We don’t have unprofitable customers, just unhappy accidents(jansanity.com)
jansanity.com
We don’t have unprofitable customers, just unhappy accidents
https://jansanity.com/we-dont-have-unprofitable-customers-just-unhappy-accidents/
17 comments
Thank you, I really appreciate your summary as I couldn't get past the first couple paragraphs.
In my experience, the worst customers are when you are not dealing with the customer directly, and have some sort of consulting or global services consulting company in the way. Most customers are not particularly difficult if you can interface with them directly, but the middleman has their own set of incentives that don't necessarily align with either yours or the end customer's. Throw in the extra communication overhead and room for error when playing telephone like that, and the typical communication styles of such VARs (daily status calls, expectation of instant support at ungodly hours, reluctance to put anything in writing or email, bald-faced dishonesty at times...), and it can be downright soul-sucking.
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i love the quadrants. I can definitely name some in my own experience.
I’m not interested at all in the distributor business but wow, what a valuable shift in perspective from the company’s to the customer’s!
I do embedded consulting (not supply chain/distribution stuff at all), and I could very readily places my customers into the various boxes. As a technical person who accidentally found himself running a business, articles like this are awesome for helping to shape my thinking.
I'm not currently running a business, but have been thinking about switching to self-employment or other more business-centric roles in the future. I also find the thinking behind the article intriguing. I'm not used to thinking about business interactions on such an abstract level but it seems to me you can apply what is being written here to any industry. Very interesting!
Maybe it’s just me today, but I just can’t follow this article. It uses many unfamiliar terms without explaining them, seems to make weird inside jokes/references, and has graphs with no directions on its axis.
Here's the most important part:
>Believe it or not, most sane buyers want their top vendors in a product category to be reasonably profitable...only a fool puts the core of their business on an unsustainable supplier.
The trick is becoming that "top" vendor. Developing and aiming for that relationship is the job of sales. The term "incomplete sale" is mentioned/introduced, signifying sales that get the order but do not lead to long-term profitability.
>Believe it or not, most sane buyers want their top vendors in a product category to be reasonably profitable...only a fool puts the core of their business on an unsustainable supplier.
The trick is becoming that "top" vendor. Developing and aiming for that relationship is the job of sales. The term "incomplete sale" is mentioned/introduced, signifying sales that get the order but do not lead to long-term profitability.
It could use a little more context. I also was confused at first and the graphs seem to me to want to make the topic look more technical then it really is. Nevertheless, it's a very interesting perspective into a field I'm not familiar with.
It's not just you. I really couldn't follow it either.
They are whadrant charts not graphs. While the article is written for people in the wholesaling industry it really says “if you just think of a customer in terms of what they mean to you you may be missing most of the value”
> They are whadrant charts not graphs.
The labels use the words “Rate” and “Size”, but I have no way of knowing which box is low/high rate or big/small size. Also, I might guess what “Margin rate”, means, but I have no idea what “Drop Size” means.
The labels use the words “Rate” and “Size”, but I have no way of knowing which box is low/high rate or big/small size. Also, I might guess what “Margin rate”, means, but I have no idea what “Drop Size” means.
By default, "high" is top & right, "low" is bottom & left. "Drop" is a shipment, hence "Volume Business" having large shipments but low margins, while "Small Accounts" have large margins but low shipments.
Companies often think their business would be healthier if they got rid of their "bad customers," but a customer who is difficult with one provider (e.g. always asks for discounts, doesn't commit over time) can act much more nicely with providers who they consider critical to their business. This is evidenced through a merger where two distribution companies compare customer lists and realize that one's best customer is the other's worst — in other words, a customer isn't good or bad, they just behave differently with different suppliers. So the key to business is not to get rid of the bad customers, but to become your customers' favorite supplier so that they build a long-term partnership with you.