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5 May 2014

Fire Your Customers and Make 80% More Money

To survive in today’s markets, you need to follow a new set of rules. Just like you have at some time or other fire your boss, isn’t it time that you fire your customers too? You’ll probably say, “Are you mad? How can I fire my customers, the people that bring me money?" Read on to find out why firing customers can give you 80% more business and 100% more happiness…

There are 4 types of customers in this world; I call them A B C D:
A – stands for Awesome, the best customers that anyone can find, people that give you high margins, advance payments, regular business and large deals. Everyone’s dream customer.

B – stands for Basic – the basic customers that you have to keep you busy with normal profits and cash inflow. Everyone’s daily customers.

C – stands for Can’t Deal With – the type of customers that ask for things to be done or delivered yesterday and when you ask for payment, it is always ‘tomorrow or next week’. You make almost zero profit and cashflow on them. Everyone’s hated customers.

D - stands for Dumped – the type of customers that should not be your customers in the first place because you lose money on them. They don’t pay up and you wish them dead. Everyone’s dead customers.

And we know that a business typically earns 80% of its profit from 20% of its top customers. That means the A and B grade customers. The other 20% of the profits come from C grade customers. We shall ignore D grade customers here because they should not be your customers in the first place. It’s just your bad luck or poor judgment that you got them.

Have you ever come home from work feeling drained and exhausted?  The type of customers that you’re dealing with probably is the C grade customers. Yet you still have them because you need the 20% of profits that they generate as you are not too confident of relying on the A & B grade customers. This is the emotional side.

To succeed in business you need logic too. Logically you should spend all of your time on A & B grade customers because they give you 80% of the profits.

So if you want to improve your sales, safeguard your reputation, and come home energized, shouldn’t you be spending all your time only on A & B grade customers? This means that you should fire your C grade customers. Only when you get rid of C grade customers will you ever have the time and energy to concentrate on A & B grade customers, the type of customers that give you both profits and happiness.

And once you give really good time and effort to your A & B grade customers, you’ll earn your reputation and this in turn gives you more referred business. You’ll never have to prospect or do aggressive advertising and promotion again. Sounds like a dream?

Well, nothing begins without a dream. To make your dream come true, you have to fire your C grade customers.

Below are 5 proven ways to fire your C grade customers without making them mad:
  1. Sell them away to your competitors. Approach the less busy competitors and tell them that you need them to do you a favour and take over some customers from you. Reason is that you've grown too big to handle them. And since this is a sale, not fire-sale, you should ask for a good one-time commission from them. After that, write to all your C grade customers, thank them for their past patronage and inform them that to serve them better, you have passed their accounts to your peer. Then get your competitor to formally introduce himself to the C grade customer and assure them that they are in good hands.  If you do the above steps properly, wouldn't you end up with happier C grade customers and also a happier you (because you've just earned some commission from passing the business and rid yourself of a headache?)
  2. Raise your prices. When you raise your prices, those that can’t pay will go away automatically. And if some of them stay with you, wouldn't they upgrade themselves automatically to grade B customers as you now make profit on them?
  3. Upgrade Your Way of Doing Business. Like they need to give you advance payments, ample notice, and be more refined as you have now upgraded both your tangible and intangible ways of running your business. Coffee shops upgrade themselves to food courts and get rid of lousy customers and win themselves new grade B & A customers. You too can do this.
  4. Be a Grade A and B customer yourself. Life is a mirror. You don’t expect your customers to treat you well when you treat suppliers poorly. This is called the Law of Attraction in action: you attract what you are most. And when you are a grade A and B customer yourself, your C grade customer may disappear automatically. 
  5. Transfer the grade C business to another entity and wind down that entity gradually. Cite reasons like ‘cost is too high and thus not viable’. The grade C customers will sympathize with you and they may come to you offering to pay you higher price so as to retain the relationship with you.  And you’ll have an automatic upgrade of the C grade customer to B grade.
In short, firing your C grade customers make good business sense.  It increases your profits, improve your cash flow, and most importantly, make you a happier You.  A happier You will in turn generate more happy and returning grade A & B customers.  Your profits will boom and bingo – you’re on the track of ‘golden age’ of higher profits.  Happy firing! 

Note: This article, written by Andy Ng in 2005, first appeared in a local magazine and later carried in regional magazines.  For details on our sales and other courses, click here.  Related articles on sales:
  1. The Law of Sacrifice that Makes Samsung become No. 1
  2. How to Move People with Your Selling
  3. The Simple 4-Step to Handle Sales Objections
  4. Are You Closing Sales or Closing Files?
  5. Use your Eyes to Get People to Say Yes to You Instantly
  6. Win New Customers Effortlessly in 7 Winning Ways
  7. Closing More Sales with the Emptiness Concept

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