- While a customer can be difficult, there are many reasons why a company may choose to keep them.
- There are many other things to consider before deciding to decline transactions with an otherwise difficult client.
- Even if the customer constantly takes your time for granted, this is not an indicator of ending your business relationship, but it should be a trigger for you to re-evaluate your scope of work or contractual agreements with them.
Most companies view customer satisfaction as an important indicator of their success. Customers who are satisfied with the service your business provides are more likely to be retained, which translates into future earnings. They also generate more positive word of mouth that can encourage other customers. This has led many service-oriented companies to adopt the idea that ‘the customer is always right’.
But what happens if the cost of keeping a customer happy outweighs the benefits you receive if you keep them? What if meeting their needs affects employee morale? When “the customer is always right” does this, do you mean your staff and company are “always wrong”? Or … Is there such a thing as bad business? Costs versus benefits It is important to note that while a customer can be difficult, there are many reasons why a company may choose to keep them.
For example, it could be a large customer providing your business with a base load of business, covering a large portion of your overheads and staff. Or they may have valuable industry connections that are a gateway to the growth of your business. Or it could be that they are already paying a high premium and are one of your most profitable customers as a result (at least on paper).
There are many other things to consider before deciding to decline transactions with an otherwise difficult client. Searching for and acquiring new customers can also be costly. You may need to adjust your current marketing strategies to draw customers away from your opposition, and will often result in an increase in your marketing spend. Remember, “then they can get expensive to keep.
Often times, such issues can be resolved by repeating your availability to your client, raising their awareness for the work you’re doing, or renegotiating your terms. Even if the customer constantly takes your time for granted, this is not an indicator of ending your business relationship, but it should be a trigger for you to re-evaluate your scope of work or contractual agreements with them.
Those who do not pay on time Cash flow is a very real problem for many small businesses. It is one of the main reasons why small businesses fail2 and it does not necessarily mean that the business is not profitable. If a business cannot convert its sales into cash in a timely manner, it will struggle. are also hidden or additional charges that may arise from late payments Accounts transferred, additional expenses to earn money back ones, debt financing and interest expense are just some of the additional costs that can be incurred.
Visit Also: BAS Services in Australia
A good customer pays on time. Sometimes there are extenuating circumstances or exceptions that can be made for real customers that can give them an extended expiration date or even a discount. But they will always fulfill their obligations. If you find that a customer is constantly paying or not paying their bills late, this needs to be addressed. Further analysis needs to be done to determine the impact that late payments have on your business. An effective accounts receivable system must be implemented to track and manage receivables.
Elderly debtors should be contacted regularly to ensure there are no other issues affecting payment. Customers’ credit ratings must also be analyzed before being offered credit terms. Those who constantly want something for free Everyone likes to feel like they got a good deal or value for their money. Offering discounts or items for free can be a way to promote your business to new customers or increase customer loyalty.
However, offering a lower price to a customer or offering a free service comes at a cost to your business. If you constantly give these kinds of incentives to a customer, they lose their impact and become an expectation. A customer must value the service you provide them enough to be satisfied with the fees you charge. Occasional incentives are great, but they shouldn’t become an integral part of customer retention.
There are bad business. But it is not necessarily the customer’s only fault. Sometimes it is a result of a misunderstanding between the expectations of the customer and the supplier. A company may need to revise its policies and procedures to change the way they address problematic customers. If a customer has been identified as “difficult”, there are many other factors to consider when analyzing whether they are worth holding onto.
Systems must be implemented to track and measure key parameters important to your business, to guide decision-making process and strategy when dealing with troubled customers. Often it is not the company that makes the decision whether a customer stays or goes. But if the cost of retaining that customer far outweighs the benefits received, both financial and otherwise, then it may be time to rethink the relationship.
The Numbers Pro
We are a is a Perth based company and registered BAS agent providing quality accounting and financial training on a personal basis to all of Australia. Using a combination of in-person visits and various external and cloud-based services, we can finalize your accounts with us or with you. We use all major accounting packages including Xero, MYOB, Quickbooks and Reckon. At the Numbers Pro, we use the latest means of communication to ensure that we finalize your accounts while retaining that personal touch. It is essential to us that we maintain an ongoing business relationship with all of our clients so that you can best manage your finances on a daily basis. We have served a large number of clients with needs ranging from our full-time attention to quarterly assistance. Each of our customers is important to us and that’s why we’re happy to help them handle business.
For more information visit website www.numberspro.com.au