Demanding Customers

When your best client is actually your worst!

Ever worked in a business where one customer is viewed as the most important and precious to the company and everyone treats them with white gloves? Yet this customer seemingly pays later than all the others, demands special terms, takes up all the managers and staff’s time, and never seems satisfied?

Why Does this happen?

When asking about how it works that one customer can seem to dominate the firm, the reply is often along the lines of: ‘they’re our longest serving customer’ or, ‘they’re our biggest customer’ or even ‘they’re a personal friend of the owner’.

What should you be asking yourself?

Demanding customer

The bottom line; is this customer adding to the growth and well being of the firm or, actually detracting from it? This is particularly acute when a customer’s business represents greater than 40% of the overall turnover. This benchmark indicates that the customer has so much influence that in effect, they are running the business instead of the owner.

As a small business grow, it’s easy to accept large orders from one customer or grow on the back of one that leads into this situation. Indeed I’ve both been in a business where this has been the case and worked with clients in this position. The key point though is that if this large customer starts to dictate how the business operates, what markets it’s in, products offered, and crucially pays late, then the business owner is in real trouble.

What’s the Solution?

How to get out of this? In the short term, work towards educating the customer about the terms of business you want to have. Easier said than done you may say yet when explaining what you want, needs, and why, to customers, it often does produce the change you’re looking for. In the long term, work towards expanding your customer base and even, towards exiting doing business with some if desired. If a customer doesn’t pay on time, no matter what their size, are they really a customer? And how much time could be freed up to handle those that do pay with better margins. Remembering to work this plan in alternative customer sources and cutting off ties with the wrong ones when the time is right for you

I call this getting rid of ‘D’ Class customers (from grading all customers A to D). Therefore, review your customer base and ask; does your ‘best’ customer upon inspection really live up to this premise- or if you had a choice, you’d rather not have taken the order and would prefer to have other customers?

The Purpose of a business is to create a customer who creates customers.