Customer! You are FIRED!

To a startup, every customer is important. Because we need the revenue to keep our company going and growing. However, recently I have a privilege to do De-Marketing otherwise known as firing our customer.

It is not the most pleasant experience I would say as I am worry about what kind of damage my company might take. But after thinking through it, I believe I have make the right move and here's why.

Most of the business book I have read always teaches one rule, the 80/20 rule. This rule represent 80% of your revenue coming from 20% of your client base. Which means we should focus most of our energy on this 20% to ensure they keep producing the revenue.

One of the incident that happen to us was we were trying to keep this customer happy by adjusting the package that we are offering. We adjusted the price, structure and delivery method but no matter what we do they still have the thinking that we are cutting them short. This goes on for weeks and we have done a few job for them at a loss in hope to keep them. After awhile I realize this is not worth our effort, we are not getting paid what we are worth and we have spend way too much time which can be use better to serve other customers who believed in our mission.

So I went on to "Fire" some of our clients and below are a 2 strategies I used:

1) Increase price/surcharge

This is probably the most effective one of all especially when demand for your service is high. Customer who value your product and services don't mind paying a bit more if you can solve their problem. Most importantly it filter off those customer who is just looking to bargain you down because you are a startup.

2) Reject orders

This is encouraged if you have high supplier bargaining power, otherwise you will just look like an arrogant company if you apply this strategy wrongly. They key to this strategy is prioritize, let the customer off slowly and give legit reason why you cannot fulfill their order. For our case, we do transportation and time is sacred so we prioritize by giving time slot first to our key clients and new customer. Then we reject orders only if we are genuinely fully booked. This strategy require some patience but after being reject a few times, the customer will usually look for alternative.

I think the most important lesson here is not to sell less than you believe in even though you are a startup. If a customer don't believe in the value you are providing, move on. There are a million customer out there and the key is to find your niche, this way your effort will be leveraged and you can too get 80% revenue from 20% of your client base.