This Halloween, look under your bed and check your closet, because “vampire customers” are the ones who are costing you more than they’re worth. They suck up time and money that would be better spent elsewhere and most businesses have no idea just how deadly they are.
Three Ways to Stop the Bleeding
1: Shine a Light on Them.
Vampires don’t survive in daylight. Most businesses instinctively know that they have Vampire customers, but don’t have an easy way to calculate profitability per customer on an accounting basis. As a result, they stay below the radar with no process to identify and deal with them in a constructive way. There’s an easier way to shine a light on them and pull them out of the shadows. Every business usually has about half a dozen drivers of profitability. Two of them are almost always “do they pay on time or do we finance them” and “are they demanding or easy to do business with”. The others will be highly specific to your own organization. Simply rank your customers on the drivers for your business, and the ones with the most X’s are your vampires.
2: Restore Them to Break Even or Better, or Exit Them Gracefully.
Vampire customers are almost a misnomer because, in 5 out of 6 cases, your “Vampires” are the result of your own self-inflicted wounds and can often be turned around! Either way, they suck the lifeblood out of your business every bit as much as the ones who need to be fired.
For example, if the customer is a fan of yours but they’re costing you money due to over-service or low prices, this is your own self-inflicted wound. If the vampire is your fan but continues to feed mercilessly through late payments or unreasonable demands, then they’re the cause of the issue. In both of these cases, you need to have a “we love you too but how can we make this work for both of us” conversation. As fans, they’ll often be open to that. If they’re neutral about your company, fix it if you’re the problem or have a discussion with them about making the relationship mutually beneficial. Sometimes that’s all that’s need to make them profitable AND a fan. If the vampire customer is a detractor with a very bad attitude towards your company, repair it if it’s your fault if you can do so economically. If it’s their fault, find a graceful way to let them go.
3: Keep Some Garlic on Hand for the Vampires.
Spot vampires who are behaving unprofitably before they sink their teeth into your bottom line. Sometimes good customers go bad. For whatever reason, they start to nibble at your jugular with aggressive negotiations or unreasonable service demands. A little garlic in the form of service stipulations or price increases to cover additional servicing may be all it takes to make this vampire customer profitable again. If not, you can always price yourself out of the market or even recommend another supplier and let the competition take the loss. Remember that gently showing a customer another open door is entirely different than closing the door on a customer.
The bottom line (both figuratively and literally), is it’s all about generating profitable revenue. Providing a lot of revenue to your business doesn’t always mean they’re profitable. For a more in-depth customer profitability analysis and expert guidance, sink your teeth into Profit in Plain Sight – the Proven Leadership Path to Unlock Profit, Passion, and Growth.
What’s your biggest concern in having the conversations with your vampire customers? Please share your thoughts in the comments below.
#1 Bestselling Author, International Speaker, and Accelerator Anne C. Graham is on a mission to help 5 million business leaders and their teams double their profit per employee – or more – in less than one year, in less time per week than they’re spending on email per day. Her new book Profit in Plain Sight includes the 5-step proactive P.R.O.F.I+T Plan to do it. Connect with Anne on Twitter and LinkedIn.