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As a reminder, when I write about customers I am talking about franchisees, too. They are customers to franchisors. I’m also talking about retail, end-user customers who patronize franchise businesses, and I’m talking about clients of franchise suppliers. A customer is a customer is a customer. But not all customers are created equal! And not all customers should be your customers!
I don’t want any special treatment,” said the franchisee.
That was always my first signal that we were about to enter a negotiation!
“But I’d like you to consider everything I’ve done for HomeVestors before you make a decision,” continued the franchisee.
How do you handle special requests?
While I was the CEO of HomeVestors, I often had these conversations with franchisees, just as I’m sure you do as the CEO of your company, or just as I’m sure you do if you’re a franchisee or supplier and you talk to customers.
What do you do in these situations?
Get ready to negotiate, even if you call it something else
You negotiate, of course, even if you don’t call it that. As the leader of your company, the person responsible for making “yes” and “no” decisions — including granting “special treatment” to customers even if you call it something else! — you listen (you listen closely), you get to the heart of the issue, you look at your answer book, and then you reveal your decision.
It’s really as easy as that. Isn’t it?
The answer book is all you need
However, there’s one critical piece of information — the answer book — that makes this negotiation really simple . . . and unfortunately most business owners don’t know what it is and consequently they don’t have it when they need it.
A critically important lesson for business leaders
Long ago I learned a critically important business lesson: Customers are not created equal.
Furthermore I learned: Not all customers should be my customers!
Who’s willing to give up a customer?
Those are challenging lessons to learn, especially now when almost every business is scrambling for more customers and more revenue. Few business owners, it seems, want to let go of any customer, good, bad or indifferent.
I hope you’re one of the few!
Which are the customers you keep?
However, this blog isn’t about letting go of customers as much as it is about deciding which customers to keep. Another time I’ll write about how to fire a customer — I tell you, that’s one of the most satisfying moments in your career!
But back to keeping customers (that is, keeping the customers you really should keep).
When you’re prepared, you can’t error
I never backed down from these requests from franchisees, or clients, because ever since I learned (from Michael Gerber and Fred Reichheld) that all customers are not created equal I was prepared for them. I had that one piece of critical information! And so long as did, I couldn’t make a mistake.
What’s that one piece of critical information?
It’s all about customer value
Simply this: The customer’s value to my business.
When I know the customer’s value, the rest is easy! And value doesn’t just translate to dollars, though that’s the most important part of the customer transaction. The Best Customers are those who pay you the most money in the least time and follow your system!
Note the emphasis on follow your system! A customer that pays you a lot of money but disrupts your business and wears out his welcome among your corporate team, or violates principles of good business and common sense, isn’t a valuable customer!
Drucker told us what to do
Peter Drucker has told us that the sole purpose of a business is to capture a customer.
Agreed, with one modification: The sole purpose of a business is to capture “the right” customer.
How many wrong customers would you like to keep?
Because a business with wrong customers is a miserable business! Unfortunately, many of you reading this blog may in fact have more wrong customers than you do right customers (or perhaps too many wrong customers), and that’s why you’re having trouble sleeping at night. It explains why you’re scrambling for more revenue today!
Five key questions to keeping customers
Negotiating with customers is so much easier when you know the answers to these questions:
- Where does this customer (client or franchisee) stand among the rest of my customers?
- How “good” (and good can mean many things) is the customer?
- What do I lose if I lose this customer?
- How much am I willing to give up to keep this customer (you are always going to give up something, don’t fool yourself, or let them fool you).
- Will this customer bring me more “right” customers?
Customer ranking will tell you what to do
So when my franchisee said, “I don’t want any special treatment, but I’d like you to consider everything I’ve done for HomeVestors before you make a decision,” I would pick up my Franchisee Rankings (the answer book) and look for the franchisee’s name.
No matter where the franchisee’s name appeared on the list, I knew what I needed to do. I knew how to respond.
Interesting: the best customers rarely call!
Funny thing. The names at the top of the list rarely ever called and asked for anything! Maybe you’ve noticed that if you don’t call your Best Customers they’re not calling you. They don’t have requests or complaints. They simply want results. Do what you promise and they’ll do what they promise and life is good! Want to talk to them? Well, they’re busy, so you’ll have to call them!
All the others — it’s a different story, isn’t it? And when they call, you’ll have to decide how much you’re willing to give up to keep them.
No special treatment is much appreciated
Generally, in my experiences, these calls were always friendly. I’d say to the franchisee, “I appreciate that you don’t want special treatment and as you know I’m not someone who believes in special treatment — I think we all create our own reality and we get what we deserve. Now, some people deserve more or less than others . . . so what’s on your mind?”
They’d make their request and I would almost always already know my answer because I had consulted the answer book.
Get your customer to improve first
Most of the time I wasn’t willing to give up what the franchisee was asking without the franchisee first moving up in the Franchisee Rankings. That’s a win-win for both parties. As a business leader, I want great customers and I’m willing to invest in them to help them become better customers. If they become better customers, they become more satisfied and they probably also make more money!
If I’m willing to give, so must be the customer!
And that was never a problem! All customers want to improve — well, maybe some are just wrong-headed or mean-spirited and they’re clueless, but that’s not true of the vast majority. Franchisees, customers, clients want to improve. They want to be your #1! And if you, as their leader, can show them how to improve, and especially how you can help them improve, they’ll respond favorably!
“Become a better customer first”
I’d say to the franchisee, “If you’ll work with a Franchise Systems Manager for the next six months . . . .” the FSM was a coach for franchisees . . . or “If you’ll host the next Mastermind so the members can help you dissect your business and create an Action Plan . . . then I’m willing to . . . .”
In both of these situations — and this is important — the franchisee had to make a commitment of time, money, energy and be willing to re-think their business for the purpose of improving their ranking in the network.
Not willing to do that? Then I was less willing to keep them as a customer.
Sorry, no deal
Of course, there were times when franchisees called with reasonable requests that I met on the spot; and times when franchisees asked for favors and I granted them — but only because the customer deserved them!
There were also times, however, when the franchisee was so low in the rankings and had earned such a poor reputation as a customer that I wasn’t willing to budge — especially not by granting a favor that would only prolong the franchisee’s existence in the network — only to make everyone more miserable!
You know the franchisee or customer I’m talking about. Just the mention of their name in your office forces everyone to duck under their desks. It’s the franchisee or customer no one wants to talk to because they’re rude, or demanding, or disrespectful . . . or they swear and scream!
Any one of those factors, along with a “low value” ranking, made my decision easier. “No deal!”
Give them their independence
All customers are not created equal. Some should not be your customers.
Figure out who they are and give them their independence! All the others you keep by helping them become better franchisees, customers and clients!
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Capture & Keep The Right CustomersIn today’s economy there is no more important task for a business than capturing and keeping customers — and not just any or all customers: only the right customers!
- Do you know who your “right” customers are?
- Do you know how to find more of them?
- Do you keep them coming back for more once you capture them?
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Photo image by: creativedc
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