Customers are vital to every business, but not all customers are created equal.
Some customers are good and are worth keeping; most however are poor and a business functions far better without them.
Acquiring and managing a customer costs money. Money that's initially spent on promotions and later on customer service expenses.
If a customer ends up behaving like a 'poor' customer (i.e. they don't buy higher margin items, lack a sense of brand loyalty, don't buy often enough and are frankly just tricky to manage) then ultimately the business loses money by acquiring them in the first place.
The business would have actually benefitted more by never having attracted those customers - so in many cases keeping the relationship as brief as possible with these people is key to getting things back on a profitable track.
How can you determine who are your poor customers vs. good customers?
Well, let's straight up dispel the myth surrounding customers archetypes and psychographics that are frequently overused by marketing specialists.
Just because somebody earns a certain amount of money, drives a particular brand of vehicle and has a definable, higher-level of university education does not mean that you can deduce anything about what kind of customer they will be for your business.
You cannot simply and reliably categorise people based on such simple attributes and honestly expect consistency.
The only way you can truly 'know a customer' is to do some business with them first, and then segment them based on their recorded behaviour. From this kind of detailed and accurate insight you can then choose to either incentivise them to stick around, or actively fire them or just ignore them.
Only then can you feasibly segment your own customer base - categorising customers who behave similarly into subgroups for easier management and analysis; and perhaps use this database to try and attract similar people with the same attributes that fit your winning profile.
Beware however, people buy things from a brand for millions of different and complex reasons. Trying to pin down a recipe to simply rinse and repeat your past successes is not foolproof. If only life were so easy!
Understand that your segments are an estimation, a loose-bond resulting largely from you casually circling a couple of names with a red felt-tip marker on a white board.
Love your good customers only
What isn't so foolish, is caring exclusively for your 'good' customers.
And yes, the old 80/20 rule does apply here.
Twenty percent of your customers will bring in eighty percent of your revenue - so just focus on retaining and delighting those 2 in every 10 customers that matter.
Always keep their favourite products in stock, always send a Christmas card to them (or if they're really great, write them a love letter every time they order from you) and if you really must have a loyalty program (...hello 1986....)...keep membership available exclusively to them.
Servicing the other 8 in every 10 customers is effectively wasting your time and money. Keep your investment in these people at the minimum.
Brands that try to be everything to everyone - tend to see very little positive return on their efforts. Stand for something, and someone; or you'll stand for no one in particular.
Those that concentrate their efforts on the customers that matter most, unlock long-term profitable growth.
The customer is always right?
No, the right customer is always right.