day, you prosper when your customers value your relationship. Developing these relationships takes a conscious dedication of time and proactive and deliberate strategies. Make sure you intentionally invest in the right relationships that lead to profitable results.

Deciding which customers to keep is only half the battle. The real win is building an account management function that knows how to grow, protect, and price your best relationships instead of just servicing them. See how Sales Gravy helps account managers deepen client relationships, prevent churn, and unlock expansion revenue. Talk to us about building a stronger account management bench.