photo credit: Torley

Sooner or later, any business or startup needs to refine/reshape its client base for one of the following reasons:

• To part with low-profit customers – proactive
• To part with customers whose demands don’t fit the company policies and damage profitability and morale – reactive

In some scenarios parting becomes necessary and the difficult part is that it requires a lot of effort and finesse. Here are a few tips on how to manage it:

Identify the ‘vital’ customers - Follow the Pareto Principle (80/20 rule). In business, 20 percent of the customers account for 80 percent of the sales, while another 20 percent account for 80 percent problems. Identify the profitable 20 percent for your business. For every minute you put on solving a problem of the costly ones, spend four minutes taking care of the profitable ones.

Get Proactive - Define the customers that cause your startup time and profitability. Solution is to keep them satisfied and less costly is by revising cost and services.

Get Reactive (if you need to) - If you think a customer is causing serious damage to your startup and the costs exceed profitability, then it is time to part ways. Tip here listen carefully, don’t get defensive and try reaching on an agreement (If possible)

As a startup, you should try and identify both kind of customers and try your best to keep them satisfied. If for some reason (genuine ones) a customer is causing more damage than benefit, it is definitely time to part ways.

For more information on this we suggest you visit:
http://www.entrepreneur.com/sales/customerservice/article204926.html

Follow up. It's important to keep in touch to see that the referral worked out. Your aim here is twofold: to help the customer and to avoid any sense of abandonment that could lead to negative reviews of your business.