In this post you will learn about:
- How to increase profits by firing your customers?
- How do you fire unprofitable customers?
- How do you fire customers?
- How to fire a customer email template
Hey everybody Mostafa Hosseini here, today I’m going to talk about how you can increase your profits by getting rid of and firing some of your clients.
Now, before you get overwhelmed with the topic because it’s kind of counterintuitive to fire your client and you know, increase your profits, how is that possible?
Give me five minutes, and you can either reject the idea or take the idea and I will hopefully convince you!
What you should do is list your customers for the past 12 months by revenue per customer.
You will notice that 20% of your customers give you 80% of your sales!
You will also notice that the bottom 30 or 40% of your customers give you less than 5% of your sales, or something close to that.
Usually out of those customers out of the bottom 30 or 40%, also give you 80 or 90%, or maybe 100% of your headaches.
20% of your customers give you 80% of your sales!
Let me explain, I’m going to mention three categories of unprofitable customers, but it’s not limited to this.
1- The first category, are customers that spend very little money with you and these guys are never happy.
Regardless of what you do, they always complain and for the tiny money that they’re spending with you, they want the whole world. They have just wrong expectations. That’s number one.
2- Number two are the category that they spend some money or very little money from the bottom 30-40%, and they take most of your time, they take way too much time on that account for the money that they’re spending with you.
3- The third category are the clients that again, are at the bottom, or maybe at the top, and these are guys are accounts that you’re not making money on them, you’re losing money on them.
Let me explain to you how what you can do with these!
The guys that are never happy, should go right off the bat!
For the guys that you are spending too much time with, you should make a boundary for these guys and let them know what is included on this account with what they bought and what is not included. Make it very clear.
If they don’t take it, they must go.
The third one, the guys are the accounts that you’re not making money on them, identify if you’re losing money, and if you know you’re at the net loss on them, then you can either increase the price on what you do, or bill them properly, or they need to go as well.
Out of these, the guys that are not happy, give you 80 or 90% of your headache; All of these guys are taking your resources, but some of them take mental resources as well.
By keeping these customers, what happens is if you or your staff are dealing with these customers, and they call you up and they make you mad, they make you sad, they get all grumpy on the phone, and maybe in person. By keeping these customers and dealing with them, you get mad and then you portray the bad vibe and the bad energy to your other customers as well. And you’re going to piss them off, they’re going to feel it, they’re going to see it, you may lose them, they may just take their business somewhere else.
And then overall, they’re just not going to be happy!
So by keeping these customers, you’re losing money, you’re losing resources, your staff are not happy and if they’re not happy, it’s going to show up in your numbers.
How to fire a customer email template
As fast as you can, grab your customer list and identify who needs to go. And then professionally at call them up and get rid of them.
You need to email them and say:
Hi [NAME], we’ve made a decision in our business and moving forward, unfortunately, we’re not going to be able to serve and support you. Here’s a list of three companies that you can use.
The bottom 30 or 40% of your customers, only give you less than 5% of your sales
You can refer them to your competition, they’re going to love the business and let them deal with it. And their mind is just going to blow as you refer them business to your competition.
Try it out, grab your customer list, identify who needs to go and save yourself some time.
I’ll give you an example.
Years ago, I used to work at a dealership. There was this one customer that showed up and he wanted to buy a truck.
He was giving headaches every day, every single day, he would show up and tell me about this truck, about that truck, about this and that.
There was no money to be made on this deal and he would show up, he would piss me off, and he would waste my time!
I went to my manager and said, Hey, this guy’s pissing me off. And I’m not making money, I can’t sell and I started losing my sleep, I started having nightmares about this guy,
Not a word of lie!
My manager is like, you go close that deal, and you gotta get it, and if you don’t get it, then you get out of here, or something like that.
This was years ago, but he was like: you gotta sell to this guy, so you got to keep the deal.
By keeping that guy, I couldn’t sleep well, I was not happy, it showed up with other customers and it just didn’t have any positive impact.
The bottom 10 or 20% of your customers, usually give you 80 or 90%, or maybe 100% of your headaches.
I should have got rid of him. I should have maybe given him to another salesman and be like, Hey, take this customer or refer them to another dealership let them deal with that. Not us!
Wise managers, wise business owners identify unprofitable customers and get rid of those guys quickly so you could focus that time and energy on your top 20% of customers! Right?
Grab that time and resources and have your staff focused on either making your top 20% happier or finding similar people to your top 20%.
I hope this helps, go through your list and if you have any questions or concerns, feel free to reach out. Send me a message and I’ll be happy to answer your questions
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Leave a comment, let me know what you think
If you try this, I would love to hear about your results!
Mostafa Hosseini, your business and marketing coach
