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February 04, 2005

Comments

Rob

I think "best customers" can be counterintuitive. Are you implying that "best customers" are those who never return things? Just because a customer doesn't return something doesn't mean they are satisfied. It may mean they don't want the hassle and just won't shop there next time.

Let me give you a personal example. I used to buy running shoes at all kinds of different stores. Then I bought a pair at Sports Authority that I hated. 30 days later, without a receipt, after running in them a dozen times, I called to ask how I could return them to Nike and complain. The store manager said she would take them back, even though they were used and I had no receipt. Her only goal was that I was happy with my purchase. From then on out, I bought all my running shoes at Sports Authority, because I knew if I was unhappy with them I could easily return them. But I have never done that again, so far. And I run alot so I go through 4-5 pairs of shoes a year.

I don't think you can decide who is a good customer or a bad customer based on one interaction. I think you have to look at larger spending patterns. Wasn't part of that whole "fire your worst customers movement" a surprise because many firms found out the customers they thought were the biggest and best were really their worst? Sometimes sales teams cut so many deals with a big compay just to get the volume that they end up losing money on that customer overall.

Stephen Macklin

L.L. Bean has a lifetime warranty on its footwear. I once bought a pair of their classic boat shoes for $60. Over the next 15 years I exchanged worn out pairs for new ones probably 8 times. On each of those trips to their outlet store I probably spent $150-$200 on other merchandise. And those weren't the only occasions I shopped there.

I have since moved to where visiting one of their stores is no longer practical but still spend probably $500 a year in their catalog. Roughly $420 in shoes (retail) went a long way toward buying them lifetime customer loyalty.

David Foster

We've all had certain customers that we would rather not have, and in some cases it makes sense to "fire" them. But most cases of bad customer service aren't a result of a conscious strategy: they are a result of plain bad management. In general, top management does not pay proper attention to CS, and often the wrong metrics are used. Maybe a call center, for example, should be measured on customer retention as well as on things like cost-per-call.

Stuart Berman

Great topic! Related articles in the Wall Street Journal keep catching my attention. The trick seems to be knowing your customers and having them know you.

ING Direct (Dutch online mortgage lender) was mentioned because they have been 'firing' some of their worst customers. ING specializes in low overhead financial products geared toward the Internet self service crowd. I have been a customer for a little while and love them. They define 'worst' as a customer who requires excessive support. I think this is a great idea for their market - but they should have told the customers this so we know what the ground rules are.

This seems to be a good opportunity to treat the customer as partner. I also use USAA extensively for online banking and other services. USAA doesn't have any 'brick and mortar' branches - all transactions are done through the Internet, by mail or phone or ATM. They offer to rebate my ATM fees up to so many times per month at up to $2 per transaction. But as a 'partner' I don't want my wonderful business partner to incur unnecessary fees - so I transfer cash electronically (at no charge) to a local credit union and use its no charge ATMs. Everybody wins, very little inconvenience.

Then there is the case of Best Buy. I used to spend way too much money there. But I noticed that they changed over a year ago. Fewer sales, different attitude, less competitive... Then I found out in the WSJ that they too were quietly 'firing' their worst customers and courting their 'best' customers. I fit one of the profiles of a 'best customer' and I was feeling alienated. It became obvious they were looking to 'milk' their best customers without a reciprocal value proposition. They were no longer a 'best buy' but 'desperately seeking profits'. I have no problem with them wanting to sell high margin product - but they should tell their customers what the new deal is and if the proposition sound stupid then it is less about keeping it secret and more about getting a better proposition.

Target stores also started firing customers. The ones that return things too often and in some cases want to repurchase the returned item at a discount once back on the shelves. As an honest customer that wants my business partners to succeed, I am all behind Target on this action. Those people are abusing if not trying to steal.

Final anecdote, as a regular good customer of Home Depot I keep asking if they prefer that I over purchase materials and return the excess instead of purchasing exactly what I calculated (which inevitably turns out to be not enough lumber, plywood, brick, whatever). They insist that they prefer that I buy more than I need and return what is left over. I like that arrangement it means fewer trips to the store. They get more sales from me since I don't run to the local place for an odd piece. But you can see how this would backfire if they secretly decided to get rid of someone like me.

The lesson might be to tell your customer what the 'deal' is and then don't hate them for doing just that.

Snorkelbuddy

The CEO who wrote this article must not have any training in place for front-line people and must not like his/her front-line people very much. If there was training for the front-line people and if excellent people are hired, there would never be a reason to make this comment: "The problem with implementing a policy of not servicing your worst customers is that you can't really trust low level employees to make that distinction".

SHAME ON YOU - you should be able to trust ANY of your employees to make this distinction. Why can't you?

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