The way to healthy business is to turn down some of your customers

Thought the headline was an editing mistake that someone allowed to slip through. Not really. As the economy grows and demand rises across sectors, there is inevitable growth that every organization irrespective of its size witnesses. With growth come new customers of all kinds, hues, sizes, expectations, requirements, work processes and quirks.

The easiest thing and the most logical thing in this situation for any SME firm which is hungry for business and ambitious about its business to do is to accept all the customers with open hands.While they might be new customers and can drive up revenues the true situation down the line may be entirely different, if there are no criteria applied to the acceptance of customers. In other words, even if someone wants to utilize your firm’s services, you need to start applying some formula on them to assess whether you need to accept that opportunity or not. This is done well and right, can lead to a healthy and stable business which still will grow minus unnecessary hassles. Here are some reasons why a firm has to do that?

There needs to be some common ground between the client and the customer if ever there has to be a partnership or relationship. In the services business this is all the more important and critical. If there is no common ground or shared beliefs, it is often difficult to ask for trust or resolve issues. This often results in extra time and effort to convince and protracted issue resolution/management sucking out valuable executive time and bandwidth. The value and cost of such time and bandwidth is enormous in services business since it is intangible and the only tangible a person has is time. This also spills over into internal employee morale and often teams on such accounts are under constant stress impacting their work on other customers and clients. If one adds up the total cost of this, it is entirely possible that the particular account or customer instead of adding up to the business/revenues has actually been a drain. Worse, since services business is all about people, their motivational levels, this results in job dissatisfaction among employees leading to some of them even leaving the company.

The second aspect one needs to assess is that is the relationship and its terms fair. Often companies trying to be very smart play it hard and make their vendor/partner agree to conditions which are either unreasonable or plain unviable. Due to business pressures many a company falls into this trap and accepts the business. Once that happens, the client further gets emboldened and starts increasing his demand and since the service provider would have invested resources and time, he would be unable to pull out. This results in a vicious cycle of exploitation with only one end result. Of the service provider suffering losses and undergoing anguish.

Best is to spot such clients in the beginning and either make the terms mutually fair or just walk-out. Ultimately business is about making margins and not assisting another business to make what you are not making.

Thirdly the client or the customer has to have some respect for the firm that provides the product or service, its capability to do so, its understanding of the business. If a client understands and respects your offering and recognizes its value, it results in a healthy relationship where the team on the account is motivated to give their best or take the extra step. They know that what they are doing is valued and the customer respects them for it. Now this is a positive cycle and the more such customers you have, happier employees you will have internally. Now, for a moment step back and visualize the scenario in reverse. With people becoming central to businesses, this is one concern or area that cannot be overlooked.

While the above three are criteria that one should definitely adopt, there is one more that can be asked from the perspective of growing the firm. This is to ask seriously and honestly, is the client bringing something to the table which is more than money? This is again very important, since today most businesses are about knowledge and for most firms, clients or customers are the biggest source of knowledge/learning and best practices. If there are more clients whom you can learn along with, the more valuable your offering becomes. Inturn leading to increased revenues and better value realization.

Ask yourself. It is finally your business and that business needs to be profitable and you need to enjoy the challenge of running the business. Challenges or issues should be business-driven and it should be empowering to overcome them. If it is not, then what is the use of having a customer? Think about it and be smart and selective in your customer addition.

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