What Do You Do With Problem Customers?

Some business experts have adopted an adaptation of a theory called the Pareto Principal stipulating that 80% of profits comes from the top 20% of clients.   The idea is that you should simply cut loose the bottom 80% as well as anyone that you deem to be problematic, or ”not worth it”.  In some cases, it helps improve sales metrics.  In other cases, it just hurts the company’s cash flow. However, I prefer to think there is an alternative option to dumping them outright: help them!

Everyone has them: the customer who doesn’t ever pay on time (or even at all), is complacent in all matters of their business until they need something (then calling every hour), always looking for a way to get things for free, or maybe one that is never satisfied no matter what is done for them.

One way in which you can do this is, in the case of the customers who are always behind in paying their bills, is to find out why this is a common occurance.  Perhaps they have cash flow issues, or are simply not organized and cannot get out from the hole they have dug for themselves.  Offer to get them in contact with your own accountant to help them resolve the financial issues, or if you know a business coach, offer to pass along the customer’s information so that they can get the assistance they need.

When you have a customer who is always looking for a freebie or a discount, turn the tables on them.  Ask them how they would feel if their own customers would ask them for the same things all of the time.  Make them realize that you just like in their own line of work you can’t just give everything away.  If you have already made concessions for them, let them know that, so they feel like they have “won”.

Some people are just cynical and think that everyone is out to get them, so they have lousy attitudes toward everyone.  In those cases, give them more than they expect.  Show them that not everyone they deal with is going to disappoint them.  It may very well be a problem that they create for themselves, but you can show that it just took the right person and company to make them happy and meet their needs!

In retail, particularly with electronics and tools, there a subset of customers known as “renters” who make purchases knowing that they will use the items for a period just short of the return policy period then return the items to avoid spending money while getting the use of those items.  That is bad for business, but don’t say that to the customer specifically.  There was a time when some retailers tracked customer tendencies (which is why you sometimes have to fill out a return form) and use that information to prevent certain people from making returns.  Let them know that you have accommodated their actions in the past because they are a valued customer, but that they cannot continue to do this.  Offer them specialized assistance to make sure they are making the right purchase the first time to avoid future returns.  Or, take it one step further and give them a “special discount” of a reasonable percentage to encourage them to keep the product.

While it may seem on the surface that these “problem” customers are just that, they may just be misunderstood or frustrated with their own situations and passing along that frustration on to you.  It may turn out that they simply needed to get their internal affairs in order before addressing the external issues.  In time, they may prove to be grateful for your understanding and assistance, and even move up into the that top 20% of your customer list or higher.  Things aren’t always as they appear so take a little time to turn the problem children into valuable sources of income for your business.

Have you encountered seriously problematic customers in your business? What steps have you taken to turn things around?  Or did you simply decide they weren’t “worth the trouble” and cut them loose?