Culling Customers

[Steve]

Troy's post got me thinking and I did a little research on the topic of culling customers.

I think a lot in this article answers our questions of when it is best to cull clients. The article advises it's not a practice you want to do when you are getting started.

Check out this article. Also if you get a chance, visit the link, there is a half hour mp3 file discussing the issue.

Client Culling - Selecting The Best Clients For Your Business (http://www.entrepreneurs-journey.com/317/client-culling/) - Client culling is a process a business goes through to isolate the right type of clients. Culling the resource intensive clients and actively seeking the “best fit” ideal clients that benefit from what the business offers without causing friction to the business systems, is what client culling is all about. During the early start-up phase when cashflow is tight business owners are willing to take on any work no matter if the job requirements don’t quite match what the business is focused on or working towards. This results in poor resource utilization and inefficient work practices that often coincide with underdeveloped systems. In a lot of ways this is part of a teething process as the business “grows up”.

As cashflow stabilizes and systems are developed business owners gain clarity regarding exactly what their business should present to the marketplace and what type of clients should be sought. With a better understanding of the ideal client and service or product positioning it becomes easier for business owners to spot a “bad client”, one that will consume more resources than the output will justify.

[tiedeman]

Well, I am actually going to start doing it for new customers. It will basically be an application for new lawn maintenance customers. These are some of the requirements I am thinking about doing:

1. Their house can not be for sale
2. They must either water their lawn, or have a sprinkler system
3. They must or I must maintain their landscape (shrubs & beds) for the entire property looks great. It reflects on my imagine when an entire property does not look great.
4. All new customers must pay their bills on time for the first three months. After that I may let them slide a bit.
5. The lawn has to be located in a certain city
6. The lawn has to be a certain size (like 5,000 to 15,000)
7. There can not be junk, repeated toys, or pet waste in the lawn


These are just some things that I have been thinking about.

[Steve]

Good ideas so far!

What about pets? Is that an issue at all?

Also, is there a way do you feel of letting the customer know they need to pay their invoices on time especially in the first three months, without coming across as too pushy?

[tiedeman]

I would say probably 99% of the time when I meet a new customer I always tell them, that invoices are due 21 days after they are mailed. I inform them of the due date, and how all services will be stopped if not paid in full. I also mention to them that I accept credit card payments.

Sure, I admit that I do not tell new customers, "If you don't pay your bill on time for the first month, then you are dropped." I would think that they would have the common courtesy to try to build trust with a new company in the first few months

[Steve]

I am glad to see you let the new customers know. I hope this helps out other lcos when they are trying to figure out how to handle this for themselves as well.