The cost of producing business today is too high. More companies today must be attentive to profitability. Conducting business today is more expensive, more demanding and requires more innovation. Focusing on new acquisition is vital to success, but so too is profit margin. Most businesses fail in this endeavor, focusing on internal costs such as employees. Perhaps it is time to review client margins. Simply put if clients are an expense and your business is not making profit, terminate them. Businesses terminate employees if unproductive, why not clients?
There are some guidelines to follow:
1. What does the data show? One of the miscalculations in business is a failure to review the data. Sales and service representatives aggregate information daily into expensive databases yet few review it. Ensure success by understanding your profit per client to denote necessary moves.
2. Relationships. Are the relations with clients strong or at arm's length? There is a fear that divorcing clients creates panacea amongst the core. If current relationships are as thick as a piece of balsa wood, then there are more issues beyond margins.
3. Take a Stand. Explain to the client that the cost of doing business is not longer profitable and requires an assessment of the relationship. If a client continually calls your service area and sways attention from other clients, it is time to fold in the towel. A major multi-level marketing firm needed to conduct such measures when a major independent constantly called suggesting incorrect and damaged shipments. Researching orders and re-shipment cost the firm seven times the original order. Imagine the added expense when there are 25,000 independent representatives.
4. Code of Conduct. There will always exist rude clients. Consumers today seek "What is in it for me" and desire spontaneity. Develop a Customer Ethics Policy and distribute to your clients. Similar to terms and conditions of sale, clients must be bound by acceptable principles. Your organization must disavow obnoxious, unprofessional, and unethical behavior and language. Develop a customer policy for Zero Tolerance.
5. Laws under Review. The customer is not always right. We live in a country that prides itself on innocence. Maintain proper documentation. Maintain documentation to validate customer issues. Our electronic world provides tremendous implicit backup, maintain these records, you do not know when you might need them. Good record keeping just might reverse the customer is always right proverb.
Business operations require innovative and cost productive ideas. Every business must be neither in business to create customers but when they cost more to maintain, they are nor worthy keeping. Review your margins, reduce expenses and stress, create resolve and if prudent fire your customers.
