{"id":124910,"date":"2024-08-10T16:04:31","date_gmt":"2024-08-10T20:04:31","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=124910"},"modified":"2024-08-26T09:06:48","modified_gmt":"2024-08-26T13:06:48","slug":"how-to-treat-customers","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/how-to-treat-customers\/","title":{"rendered":"How to Treat Good Customers (& Weed Out the Bad)"},"content":{"rendered":"\n

Which customers are worth letting go of? How do you know who your most valuable customers<\/a> are?<\/p>\n\n\n\n

Mike Michalowicz says that an important component of the quality mindset in business is focusing your time, energy, and resources on your most valuable customers. Not every customer is going to be a good customer, so you need to learn how to differentiate between the bad and the good.<\/p>\n\n\n\n

Take a look at how to treat customers that will help or hurt your company down the line.<\/p>\n\n\n\n\n\n\n\n

Catering to Your Most Valuable Customers<\/strong><\/h2>\n\n\n\n

Many entrepreneurs mistakenly believe that any customer is a good customer. Thus, they overextend themselves and force themselves to constantly deal with frustrating people. In contrast, identifying what a good customer has three main benefits:<\/p>\n\n\n\n

1. Your customers will grow increasingly valuable.<\/strong> As you adapt your processes to know how to treat customers that are good and bad, your customers will appreciate your company more, increasing the odds they\u2019ll use your services more often in the future.<\/p>\n\n\n\n

2. You\u2019ll attract more high-value customers.<\/strong> Since you know exactly who your desired demographic is, you can market to them more effectively. For instance, instead of putting cheap, generic ads for your business in as many places as possible, you can put more pricey, customized ads in places you know <\/em>your most valuable demographic will see them.<\/p>\n\n\n\n

3. You\u2019ll be happier. <\/strong>You\u2019ll spend your time focusing on customers who are more enjoyable and less frustrating to serve, improving your overall work experience. (Shortform note: This may spark a virtuous cycle<\/a>. People who are happy at work are more helpful and cooperative<\/a>, says Gretchen Rubin in The Happiness Project<\/em><\/a>. <\/em>In turn, your positivity makes other people <\/em>more helpful and cooperative, further decreasing your frustration and making work more enjoyable<\/a>.)<\/p>\n\n\n\n

These benefits so influence your business\u2019s success that Michalowicz says this component is the most important of the three.<\/strong> Thus, catering to your most valuable customers should be your first priority. We\u2019ll explore Michalowicz\u2019s three-step process for doing so.<\/p>\n\n\n\n

Another Perspective on Catering to Your Customers<\/strong>

In Raving Fans<\/em><\/a>, <\/em>Ken Blanchard and Sheldon Bowles agree that catering to your customers should be your primary focus. While they don\u2019t use the same ranking and prioritization method as Michalowicz, they say you should have a clear vision of how you <\/em>want your company to operate<\/a>. That way, you can evaluate your customers\u2019 desires and only work to actualize the ones that align with your vision, instead of getting distracted or burned out trying to actualize all of your customers\u2019 desires.

They also agree that increasing customer value and attracting valuable customers are two benefits of providing a great customer experience<\/a>. However, while Michalowicz frames these benefits as stemming mostly from separate actions\u2014improving your service and improving your marketing\u2014Blanchard and Bowles say they both stem from improving your service<\/a>. When you continually improve your service, customers are not only more likely to appreciate and remain loyal to your company, but also to become brand advocates, encouraging others to use your company and thus expanding your customer base.

To generate this level of enthusiasm, they specify that you must not only give your customers a positive experience, but also continually exceed their expectations<\/a>. If you succeed, you may not need to place ads at all, as your existing customers will do the marketing for you.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Step #1: Rank Your Customers by Value<\/strong><\/h3>\n\n\n\n

Michalowicz says it\u2019s important to rank your customers because their rank will determine how you should treat them to ensure your company\u2019s success:<\/strong> The more valuable the customer, the more you\u2019ll prioritize their needs and desires.<\/p>\n\n\n\n

In this section, we\u2019ll first explore what makes a customer valuable. Then, we\u2019ll discuss the categories of value your customers can fall into and how you should respond to each category.<\/p>\n\n\n\n

What Makes a Customer Valuable<\/h4>\n\n\n\n

We\u2019ve consolidated Michalowicz\u2019s definition of a valuable customer into three metrics:<\/p>\n\n\n\n

1. Similar worldview.<\/strong> Valuable customers get along with you well because they have a similar set of rules that they approach life (and business) with. Michalowicz calls these \u201cimmutable laws,\u201d as they\u2019re extremely influential and never change. It\u2019s easy and enjoyable to work with people who have similar worldviews, as you\u2019re more likely to want the same things and understand each other. In contrast, you\u2019re more likely to experience misunderstandings and conflict with people who don\u2019t share your rules. You may also feel pressured to change the way you operate\u2014to break your unchangeable rules\u2014to accommodate them. This then leads to internal conflict and unhappiness.<\/p>\n\n\n\n

For example, if part of your worldview<\/a> is “Always take responsibility<\/a> for your actions,\u201d you wouldn’t work well with people who are focused on protecting themselves from criticism. It would be frustrating to work with them, and they may take advantage of you by blaming you for anything <\/em>that goes wrong, not just the things you\u2019re actually responsible for. You might then feel tempted to act defensively and refuse to take responsibility at all, contradicting your own worldview and causing internal conflict and unhappiness.<\/p>\n\n\n\n

