Tony_Scarpelli
Rest In Peace Tony
- Reaction score
- 26
- Location
- Wichita, Kansas U.S.A.
There is a theory in operations management that I learned in my masters program. Basically you do a profitability project report and sort it by profitability or other economic metrics. Then you take the bottom 10% of your customers and fire them. These might be small clients who do not pay COD, or hard to reach because they are too far out of town and not big enough to make it pay to do them. Or other factors that make servicing them difficult for you.
So when I took over my brothers company he had allot of mooches (which he trained them to be that way) and I decided that these same group of customers were the most demanding and most expensive to us to service. They were demanding as to when we would have to come out, always wanted immediate service today or within 2 hrs, always wanted terms to pay and then paid late, always complained about the charges, always wanted us to meet bestbuy price on hardware and other irritating things. We had a policy of emergency response within 2 hrs. The way we offered this is that all our clients signed an agreement to allow us to move their appointments if another client declared an emergency. So if it works well they all benefit as it might be you the next time. These smaller PITA clients would always declare an emergency. Or policy was to let the client make the decision of what was an emergency not us.
So I sent them a letter telling them they no longer met the minimum requirements to be a System II Technologies, Inc. client and recommended they find another IT company within 30 days. I told them we would continue to help them in an emergency but they MUST PAY VISA or Check at the time of service delivery - no more net 10, and they no longer had the option of declaring an emergency.
There were only about 12 we sent the letter to and 3 called up and asked what they could do to keep us as their technology vendor. So we kept them on a probationary basis. But what was a surprise is that all our customers heard about it and some of them inquired what can we do to stay on your good side the next time you cut the dead wood? I told them it wasn't about being on a good side but just being a target customer, someone who fit in our target market, that we could afford to do business with at a modest rate and still make a moderate profit margin.
This was the start of a complete change of our operations. We had about 150 customers 120 were active within the last 6 months. Out best customers became better customers as they would communicate more with us where before they might put us off when we wanted to sit down and talk to them about a IT plan for the next 1, 2, 3 years. They started offering us their server and PC hardware sales. Many included me in their strategy sessions for the growth of their own businesses.
It sort of balanced the power between us and them and life was really good for about 3 years.
So when I took over my brothers company he had allot of mooches (which he trained them to be that way) and I decided that these same group of customers were the most demanding and most expensive to us to service. They were demanding as to when we would have to come out, always wanted immediate service today or within 2 hrs, always wanted terms to pay and then paid late, always complained about the charges, always wanted us to meet bestbuy price on hardware and other irritating things. We had a policy of emergency response within 2 hrs. The way we offered this is that all our clients signed an agreement to allow us to move their appointments if another client declared an emergency. So if it works well they all benefit as it might be you the next time. These smaller PITA clients would always declare an emergency. Or policy was to let the client make the decision of what was an emergency not us.
So I sent them a letter telling them they no longer met the minimum requirements to be a System II Technologies, Inc. client and recommended they find another IT company within 30 days. I told them we would continue to help them in an emergency but they MUST PAY VISA or Check at the time of service delivery - no more net 10, and they no longer had the option of declaring an emergency.
There were only about 12 we sent the letter to and 3 called up and asked what they could do to keep us as their technology vendor. So we kept them on a probationary basis. But what was a surprise is that all our customers heard about it and some of them inquired what can we do to stay on your good side the next time you cut the dead wood? I told them it wasn't about being on a good side but just being a target customer, someone who fit in our target market, that we could afford to do business with at a modest rate and still make a moderate profit margin.
This was the start of a complete change of our operations. We had about 150 customers 120 were active within the last 6 months. Out best customers became better customers as they would communicate more with us where before they might put us off when we wanted to sit down and talk to them about a IT plan for the next 1, 2, 3 years. They started offering us their server and PC hardware sales. Many included me in their strategy sessions for the growth of their own businesses.
It sort of balanced the power between us and them and life was really good for about 3 years.
