Have You Fired Any Customers Lately?

In my last blog, I wrote about the value of collaboration and relationships, so you may think from this title, that I am doing a 180. Not so.

As I reflect on my experiences as a Logistics Service Provider (LSP) and then think about the challenge many companies face today as they acquire, service and grow accounts profitably, the gnawing question sometimes lurks: Is this customer good or bad for my business?

There’s no one, simple answer.

The customer might be an anchor who covers fixed costs or provides the density for a transportation network. Then there’s the client who was great, but continuously increasing one-sided demands over time have eaten away at what were once healthy margins. Perhaps the business is profitable when suddenly it’s announced that 30 day payment terms will now become 45, putting cash flow in a tail spin.

In this uncertain economy, it’s tough to ask yourself about firing customers. At the same time, we all know that the definition of insanity is doing the same thing over and over and expecting a different result. Maybe it’s time for you to examine the quality and profile of the customers you serve.

Let me caution, however, this is not for the weak at heart, and it must be done with purpose and understanding.

The goal is to get more customers like the ones you define as “best” in terms of the value they – and you – receive and to stop pursuing and servicing customers who don’t fit your profile. This is hard work and brings to mind another of my favorite quotes: “If you don’t know where you’re going, any road will take you there.”

You must have a great plan, and you must execute it flawlessly.

One CEO whom I greatly admire is Margie Traylor. Margie transformed the way her company secured and serviced its clients by adopting The Whale Hunters Process™ – a process that gives companies the steps and tools necessary to successfully find, land, and harvest “whale-sized” accounts. Beginning in 2007, Margie shifted her focus on the types of customers she pursued, and in the course of three years, “fired” more than two-thirds of her existing customers. Her business grew in double digits each year 2008 through 2010, and her minimum deal threshold grew by a multiple of 10.

Now, I’m not suggesting that you go out tomorrow and start firing customers, but I think customer quality and revenue quality are important topics for LSPs.

Recovery is happening. If you haven’t examined your growth strategy in a while, there’s never been a better time to get started.

— Valerie

(In her role as SVP Strategic Market Planning for Tompkins Associates, Valerie helps companies design and implement growth strategies. She is also a certified Whale Hunter. For more information on The Whale Hunters Process™, visit http://www.thewhalehunters.com/WhatWeDo).

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