The customer is not always right

Are you in business to make money? Then you need to drop the old clichés – ‘The customer is always right’ or ‘the customer is king’. The ‘right’ customer is right. The rest are not. The profitable customer is king. The rest are begging for value they did not pay for.

Let’s get a reality check here and make sure we select customers carefully. Especially in this economy, you cannot afford to do business with the wrong customers. Over generalizing clichés should be replaced with carefully crafted marketing strategies.

Customer strategies should not be left to oversimplified clichés and fairy tales. The customer is not always right. Some customers are not kings. A customer who is not paying for the value they consumed should not be a raving fan. Customers should know what is expected of them as part of a relationship.

They need to know what you promise to them and what they are expected to do in return for receiving the promised value. If you don’t do this you will be out of business soon. Every company that operates with clichés such as ‘the customer is always right’ has created abusers – customers who do not know where or when to stop.

The litmus test

Customers who think that there is an open, free buffet will have no shame lying to get a free meal. Abusers should not be tolerated and the practice must be stopped. If it does not, you run the risk of spreading it to other customers and compromising your business model and profitability. There is a simple litmus test for how serious the customer is: Are they willing to pay for their special request or additional demands? If the answer is ‘no’, you have a problem. The customer is, in a sense, asking you to bear the cost of additional value. If they are willing to pay, find a way to make it happen, while maintaining your profitability.

Charging is a great way to test the customer’s real intentions and needs. If there are no financial consequences, customers will ask for anything imaginable. They will act like spoiled kids with no end to their desires. When you create consequences and financial discipline, they will quickly rethink their requests and many of them will evaporate. Desperate for sales, you have run various special promotions and discounted your products in the process. As such, your customer pool includes those with different levels of profitability. Some customers paid full price and expect a luxury experience in exchange for the generous margins they provided you.

Others paid rock bottom prices and are enjoying an experience they did not fully pay for. The latter customers are free riders at the profitable customers’ expense. Align your resources with the ‘right’ customers. Those ‘right’ customers should be priority number one for all your resources and value.

Customers, who purchased from you when the price was significantly reduced, should be treated accordingly. They should be provided with a reduced experience.

A reduced experience does not mean a bad experience – it means a less privileged experience.

There is nothing right about treating customers with different levels of profitability the same way. In fact, it is flat out wrong. There should be a different level of ‘right’ for different levels of profit. By not teaching your customers that there are sacrifices that need to be made for lower prices, you are spoiling them and creating unrealistic expectations.

The reason you are limited in your ability to delight and wow your “right” customers is that your resources, both human and financial, are tied up with low profitability customers who are expecting high profitability experiences. Break this vicious cycle and you will have all the resources you need to treat the ‘right’ customer the right way

‘Right’ customers

Now that you know who your ‘right’ customers are and you have measured their collaboration, its reward time. You need to send a clear signal to all your customers: the ‘right’ customer is right. Rewarding the ‘right’ customers in a public way resets the expectations of all customers.

They all know now what is important to you and what type of relationships will receive the highest level of attention. You set the stage for customers to select if they wish to be your ‘right’ customers or not. Treat the ‘right’ customers as kings and make all the wrong customers envy the royal treatment received by the ‘right’ customers. This is the best way to have the wrong customers join the ranks of the “right” customers and make them more profitable.

It is time to take a disciplined approach to analyze who are the ‘right’ customers and then you can treat them the right way. Let’s crown the customers who deserve to be kings and leave the rest to the competition