I just learned (experienced) more reasons not to discount !
If you’ve been in business a while, I will bet that you have had one of these happen to you.
And I’ll bet it wasn’t fun or pleasant.
Read on, because there is a solution . . .
1. The 80/20 Rule
This is a prime example of the 80/20 rule.
80% of your troubles will come from the clients that pay you 20% of your income (revenue).
It follows that if you sacrifice 20% of your income, you will get rid of 80% of your problems in business.
Think of it this way, the time you spend with the low payers, is time that you cannot give to your high payers who deserve better !
2. “Cheap and Nasty”
The dictionary defines this as “of low cost and bad quality”.
A new spin on this is that those clients that are “cheap” are the quickest to turn “nasty”.
And this usually happens from just the smallest slight or inadequacy on your part.
Now, it’s possible, even likely, that something will go wrong in your business at some time.
No matter how hard you work at it, Murphy will probably catch up with you ! LOL
The “cheap and nasties” will:
- get angry
- made ridiculous demands
- use abusive language
- and if close by, may also get physically abusive
Good customers will be flexible and work with you to get through the issue.
3. Slow payers
Take a good look at your Accounts Receivable and Aging Accounts.
The clients or customers who negotiate a cheap price are usually the slowest to pay.
They will need payment reminders and follow ups, (costing you even more time and money).
Thus the money you make from them is worth even less to you.
4. More demanding and less flexible
Even though it is the same task or job, there will always end up being more work in the one that pays you less.
I think that is another of Murphy’s infamous laws!
The low paying clients are more demanding and less flexible – just plain harder to work with.
They will still expect the full-price service even though you agreed on a reduced-service price ! LOL
Get any and all contract variations in writing first!
At least make a written notation on the receipt.
5. DIY Cost Savers
(A client told me about this horror story today, and inspired this article.)
When you offer a DIY component to your product or service to help reduce costs, you need to be very careful and very clear about what you are responsible for and what the client is responsible for.
If the DIY component doesn’t work out, (usually because of a client error of some kind), it will still always be your fault, and you will be expected to provide “good service” by rectifying the problem at your cost.
More Fool You
There is sensible negotiating, and then there is “cheap and nasty” bargaining.
And if we take on clients like this, knowing the signals, then “more fool you” and “more fool me” for doing it!
Times might be tough, and the temptation is to just get a sale.
Resist !! Resist that temptation if you get any of the warning signs.
It’s not too late
If you identify that you might have a few clients like this, it is not too late to take action.
You will know when you reach the point where you just run out of tolerance.
Meet – Dr Paddi Lund – the Crazy Australian Dentist!
Yes, because in order to improve his sales he did a bunch of radical things, including:
He “fired” more than half of his customers !
In fact, he graded his clients from “A” to “D”.
Then he contacted his competition and asked if they would like some more customers !!
His “D” grade customers of course! LOL
Well, that looks quite simple, although there is probably a bit more to actually doing it !
What should you do now?
- If you want a happy life, choose your clients carefully.
- And dump those that are giving you the most grief.
- Want some help or ideas? Just contact us at Hotpink Websites now.
For Valentine’s Day, I’m going to do nothing. But the next day, I’m going to buy all the discount chocolates I like.