Do bad customers deserve the same attention as good customers?
Not all customers are equal.
While many business leaders teach us to cherish ever customer, and to assume that the customer is right in every situation, this approach can lead us astray.
After all, some customers can be more trouble than they’re worth.
Let’s consider two extremes:
Good Customer is great at paying on time, and they always choose premium services, and require little or no support, hand-holding or special accommodations. After using your service, they recommend you to others or leave positive reviews online.
Bad Customer is hanging on to a legacy deal, which means they get your products for a fraction of your current pricing. They often pay late. And they jam up your contact centre with tech support requests that have little or nothing to do with your services. They complain about your business to their friends, and leave negative reviews online.
These are two extreme examples, but it’s clear that, if you’re going to invest in retaining customers, you will focus on retaining the Good Customer. After all, losing the Bad Customer may actually improve your profitability.
Think like a casino: focus on the whales
For people raised on the idea that the customer is always right, and that all customers are precious, it can take a little adjustment to consider that some customers are more desirable than others.
In Las Vegas, casinos have a very deliberate approach to customer segmentation that is connected to the value of visitors. Casinos see people as minnows, dolphins and whales.
Minnows are small-spenders. They are a valuable customer group because there are many of them, but the effort of pleasing them must be balanced against their limited budgets. Minnows may become Dolphins – or attract friends who fit in that category – so they typically receive high-quality customer service.
Dolphins are more likely to get personalised care and attention, because they are happy to spend money on a memorable Vegas experience. They have deeper pockets, and are the people who may become – or attract – whales, so they are highly valued and well cared for.
Whales are more likely to be met at the airport with a limousine and whisked to a suite, which may be provided free of charge. Whales get free drinks, free food – and the close attention of hosts and managers. Why? Because their spending is gargantuan. Casinos know that to retain their whales they need to treat them well. There are plenty of other casinos that would love to welcome a new whale.
Customising communications according to customer value
There is a risk to this kind of thinking, a risk that we mistreat some customers because we decide they are worth less to us than other custoemrs. And there’s a danger that we mistake good customers for bad customers, or mistreat customers who might have made the transition from minnow to whale.
Thinking about good and bad customers is not a licence to mistreat or ignore some customers. The default position for all customers should be high-quality, responsive customer service and support. All customers should be treated with care and concern, regardless of their status or wealth.
However, this method of segmentation can help businesses focus on their most loyal fans. Instead of expending effort and budget on customers who don’t really care about our products, businesses can focus on the customers who appreciate extras, bonuses and gifts.
What do you think?
Do you have any terrible customers? Do you think all customers should receive the same treatment? Or do you segment customers according to how they respond?