I attended a webinar recently, with a really interesting panel of experts on Customer Journey Mapping.
At one point, I asked the panel about what Jones and Sasser1 defined as “wrong customers” and one of the experts, quite rightly said: “We have to be careful how we label our customers. We surely don’t have “wrong” customers”. Another panellist added something like: “We must have strategies to win back difficult customers”.
Of course, they were both right. There can’t be such a thing as a “wrong” customer if we know how to prevent customers from becoming “wrong”.
What is a “wrong” customer?
According to Jones and Sasser,1, “wrong customers” play an important role in overall customer loyalty and the amount of resources invested per customer. They should therefore be considered in Customer Experience and business strategy.
Their article suggests that some customers are inherently difficult or unprofitable to serve. If a customer constantly complains, returns products, or requires excessive service, they may not align with the company’s core value proposition. This can happen if Marketing attracts the wrong audience.
The customer perspective
Wait a minute. I am certainly not a wrong customer for anybody! What are you talking about?!
For that matter, a company is wrong for me if it doesn’t meet my expectations, if it doesn’t serve my needs and if it doesn’t make me feel delighted.
If I need to return a purchase or ask questions, I am simply exercising my consumer rights. And if I feel that I am not being treated fairly, I will definitely make a complaint.
That doesn’t make me “wrong”, and it’s quite possible that I’ll end up blacklisting those companies and buying elsewhere.
So, from the customer’s perspective, there’s no such thing as “wrong” customers, but only companies that don’t have the right processes in place to meet the full range of their customers’ needs.
The business perspective
The classic Pareto Principle (80/20 Rule)2 suggests that 80% of a company’s revenue often comes from 20% of its customers. The remaining 80% of customers may generate little profit or even cost more to serve than they bring in. Tools such as Customer Lifetime Value (CLV) help identify low-value customers.
So, from a company perspective, it looks like there is such a thing as a “wrong” or “difficult” customer, even though we may think that is not the best way to describe our beloved customers. There are scenarios where a company needs to invest too much and allocate too many resources to serve certain customers.
Any organisation that wants to succeed needs to look closely at its revenues and profits, and that probably means developing a strategy to deal with these costly customers before it’s too late.
Who’s right?
Well, both the customer and the company are right from their own point of view.
Companies need to target the “right” customers and ensure that they are the “right” fit for them. At the same time, if their Marketing efforts are attracting customers that they are not fully equipped to serve, they need a process to prevent difficult situations. And if it’s too late, they will need to have a way to identify them and act on them.
How to always have the right customer
Both businesses and customers would probably agree that it’s best if things run smoothly and the customer doesn’t have to return goods, ask questions or complain. So the first thing to do is to be vigilant and capture any issues that the company has not thought of and does not have a simple solution for.
- Processes and Procedures should be flexible and organic enough to adapt to the evolving needs of their customers and the constant changes in their context.
- Then, businesses need to have an effective complaint resolution strategy that allows them to turn those complaints into actionable insights to learn from and improve.
At this point, if the response to the problem has been fair and the communication has been effective, the dissatisfied customer might even become satisfied because they will appreciate how an organisation has dealt with a problem.
If the customer is still dissatisfied, there’s a high risk that the initial issue will snowball into a much bigger problem, which may include the customer simply defecting to competitors, spreading the bad word across channels, or, as this idea of “wrong customers” suggests, requiring constant attention and additional resources that can never fully resolve the issues. The snowball effect involves an increasingly frustrated customer and an increasingly overloaded team.
Firing Customers
I can speak from a personal experience about when I had to close my bank account with a certain financial institution after only a couple of days with them, when I found out they wouldn’t provide me with an IBAN, which I absolutely needed.
Defecting as a customer so early in the journey must have triggered an internal process and made me fall into a pre-defined persona classification that meant I was banned for life. And now I can’t apply for any of this bank’s products and services ever again.
You may have heard of these practices, which are becoming increasingly common in our world. From the customer’s point of view, they feel really unfair and outrageous. And from a business perspective, they seem desperate and potentially damaging to reputation.
This is the point of failure. If a company has not found a way to adapt its onboarding process, its Marketing process and all “moments of truth”3 of the Customer Experience to avoid these situations, it will find itself in a place where it may have to take drastic measures to cut its losses.
Conclusion
I think the responsibility for the whole “wrong customers” idea lies with the business side. It’s the business that needs to put the right strategies in place. Firstly targeting the customers they are prepared to serve, then communicating properly, putting in place an effective onboarding process, and then of course, good Customer Service to deal with the known and unknown issues.
Firing customers sounds despicable, it goes against all the customer-centric principles and best practice rules that CX enthusiasts live for. At the same time, we have to accept that a business is only a business if it makes a profit, and monitoring the cost of serving customers and segmenting accordingly is certainly a good idea.
The experts on the webinar panel were right, there can’t be such a thing as “wrong” customers, and companies need to avoid getting to that point. They need to focus on prevention by enhancing their Customer Experience Programme, incorporating a strong persona classification, with the right Customer Journey Map, and the right process for each touchpoint.
Bonus: Guidance
There are actionable strategies that businesses can adopt to prevent these uncomfortable situations and ensure they only have the”right” customers:
- Customer Segmentation:
- Profitability Analysis: Analyse data and segment customers based on profitability. This will help to allocate the right resources to the right customers.
- Behavioural Segmentation: Identify patterns and behaviours to effectively tailor services and marketing efforts.
- Customer Journey Maps:
- Identify Pain Points: Map out each stage of the customer journey to pinpoint where customers may experience challenges, and make sure you implement improvements.
- Enhance Touchpoints: Ensure that each interaction is aligned with customer expectations and company capabilities. Create new processes where you find gaps.
- Clear Communication Channels:
- Set Expectations: Clearly communicate policies, product capabilities, and service terms to prevent misunderstandings.
- Feedback Loops: Encourage and act on customer feedback to continuously refine offerings and address concerns promptly.
- Monitor and Adapt to Customer Needs:
- Regular Assessments: Continuously evaluate customer satisfaction and adjust strategies to meet evolving needs.
- Personalisation: Use customer data to offer personalized experiences that resonate with different segments.
References
1 Jones, Thomas O. and Sasser, W. Earl. Why Satisfied Customers Defect. Harvard Business Review. 1995.
2Juran. Pareto Principle (80/20 Rule) & Pareto Analysis Guide. https://www.juran.com/blog/a-guide-to-the-pareto-principle-80-20-rule-pareto-analysis/
3 Carlzon, Jan. Moments of Truth. Harper Business; New edition. 2001.
