Ever had a customer who drove you crazy? You may want to fire that customer. Yes, you read that right. Sometimes, you are better off letting a customer go, rather than dealing with on-going complaints.
Consider that 5% of your customers likely generate 50% of your problems.
Your resources are precious, and how you choose to allocate your resources will determine the success or failure of your business. When you are faced with customer complaints, it’s important to pay attention to where those complaints are coming from.
Key questions to consider:
- What product or service is responsible for generating the most complaints?
- Which customers complain the most? Do they tend to purchase a particular product or service from you?
Interestingly, our best customers tend to purchase our best products and services. They also tend to be the ones who treat us with the most respect.
In 80/20 Sales & Marketing, Perry Marshall actually advises us to fire the bottom 10% of our customers—annually. Okay, I know that may strike you as a gutsy, if not an outright crazy move, until you consider just how much time, energy and profit customer complaints drain from your business.
If it’s your best customers who are complaining, sit up, pay attention, take notice and by all means, do something to correct the situation.
However, if your team and you are being consumed by customer complaints from a group of customers who are responsible for only a small portion of your business’ annual revenue, consider some options:
a) discontinuing the product or service that group of customers is purchasing
b) raising the price of the product or service that generates the most complaints (so you can afford to invest in the improvements you need to make, while simultaneously attracting better customers)
c) notifying customers who complain the most, yet have very little impact on your business’ overall revenue, that you will no longer be able to serve them.
Customer Complaints Lead to Major Changes that IMPROVE Revenue
Todd, an experienced plumber, runs a small plumbing company in rural Georgia. He caters to a large and diverse clientele in his town. Besides providing plumbing services to local residents, he has several large contracts with other local businesses and government agencies.
A few years ago, some of his residential customers requested he carry budget-friendly parts for do-it-yourself work. In the spirit of providing good customer service, and believing he was meeting a legitimate demand from the marketplace, Todd expanded his business to sell budget-friendly “DIY” parts. He even went so far as to add a small showroom onto the front of his store to accommodate the display of these parts.
Within the last year, Todd began noticing an increase in customer complaints. Todd decided to do a deeper analysis into the problem and he asked his staff to collect data on customer complaints.
Todd made quite an interesting discovery. The majority of customer complaints were from customers purchasing the less expensive “budget-friendly” DIY parts, some of which broke during installation, and others that did not hold up over time.
Having invested time, energy, and capital into expanding to provide this line of parts, Todd faced a difficult decision. He decided to stop selling these budget-friendly parts.
When customers came in requesting to purchase these parts, Todd explained that he could not, in good faith, sell parts that he knew would not hold up over time. Although he lost some business to a major retailer, who carried a similar line of parts, he also picked up new residential customers who were pleased by his attention to quality.
As a result of discontinuing this line of products, Todd saw a significant drop in the number of complaints. His staff was able to dedicate more time to serving customers and tackling more serious problems. Their morale and quality of service greatly improved. At year’s end, Todd was surprised to see a healthy 14% increase in revenue, in spite of discontinuing an entire product line and losing some customers.
By knowing and understanding your customer base, their buying patterns, and how much value they bring to your business, you can make more informed decisions that allow you to streamline your products and services, while providing better customer service.