Tuesday, September 25, 2007

The Concept of "Firing Customers"

In "Lessons in Excellence from Charlie Trotter,(pp195-196)" Paul Clarke writes,

"After you pick your customers by carefully targeting a relatively homogeneous market, it's time to narrow the market further. More than likely, some customers aren't right for your business, particularly if your is an enterprise that attempts to offer customers truly distinctive products or services. So get rid of customers who aren't right. This contemporary and somewhat unconventional business practice is known as "firing customers."

"If you want to make your business better sometimes, it's not always a question of trying to make every customer happy," explains Trotter. "Maybe it's better to fire certain segments of your customer base to make what you do even better for your best customers."

Why would any business want to get rid of paying customers? For one thing, your product, company, or service is defined not only by its features, uses, and benefits, but also by its customers or users. Also, in service businesses, certain customers--for example, smokers or young children--could alienate your best customers. Most important, the objective of firing is not simply to get rid of certain customers, but to fine-tune the product or the marketing message for your target market."

It is important for each of us to designate our position in the market and craft our entire business philosophy from product quality to quality of service to reflect that. This is something that we have been doing since day one, and while this is foreign to many in our industry --trust me, I've seen their ideas of "marketing"-- it is an important lesson that we can learn from one of the greats in the service industry.

This idea of "firing customers" is more evolved in European, and to some degree, Asian countries. The faulty logic that too many in our industry have is that a "customer" is anyone with a couple of bucks who walks through the door and orders a drink. Those who understand market positioning, and dominating that position will tell you that in order to define your market, you have to create a culture of excellence where the customer seeks your expertise, rather than questions it.

If the industry is to evolve, you should not be afraid to "fire" customers from time to time...BUT to do so without understanding and defining your place in the market will be perilous.

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