The great things that came out of this era were better quality and service in almost everything that is bought or sold. One unfortunate artifact of this revolution was the notion that “the customer is always right” and the compulsion to do anything to satisfy any customer.


Sadly, there are good customers and bad customers. Ferris in The 4-Hour Workweek says to use Pareto’s Law to separate good customers from bad customers. Here we will define “good” customers as ones who order and pay reliably and any feedback is thoughtful and well founded. In contrast, “bad” customers are always trying to erode price and use tactics like complaining, bullying and threatening to revoke orders. Pareto’s Law can be simply stated by 80% of the problems can be attributed to 20% of the customers. This is also known as the 80/20 rule. The 80% and 20% are just numbers for example. They could be as extreme as 95/5 or higher.


For example, if a customer makes up 1% of revenue but 70% of customer complaints, does it make sense to keep doing business with this customer? Any lost revenue is easily made up in the savings in time to deal with the customer. You can use this extra time to find more “good” customers.


Making a list of bad customers and acting on it are two different things. How do you fire a bad customer? The answer is quite simple – you transform him into a good customer or a former customer. The way to do this is to remove any special treatment they have rung out of you in the past. Tell him that it is a change in policy. If the customer is abusive, tell him that you will not tolerate that behaviour and give him the standard ordering information. This puts the decision with the customer. Either he starts to act like a “good” customer or he takes his business elsewhere. Either way you are much better off.


This technique works equally well with suppliers. In fact, this technique can be used to evaluate employees. Because of the finality to this step, it should be done with caution.


The End?


When these steps are complete, you will notice a number of changes around the workplace. The first is the work atmosphere. Employees will come to work charged up to improve the company as a result of their new information sharing and authority. The stress level will go down, as “bad” customers, suppliers and employees will be dealt with. Employees see themselves as key in the success of the company through their work and decisions – they go from the “bench” to the “starting lineup.” When employees have time to think about their work, a rush of innovations will result. It’s been the experience of Abonar that employees will surprise you with great new ideas if given the chance.


The second thing you will experience is a drop in phone calls and emails. In fact, you may go unnoticed in the workplace. If your ego can accept this, it can be very liberating. Use the extra time to find the next big thing for your organization. You might be asked to do this same transformation for other parts of the organization. Or better yet, spend time outside of the office. Take up a hobby, get involved in your children’s activities – you know, get a life!


Once the system is set up, maintaining it is easy. Before taking on new tasks, establish the value, who will do it and when it will stop being done. Customer, supplier and employee monitoring can be done at your own chosen frequency.


This newsletter sums up Abonar’s philosophy for human resource and strategic management. If you’d like to find out how to put these techniques to work for you, let us know. Let your competition deal with the recruiting, turnover and training merry-go-round that you used to endure.









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