You know you aren’t making any money off the customer who became your customer when you were desperate during a slow period.
Just because you made one bad mistake doesn’t mean you need to continue living it. If you do continue to do business with the low-price customer, the only thing you’re doing is continuing a bad thing.
There are two ways to deal with the cheap customer you want to fire.
One is to simply stop doing business with them.
Personally, I’m not a fan of that approach as it can leave bad feelings which can wind up being plastered all over the web. If this happens, you may have the satisfaction of not working with the cheap customer, but you may have to then deal with a damaged reputation.
A much better way to deal with a cheap customer is to simply raise their prices.
Don’t just go up a little bit. Go up as much as necessary to make the customer a profitable customer with whom you actually would want to do business. By taking this approach, you have not put the decision in the hands of the customer.
If the customer walks away, so be it. Don’t lose sleep over it.
Surprisingly, when you use this technique, the customer will accept the price increase far more frequently than you might expect. When this is the case, you win. You retained the customer and are now making the right level of profit.
The other outcome of increasing the price of the cheap customer is you now have pricing integrity. Nothing will destroy a business faster than to not exhibiting pricing integrity. When you have customers all over the place when it comes to pricing, it’s hard to feel good it.
Many companies I’ve had the privilege to work with have been able to make their annual plan by merely addressing this matter of the low-price customers and increasing their price. They will either walk away or they will start to pay what they should have been paying in the first place.
Copyright 2013, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.