GOOD RIDDANCE

 

We spoke recently with a reporter who was looking for insights into how to regain lost clients. What techniques would be most effective and what would the timeline be? How would one address the issues that led to the loss, and how could confidence be regained?

Client loyalty ain’t what it used to be, so the topic of account retention is particularly timely. However, the most relevant questions when a client leaves are not necessarily tied to winning them back. More important, in our view, is the question of whether we want them back in the first place.

As regular readers know, the Quadrant Five discipline emphasizes the identification, care and retention of A-List Clients. A company built around its A-List will be inherently more profitable, less risky and more valuable than its peers.

There’s nothing wrong with losing a customer, if it’s the right customer and it’s lost on the vendor’s timetable. It’s a major failing, however, when an A-List customer leaves. Knowing which is which can make all the difference.

In most companies we’ve worked with, a handful of customers provide most or all, or more than 100% of a company’s profitability. Of course, as we discussed in our 120/20 Rule post a few months ago, a single group of customers can’t provide more than 100% of earnings unless another group is being served at a loss.

When clients are unprofitable, it’s important to understand why this is the case, and whether/how to correct it. Some clients might appear unprofitable at first glance, but actually deliver a satisfactory return when all factors are considered. Others are unprofitable for reasons created by the company, such as overly aggressive bidding or over-servicing the account. These clients might be salvageable through steps that lead to a profitable relationship.

In other cases, clients might appear profitable, but prove to be a drain when all factors are considered. A toxic client that drives staff defections creates employee recruitment/retention costs that should properly be assigned to their individual P&L.

If a company does an appropriate analysis and a client turns out to be irretrievably unprofitable, management can implement a number of steps to reduce losses and encourage a friendly departure. The action plan could include price increases or strict adherence to protocols on service levels and receivables, for example. It’s best to handle this process on a transparent basis, when possible, so that the departing client feels he/she was treated with respect and without business disruptions. One never knows when today’s unprofitable client will become tomorrow’s desirable target, or when the primary contact person at an unprofitable account will be hired by a profitable prospect.

Regaining a lost client can be a long process and it usually requires consistent, strategic effort. There’s no issue, though, when a company loses clients on its own schedule, working from its own priority list.

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Quadrant Five taps the full potential of strategic customer relationships to build both today’s profitability and tomorrow’s exit value. We make the critical connection between internal financial drivers and the value perceptions of A-List customers, generating returns for clients who must:

  • Identify the shortest path to stronger profitability.
  • Build enterprise value in advance of a liquidity event.
  • Develop a strategic plan that can be implemented successfully.
  • Perform customer/market due diligence on an acquisition target.
  • Accelerate profitable integration of a merged business.
  • Protect against customer turnover or lost sales.
  • Recoup the cash that is wasted on unprofitable marketing/sales initiatives.

To learn more, please contact Michael Rosenbaum (michael@quadrantfivefocus.com) or visit our website (www.quadrantfivefocus.com).

 

 

About Michael Rosenbaum

Rosenbaum

Quadrant Five founder Michael Rosenbaum has walked the walk when it comes to building a business, so he can be a confidant and compatriot—not just an advisor—for clients. Rosenbaum worked his way up to president of a $35 million company with 300 people and 600 clients. Along the way, he managed operations, HR, IT, and marketing, and advised CEOS and CFOs at more than 200 companies.

Beginning as a newspaper reporter, he developed a specialization in business journalism and earned an MBA on his way to a 30-year consulting career. Representing both angel-backed startups and Fortune 100 giants, Rosenbaum identified the patterns and processes that drive success across a wide range of industries and business cycles.

He is well regarded for designing each performance-improvement process around specific client needs, capabilities, and culture, rather than pushing a pre-fab set of rules for clients to follow. He brings a unique set of skills to each engagement, including experiences as a company president, financial journalist, marketer, IR advisor, non-profit founder, author, and public speaker. Items of note include:

• Received the Order of Merit of the Republic of Poland in 2015 for non-profit work
• Honored for the Best Business Biography of 2012 for his fifth book, Six Tires, No Plan
• Frequent speaker on customer relationship value
• Sales instructor for Certified Value Growth Advisor certification program.
• Regional Communications Chair, YPO Gold
• Marketing Chair, AMAA’s Mid-Market Alliance
• Former Chicago Chapter Chair, National Association of Corporate Directors

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