2. Financially trustworthy.<\/strong> Valuable customers use your services regularly, pay their bills on time, and are likely to generate future revenue.<\/p>\n\n\n\n

3. Cooperative. <\/strong>Valuable customers maintain good communication and are willing to work with you to resolve any mistakes instead of holding a grudge.<\/p>\n\n\n\n

How to Rank Customers<\/h4>\n\n\n\n

Michalowicz uses a letter-grade system when ranking customers<\/a>. We\u2019ve divided it into four categories your customers could fall into, and describe how you should respond to each:<\/p>\n\n\n\n

1. Most valuable.<\/strong> These customers are almost perfectly aligned with you in all three metrics. You\u2019ll focus on catering to this small, elite group with every decision you make, as they\u2019re the most likely to bring you future revenue and help you succeed. (We\u2019ll discuss how to do this in Step #3.)<\/p>\n\n\n\n

2. Valuable.<\/strong> These customers are mostly aligned with you, with only minor differences, and they make up the majority of your customer base. You won\u2019t focus on catering to this group, since you don\u2019t want to diffuse your attention too much, but the decisions you make to benefit your most valuable customers will usually benefit them too.<\/p>\n\n\n\n

3. Mediocre.<\/strong> These customers are aligned in some ways, and they don\u2019t harm your company, so you don\u2019t need to fire them right away. However, they\u2019re not particularly helpful to your success, either, so you\u2019ll try to gradually replace them with more valuable customers.<\/p>\n\n\n\n

4. Bad.<\/strong> These customers aren\u2019t aligned with you. They drain resources and stop you from succeeding. You\u2019ll fire them immediately to minimize the damage they cause. (We\u2019ll discuss firing bad customers in more detail in the next section).<\/p>\n\n\n\n

Step #2: Fire Bad Customers<\/strong><\/h3>\n\n\n\n

Once you\u2019ve ranked your customers, Michalowicz says you need to fire the bad ones<\/strong>\u2014the ones who don\u2019t share your values, aren\u2019t financially trustworthy, and aren\u2019t cooperative. As mentioned before, many entrepreneurs struggle with this step because they don\u2019t want to lose any customers. However, the customers in this category actually damage <\/em>your business: They drain resources, leaving you less time, energy, and funding to devote to your valuable customers who\u2019ll actually help you succeed. By firing these customers\u2014and eliminating the expenses associated with them\u2014you give yourself room to better serve your remaining ones. As discussed, this better service will then attract more valuable customers, helping your company grow.<\/p>\n\n\n\n

Michalowicz recommends re-ranking your customers every quarter.<\/strong> This ensures you catch any new bad customers before they can cause much damage. It could also help you decide which mediocre customers to fire when making room for more valuable ones.<\/p>\n\n\n\n

Step #3: Continually Improve Your Most Valuable Customers\u2019 Experiences<\/strong><\/h3>\n\n\n\n

Once you\u2019ve fired your bad customers, the next step is to improve your most valuable customers\u2019 experiences.<\/strong> This will further increase their value and help your company succeed. We\u2019ll focus on the method Michalowicz spends the most time discussing: turning customers\u2019 dissatisfaction into delight.<\/p>\n\n\n\n

You can improve your most valuable customers\u2019 experiences by turning their dissatisfaction into delight<\/strong>\u2014or fulfilling their wish lists, as Michalowicz frames it. Michalowicz says that your customers are likely dissatisfied with your industry in some way. If you can identify what irritates them or what they want done differently, you may be able to alleviate this dissatisfaction. Since these are industrywide problems, being the only one solving them will make your customers happier and make your company more unique and attractive.<\/p>\n\n\n\n

Michalowicz suggests interviewing your most valuable customers to identify the reasons for their dissatisfaction. Your questions should be industry-focused, not company-focused,<\/strong> he stresses. If you ask customers what they want your company specifically to change, they may be uncomfortable<\/a> giving an honest answer. If you focus on the industry as a whole, you\u2019re more likely to get a real answer.<\/p>\n\n\n\n

Once you\u2019ve identified why your customers are dissatisfied, brainstorm ways to improve their experiences.<\/strong> The method you use will depend on your industry and the source of dissatisfaction: If you run a grocery store and customers complain about long lines, you may offer self-checkout as a new service, but if they complain about high prices, you may make deals with local farmers to buy produce more cheaply so you can then lower your own prices.<\/p>\n\n\n\n

Finally, propose your solution to your most valuable customers, and ask for feedback<\/a>.<\/strong> Since they\u2019re the ones you\u2019re trying to help, they\u2019re the best people to judge whether your plan will work. Michalowicz says to revise your plan until customers ask follow-up questions like how much the new service would cost or when you\u2019re going to implement the new strategy. These questions show that customers are excited about your solution and that your plan would significantly improve their experience.<\/p>\n","protected":false},"excerpt":{"rendered":"

Which customers are worth letting go of? How do you know who your most valuable customers are? Mike Michalowicz says that an important component of the quality mindset in business is focusing your time, energy, and resources on your most valuable customers. Not every customer is going to be a good customer, so you need to learn how to differentiate between the bad and the good. Take a look at how to treat customers that will help or hurt your company down the line.<\/p>\n","protected":false},"author":14,"featured_media":128599,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,104,103],"tags":[1509],"class_list":["post-124910","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-marketing","category-sales","tag-the-pumpkin-plan","","tg-column-two"],"yoast_head":"\nHow to Treat Good Customers (& Weed Out the Bad) - Shortform Books<\/title>\n<meta name=\"description\" content=\"Valuable customers benefit companies, and bad ones will bring them down. 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