We all know bad customers are unpleasant to deal with. They create headaches for managers and add no real value to your business. They are in fact a waste of time and money.
Bad customers can come in many shapes and forms. Customers who do not pay you on time, those who don’t pay the price for you to make a reasonable profit, who always complain about everything you do even if you offer the best, customers who demand unrealistic value addition such as extra discounts, immediate supply of products, who play one against the other to squeeze your thin margins further.
Don’t pay on time (or never), don’t pay enough (or don’t want to pay), have unclear or changing demands, want all the attention, aren’t honest, very deceitful, abusive or threaten your staff, make unreasonable demands, complain to anyone who will listen.
Such customers are a pain to any business and drain a lot of valuable time and effort of the organisation. Have you ever felt that you are better off weeding out such customers?
They contribute to churn when they don’t listen to you and don’t realise the value of your offering. They take up more than their share of resources in terms of management time and money. And wreck your metrics across the entire business. This fiercely competitive environment with mounting economic challenges do not provide space to sustain such customers
The good customers reward us through net revenue, referrals, and loyalty. Unfortunately, toxic customers hinder your ability to serve profitable customers.
That’s why it’s so important to funnel and identify profitable customers. You’re in business to make money. And customers that don’t pay don’t make you any money. In fact, they cost money.
Unpaid invoices reduce your cash flow. Is cash flow or profit more important to a business? The answer is both. Some customers will nickel and dime you to death. This type of client puts you on the defensive from the start.
During the sales process, they question your pricing. These customers are often overly demanding. They want to make sure they squeeze every penny out of you.
Unclear demands
Often, many harmful customers have unclear or changing demands.
Imagine you and your team spend weeks preparing a proposal for a client. Nothing is worse than delivering on a project only to be told your work doesn’t meet its objectives. You know, they didn’t tell you about the objectives.
Mistakes do happen, of course. Sometimes poor communication is the root cause of not meeting expectations. However, when you give a customer what they ask for, and they’re still unhappy, that’s another problem entirely. When the customer moves the goalpost, nobody scores.
You have a wasted effort and an unhappy customer on your hands. And if you point out their behaviour, you look like you’re making excuses.
Tackle such situations immediately, Start with data. Find out which customers are generating the right returns. Identify how long their interactions take and how many touchpoints they require.
Beware of anyone taking more than their fair share. And talk to your staff. Your employees should feel empowered to tell you when customers are being unreasonable or asking too much. Then document their concerns and act on them when appropriate.
Unresponsive clients also miss out on the value your offering could provide. This can mean higher demands on your customer support team, poor customer success metrics, and higher levels of churn. Sure, we all miss a meeting from time to time. But identify these customers by a pattern of absence and raise the red flag.
The customer is always right — or wrong. In fact, some deceptive customers may lie to you on purpose. And that’s a big red flag.
Common lies include: Claiming you promised to deliver things you never promised, telling you that another employee made promises, they claim to have had a bad customer service experience, making up stories about the actions of your employees, under-representing their ability to pay. In each of these situations, their dishonesty causes problems for your business. You can trust what they say, so you can’t act on it. Their lies can also foster distrust and animosity among your team.
If you catch a customer in a lie once, give them the benefit of the doubt. If it becomes a pattern, you should document the behaviour. Honesty is in everyone’s best interest. Complaints are a normal part of doing business. And with social media, it’s easier than ever for upset customers to make you look bad, too.
The cost of a simple tweet can be very high. Clearly, you can’t afford to ignore online reviews. And if those reviews are unfair, their impact goes way beyond one bad customer.
Assess the real value
The costs of customer acquisition are certainly higher than the costs of customer retention. So you need to ask, “What is the value of keeping this customer?”
Their cost versus their profit. Here’s where you’re going to want solid data. If your bad customer is a high-profile customer, they may be worth the headaches they cause.
What are the consequences of losing this client? You may be in a situation where the risk is too great. The solution here lies in communication. Any change in your relationship is going to have to start with talking to the customer. The goal of this conversation is to move your relationship in the direction you’ve chosen when you assess the customer value.
Be transparent and honest about your concerns. Manage their expectations. Clearly explain what you can and can’t do for them. If you’re keeping them as customers, then make sure they know what to expect going forward. Get on the same page. Make sure you understand their needs and that they align with yours.
Bad customers may be a fact of life, but you can do plenty to keep a bad experience with them from ruining your business. By identifying those bad apples, you can deal with them effectively. In many cases, it’s not the customer’s fault per se, but the company shares responsibility in their experience along the way. Recognise and prune unfit customers before they harm your reputation.
Likewise, nurture and wow your existing customers so they can’t help but tell others about their experience.
