Every business has some customers or clients whom they’d be better off without. Leaders know it, yet few are willing to decide to let go. That doesn’t mean the leaders don’t know who a bad or sub-optimal customer is. Usually, they know or have a clue but rationalize to avoid unpleasantness. You are probably asking, “What kind of a leader does this?” The answer is humankind.
No matter how accomplished, people can succumb to the desire to avoid what is unpleasant, though not necessarily with intention or awareness.
Recently, James, a senior vice-president, told me that his team was “falling apart.” Pandemic stress, workload, everyone working from home, and feeling disconnected were the reasons he named, and each is true. However, what tipped the scale from demanding work to impossible was the unwillingness James had to see that several customers, who generated 21% of the company’s revenue, were also working his team into the ground. Yes, they paid millions each year in fees, but they were demanding and abusive to his team. His refusal to listen to his team had taught them to suffer in silence, a deadly state of affairs. Not only were the clients demanding, but they were barely profitable and couldn’t be counted on for references or testimonials. These are the hallmarks of bad clients.
James had to learn to take a broader view of clients, well beyond top-line revenue. He also had to learn to create an environment where talented people could thrive, which meant listening to them without defending his position. Fortunately, these are things that can be learned if the leader accepts that they need to learn.
A million-dollar customer who resents you isn’t worth a million dollars. A million-dollar customer who respects you is worth far more than a million.
Know what value you provide and to whom. Leaders are fond of saying, “We can’t be all things to all people,” but they don’t often run the business as though that’s true. The result? People are spread too thin, and customer satisfaction is too low. When a company is clear about what they offer, customers can opt-out, and those who opt in don’t feel duped. Wal-Mart is a good example. No one walks into a Wal-Mart and expects to have the same experience as they would at Saks Fifth Avenue. These brands are clear, and they say “no” to specific customers in obvious ways. Waffle House is another example. They are highly consistent in what they deliver – they don’t try to lure people who are on their way to brunch at The Four Seasons.
Make it easy and even pleasant to part ways. Most businesses try for add-ons and add-ons. Netflix did the opposite a few years ago, and it was brilliant. They let customers know that they would cancel their service based on their use history. If you weren’t using the service, they would automatically stop charging you on a particular date.
Say “no” to providing a product or service that doesn’t fit the need. I was once asked to provide “intense coaching” for a senior executive in a Fortune 100 company. He was creating chaos, revenue was falling, and his team was resigning at an alarming rate, but his boss didn’t dare remove him for very complicated reasons. I told his boss that no matter how much time I spent with the executive, it wouldn’t help. Further, it would be unethical for me to accept the work and payment, knowing it would not add value. It would have been a very lovely fee, but my reputation for accuracy and honesty would have gone down the drain.
In my consulting and coaching work, I often see people who are not making decisions to win so much as they try not to lose. This fear makes it very hard to say “no” when they should. These are intelligent, experienced people, but fear of short-term loss gets in the way of what leads to long-term gain-strategic thinking and courageous action. Leaders can improve significantly by applying these three ideas: 1. Be clear about the value they provide, to whom 2. Make it easy for their ideal customers to find them and engage 3. Say no even when a customer asks for and will pay for something you know will not help them achieve their goals.