Why it’s Okay to Turn Away Some Customers
- Comments: 9
We spend most of our time and money trying to attract new customers. So why on earth would anyone want to turn away any paying customer?
Ever heard of the 80/20 rule?
Generally, businesses receive 80 percent of their revenue from 20 percent of their customers. They also say that companies spend 80 percent of their time on the customers that make them the least amount of money.
What does this all mean?
This means if we spent all of our time on the 20% that were the most profitable, we would actually spend less time with customers and increase our margin.
Sounds pretty good to me. Working less and earning more.
This also means that it can sometimes be a good idea to tell some customers that they should go somewhere else. I learned this concept very well being in the banking industry.
A part of being licensed requires that you make smart and well suited investment decisions for people or you can go to jail or get fined. For example, you wouldn’t put all of a retired person’s money in a single growth stock and you probably wouldn’t put a very young person’s money in long term cd’s. So if a customer ever came in requesting to make an extremely unsuitable investment decision I would kindly tell them the reasons that I cannot make the trade or the investment, and explain to them that other institutions would be better suited for this particular trade.
Ideal Customers and Email Lists
It is important to be able to recognize who your ideal customers are and focus on them. Doing plenty of research to find what their demographics and purchasing habits are is well worth it. This is especially useful if you are working on a limited budget. You can keep your costs down and maximize your effectiveness and marketing.
This is why having e-mail lists are so important and developing one asap is completely necessary, no matter what stage of the game you are in and no matter how many customers or readers you come in contact with. E-mail subscribers are often very concentrated customers ,and are probably your ideal customers.
So find out who your most profitable customers are and go after them!
I’ve recently started turning away a lot of work because I just can’t handle the load. It’s amazing how you find it hard to get new clients when you don’t have many and turn away lots when you have lots
You are right on the money about this one. In my previous job, we had a Fortune 500 client who offered services that required a lengthy contract. They knew they wanted to attract a certain clientele that would be able to pay the monthly fees.
They designed their whole marketing strategy around it. Including spending TV ad money on cable and staying away from broadcast.
It is weird but more often than not, that is the way it works!
It is very smart to spend money only on the customers who
are going to make you the most money. The relationship just works better this way;) Thanks for the comment!
The idea of giving up some customers is sometimes a tough decision… But for the sake of the long term, it is still a better choice.
Thanks for the comment Charles. It is hard to give up customers, but your right it is better in the long run.
Great exlpanation of an 80/20. I never thought about starting an email list. That will be one of my tasks for this week. Thanks for the idea.
No problem. I’m glad you were abel to take something away from the post!
[...] Why It’s Okay to Turn Away Some Customers - Josh Mullineaux [...]