You Can Replace Unprofitable Customers With Profitable Ones Without Being A Jerk

To grow your business, you need new customers. However, some new customers are more profitable than others.

Marketing dollars spent to find a few needles in an enormous haystack are the ghosts of campaigns past haunting your ROI nightmares. 

The good news is if you have any current customers some of them are your most profitable customers, and before they were current, they were new. Once upon a time, you found your existing customers, or they found you. No matter how your paths crossed what is most important is that they did cross.

It is reasonable to assume that there are people out there with the same problems your best customers had before they found you.

Your potential best new customers are looking for solutions. You have the answers they need.

If your most profitable new customers are out there - ready willing and able to pay you money and send referrals your way - where are they?

You can find them if you know where to look.

Chances your next crop of best customers will look a lot like the best ones you have now. Dig into your current best customer files to identify characteristics that your best customers share. Others with the same characteristics are likely to be a good fit for your business

These questions are designed to help you begin to pinpoint what is unique about your most profitable current customers.

✺ How did your existing best customers transition from leads to customers?
✺ What commonalities do you most profitable customers share?
✺ What about the characteristics of leads that did not become customers?

Likewise, it is equally as important to be able to identify potential customers to avoid. Remember the leads that never went anywhere no matter how much effort you put forth? Yes, the leads that got away.

Potential new customers like the leads that got away are overwhelmingly likely not to be a good fit for your business.

Develop Best Customer Personas to Identify Best Prospects

The key attributes that define a good fit are unique to each business, and there are countless attributes you can consider. The goal here is to compile the data points that describe in detail the characteristics, behaviors, goals, skills, and attitudes of your best customers. The descriptions that emerge are your buyer personas.

Your buyer personas are your roadmap to profitable new customers that are a joy to serve.

Types of Data to Consider

  • Demographic Details

    If your B2C target market is a specific demographic like parents of twins or single expats trends in the age, gender, household, income, occupation, education, location, income, and so on of your best customers can help you identify people with the same characteristics who are most likely to become your new customers.
  • Business Information

    For B2B, consider the industry, number of employees, annual revenue, number of locations, location size, physical location, and product interests of your top customers. After determining the critical qualities of your ideal customer, you will know who your ideal customer is, but that is not the whole picture. You also need to know how they behave.
  • Online Behavior

    How have they interacted with your brand digitally and with your website in particular? The more engaged leads are the more likely they are to become customers. Look at the behavior of the leads which eventually become top customers. These are online behaviors to consider:
    • Click Link to Your Website
    • Webform Submission
    • Click Offer Link
    • View Webpage
    • Download Content
    • View Image
    • Leave Comment
    • Watch Video
  • Email Activity

    Focus on the behavior of your best customers. Those with the highest open and clickthrough rates are the engaged subscribers, but are they your best customers?

  • Social Engagement

    Social sharing, mentions, and following of your brand can indicate a level of interest. If your target market is active on social platforms, this can be especially true.

Now you have a list of the behaviors and characteristics of your best customers. Hard values like profit margin, customer lifetime value, and retention rate are a matter of calculation or running the proper report. Take those numbers are compare the best of the best.

Now, take illustrations of brand advocacy into account including referring new clients, testimonials and case studies, event sponsorship, networking and so on. Strong brand advocates can significantly benefit your business. It is essential to know the universal qualities of your brand advocates to find the brand advocates of the future.

Once you determine the core qualities and behaviors of your best customers, you will know where to concentrate your marketing spend.

It may cost more per lead for leads that match your best customer profile, but obviously, your conversion rate should be higher as well.

In Types of Data You Can Use for Online Research Ferran Savín defines “a customer-centric marketing strategy places the customer front and center, on the assumption that by creating a positive experience we will achieve the widely sought-after customer loyalty.”

The customer-centric marketing mindset will help you in identifying your most and least profitable customers.

With the customer experience in focus Savin looks at a new way to classify consumer data for use in market research studies. Two factors determine classification. One is the way data is collected, and the other is the type of data itself.

Data is given passively or actively.

  • Passive data is categorized as behavioral and is based on observing what someone does.
  • By contrast, when information is actively provided to us, it is categorized as active or declarative data.

Data is by nature either subjective or objective.

  • Objective data points are facts and cannot change.
  • Subjective data is based on thoughts, feelings and opinion.

In Types of Data You Can Use for Online Research Ferran Savín shows us combinations of behavioral-declarative data and subjective-objective data to form four types of data to use in future market research.

  1. Behavioral objective data
  2. Declarative objective data
  3. Subjective observed data
  4. Declarative observed data

If you discover #1 declarative, data customers actively give, objective, unchanging facts, that as part of your best customer persona(s) and you can use those data points to find future best customers you have struck gold!

After you identify your most profitable customers what is your next move?

Turn your attention to the rest of your customers. You have an opportunity to find out which of them is costing you money.

Deep in this pile of the rest of your customers are the dreaded “unprofitable.” You probably know who they are already. Unprofitable customers drain resources.

The unprofitable soak up everything they touch including time, company morale, bandwidth, and energy both yours and that of your employees.

If your most unprofitable customers are this horrible, the best thing to do is get rid of them.

From a business standpoint, there comes a time when it is time to stop servicing unreasonably demanding customers. These customers consistently take up an excessive amount of time, do not follow instructions, and always want more, but never want to pay for it.

How can you get rid of an overly demanding customer if the customer is always right?

In a word, no. There are times when customers have unrealistic expectations and place outrageous demands. If this is happening with any frequency find out why immediately. Look into what is happening.

Under normal circumstances, you can expect under 10% of your customers to be fewer than 10% of customers of a business are You can either do something about unprofitable customers or go out of business trying to make it work.

There are a few things you can do about customers that are unprofitable and remain professional and on good terms with them.

The Same Level of Service to All Customers
When faced with a demanding unprofitable customer that represents a loss for your business the first thing to do is stop catering to them. Also, alert your staff and train them on how to deal with customers of this type. Specifically, keep interactions with the customer short and sweet. It usually does not take long for customers like this go elsewhere for what they need.

Once you decide to take the focus off customers that are not profitable for your business, please do not give them intentionally poor service. Just treat them as you would any other customer. Give them the same level of service if the customer continues to buy from you without demanding extra attention that is an improvement. Not to mention a miracle, do not expect this to happen. It is not likely.

Raise Prices to Reflect Their Demands
In this case, I am referring to the demands the difficult customer inflicts on you and your staff. Time costs money and taking up more time has a price. An unprofitable demanding customer undoubtedly shops on price and who is willing to deal with them. Raising your prices either makes them profitable for you or makes them costly for one of your competitors. Either way, you must consider it a win for you.

Realize that people who are this kind of customer acts the way they do everywhere they go. If you are part of a small niche or close-knit industry, they are the customers that everybody tries to avoid.

Any business they frequent eventually concludes that it is too costly to continue to deal with them.
It is up to the customer to figure out how to behave to remain a customer in good standing when they are both intolerable and unprofitable. It is up to you to identify them as such and use some of the ideas here to replace them with more ideal profitable customers.