So, when does it make sense to give up on a B2B customer? At what point do you stop trying to win their business?
For most companies, this decision is made haphazardly. Other companies rely on a more systematic way to determine if a B2B customer is no longer a viable target.
These companies measure a B2B customer`s value according to a set of predetermined criteria.
Marketing and sales have a say, but so do accounting and finance, in addition to engineering and production. All of them play a role in determining whether the customer relationship should continue, or whether it`s time to move on. What type of criteria should your company be considering?
Sales
Some B2B salespeople find it difficult to defend themselves with customers. These salespeople provide one quote after another, each time lowering the price, hoping a below-market price is the key to winning an order. It isn’t. The customer simply takes that price and has their existing vendor match or beat it.
B2B customers must respect the salesperson`s time and efforts. If all that customer does is take your price and use it to lower their current vendor’s price, then aren’t your efforts best spent on other, more serious customers?
Customers have the right to get the best price and value, but it does not mean they have the right to use your company – or your salesperson – as a tool to get a better price from your competition. Take the time to explain to your customer what it takes to get that price, and if your customer keeps using that price against you, then move on.
Marketing
Are your marketing resources being wasted in a customer segment where the returns just aren’t there? You’ll typically find commonalities among problem customers. Identify what those commonalities are and ask yourself if you’re focusing your marketing efforts on an undesirable portion of your market.
Break down whom you’re targeting and why, and then define how they benefit your business. Every marketing strategy is measured by its returns. If you continually find that a certain segment of your market is giving you problems, then it’s time to abandon the pursuit.
Production & Engineering
It makes sense to spend engineering resources designing customized products for customers that reward your work with repeat business. However, allocating engineering resources to customers that are constantly making engineering change requests, without the benefit of repeatable volume, is not a winning formula.
Steady production is what you need. Customers that constantly occupy engineering time, without your company reaping the rewards of higher volume, are not customers worth pursuing.
If need be, charge them a non-recurring engineering (NRE) charge, one that’s reimbursed when they come through with future volume. It’s common for customers to use one vendor to iron out the kinks of their design, only to reward the higher volume to another company. Don't be that company that constantly does all the heavy lifting.
Accounting & Finance
Customers must respect your payment terms. Now, there are guaranteed to be customers who extend their terms. However, obscenely late-paying customers can wreak havoc on your daily cost of money. Ultimately, your company isn’t a bank. You’re not here to finance your customer’s business.
Work with your customers to make sure the payments are on schedule and as up-to-date as possible. However, if you have a customer that is continuously beyond their terms, and uses one misleading statement after another, or worse, even outright lies, then take steps to move on from their business.
All companies want good customers. They are easier to sell to, easier to work with, and easier to collect from. Granted, these customers don't grow on trees. It's not easy to find them, let alone keep them once you have them. However, when your entire team is geared towards prioritizing these customers, you'll find that it's much easier to devote your resources to the best opportunities.
