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How to Deal With Customers You Wish You Didn't Have

Do you have customers who abuse your services, cost money or otherwise damage your business? Here are 5 steps to tackle these thorny issues.
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Sales are vital to any business, naturally. But sometimes even paying customers can be too much trouble.

A New York City McDonald's franchise recently made headlines after employees attempted to shoo away customers who tend to camp out for hours on end. Zappos's female teenage customers are throwing "try new shoes" parties, where they order shoes online and then return them for free thanks to the Web retailer's free-returns policy.

Such examples merely scratch the surface of the difficulties small businesses face daily. You obviously want to please customers, but you also need to make a living--and at a time when the economy is still recovering from a major financial crisis, that's not easy.

Decades of reinforcing the message that the "customer is always right" haven't helped, either. A generation of consumers--now armed with social media--is trained to hunt for good deals and at times takes unfair advantage. Suddenly, a change in policy that is perceived by the masses as “anticonsumer” can ruin a company's reputation in minutes. (Remember when Netflix unbundled its mail and online business?)

Things get even trickier for McDonald's franchise owners, in large cities especially, who need to contend with a serious loitering challenge. This is a far greater dilemma, as it includes community, humanitarian, and business issues. Still, the heart of the issue is the same: Can you change your overall customer strategy and still keep a strong relationship with your good customers?

If you’re considering changing your relationship with some or all of your customers, try the following:

1. Define your core customers. Who are your key, valuable customer segments today? What do they need, and how might that change in the future? This will help to influence both this and future customer- centric efforts.

2. Understand the bad eggs. What are the problem customers after? How do their needs match or conflict with what you offer? Is there something you’re doing to encourage their "bad" behavior?

3. Assess the damage. How much do the bad eggs cost your business today? What are the potential long-term business and brand implications if it continues? Are there any long-term benefits?

4. Classify the problem. Is the problem occasional or endemic? Is it within or outside the control of your business alone? How easy is it to change? What kind of damage might a change cause for your business? What is the upside? Resolving these questions will help you determine what measures to take.

5. Plan and take action. Depending on the above, your next steps may be minor or radical. Consider your stakeholders’ reactions (customer, employee, broader community, media, etc.) when you decide to enact change. Run small pilots first, to test a variety of approaches, before launching a business-wide change.

Consumer relationships are more personal these days, and consumers feel they deserve a real voice in the corporate arena. Social media is their megaphone. This isn’t a bad thing. It just poses new challenges for businesses. When you’re running a business like McDonald’s, changing the rules for visitors may entail working through major social, ethical, and business implications. McDonald's and other such establishments must take into consideration the broader community and support systems available to help local business owners thrive while staying sensitive to the needs of the patrons.

What happens if you don’t address the issue? Having staff spend time and attention on the bad eggs means that you’re neglecting the needs of those people who truly support your business. Unless you are a charity, "bad customers" can seriously drain your profitability and can destroy your business in the long run. If you and other firms don’t thrive, it means that many more other people will suffer as well.

-Co-authored with Nicole Adams Kraus, principal at Decision Strategies International 

IMAGE: Getty Images
Last updated: Jan 31, 2014

PAUL SCHOEMAKER | Research Director, Wharton School

Paul J. H. Schoemaker is the founder and chairman of Decision Strategies International. A speaker, professor, and entrepreneur, Schoemaker is research director at the Mack Institute for Innovation Management at Wharton, where he teaches strategic decision making. His latest book is Winning the Long Game: How Strategic Leaders Shape the Future.




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