When is a customer not a customer? The first time they don’t pay you – that’s when.
There was a time in the IT SME services sector that you almost couldn’t help but make money – companies were trampling each other under foot to buy your services – well that might be a slight exaggeration but you get the picture! But not any more. Trying to convince customers to part with their hard earned so you can monitor their systems and ensure maximum uptime and availability can be a hard sell when their cash flow sucks and their own sales have dropped off faster than a Lemming over a cliff.
With that in mind it is even more important that you take a look at your existing customer base and decide which customers are earning you money and which you should get rid of. Now I know that it might be an odd thing to consider getting rid of customers but if they aren’t making you money and assuming you aren’t a registered charity then they have to go – for your sake, your employees sake and your good customers’ sake.
So that brings me on to what we consider a non customer or one that needs to go and how we go about telling that customer. We used to be quite lenient when it came to payments – I don’t mean we didn’t have procedures in place, we have and have had since the beginning. We have however tightened up on those procedures a lot as we were stung by 2 customers whose payments we let slide who then went belly up. Now, as soon as a customer doesn’t pay us when they’re supposed to we give them one chance and one chance only to correct the situation. After that we suspend any services related to non payments until they do pay up.
If they still don’t play ball, we issue a draft small claims court red letter. Experience has taught us that if they don’t pay at that point they really can’t afford to pay and it is time to get rid of them. You aren’t their bank or finance house, but by continuing to provide your services when they aren’t paying means that is exactly what you have become to them. It’s a hard decision but it has to be made.
So now you have weeded out the bad customers what do you do with the additional time and resource that has freed up? You go and have conversations with your good customers and spend more time with them. Keeping your good customers on side during these hard times is incredibly important and if you aren’t talking to them on a regular basis you can bet one of your competitors is!