Should Firms “Fire” their Customers?


A logical conclusion to be drawn is that firms should somehow get rid of those customers who are not right for the company. More and more companies are making these types of decisions based on the belief that troublesome customers are usually less profitable and less loyal, and that it may be counter productive to attempt to retain their business. Another reason for firing a customer is the negative effect that these customers can have on employee quality of life and morale.

 Although it may sound like a good idea, ‘firing’ customers is not that simple and needs to be done in a way that avoids negative publicity or negative word of mouth. Sometimes raising prices or changing for services that previously had been given away for free can move unprofitable customers out of the company. Helping a client find a new supplier who can better meet its needs is another way to gracefully exit a nonproductive relationship. If the customer has become too demanding, negotiating expectations or finding more efficient ways to serve the client can also salvage the relationship. If not, both parties may find an agreeable way to end the relationship.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Advertisements

Recovery of Loss-making Companies


A surprising number of large companies have one or more subsidiaries making losses at any time. The number of private companies which fail is further ample proof of loss-making businesses. One response is a desire to sell the loss-making business, which is really an attempt to walk away from a situation which is both a problem and an opportunity. Even if a buyer is found, the purchase price is likely to be lower than net asset value. If loss-making business is sold to the existing management interesting questions are raised. What will they do as owners of the business different from before? Why was this not done at the direction of the group previously? The opportunity is to turn the business into profit before considering selling it, because even if a sale makes sense, it will be easier to achieve and a much higher price should be obtained.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight