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March 2, 2020

How would you rate your relationship with your clients/customers?

Business Tips, Small Business, Women in Business

Customer/client relationships are an extremely important part of being in business as without them there is no business!  A helpful matrix drawing on the work by Thomas Jones and Earl Sasser provides a framework to categorise and prioritise clients/customers.

There are two questions to ask of your clients/customers:

  1. What is their overall satisfaction?
  2. What is their likelihood to repurchase?

 

Client Segments

The answers to these questions categorise your clients into 1 of 4 segments:  Hostages, Loyalists, Defectors or Mercenaries.

  • Hostages are clients/customers who are highly loyal but low to medium satisfied.  They are tolerating the best of a bad batch.
  • Defectors are those who have left, unhappy when expectations haven’t been met.
  • Mercenaries are those who are highly satisfied but their likelihood to repurchase is low usually caused by price sensitivity.
  • Loyalists are those who are highly satisfied and they are very likely to repurchase.

 

We’d all only like clients/customers who are loyalists.  These are the people we enjoy working with the most and get the most satisfaction from.  However, there will always be some clients/customers who fall into one of the other three categories.  Our goal is to move clients into the Loyalists category and if we can’t what’s the best way to respond to the others?

Defectors

For Defectors it is best not to take them on as clients.  It’s better to be up front and acknowledge that you’re not a good fit.  If you’ve already taken them on as clients, then an open and honest meeting to understand why they’re not happy may resolve the issues.  When it becomes clear that it doesn’t matter what you do, and the relationship is not going to work then it’s best to part ways before the client becomes a Damager who openly and actively damages your business and reputation.

Loyalists

A customer/client doesn’t necessarily remain in the Loyalists category, so you need to continue to do their work well and not become complacent.  The goal is to turn a Loyalists into an Apostle – someone who actively promotes your business.

Mercenaries

Mercenaries are the group who are most likely to cause scope creep; wanting a bit more for nothing.  The onus is on the business owner to be really clear about boundaries and what’s included and what’s not included.

Hostages

Hostages should be the easiest group to convert to Loyalists as a lift in service or quality will increase their overall satisfaction.  This could be achieved through a frank discussion to understand what needs to change and sometimes a change in personnel will help fix the problem.

Communication

The most important part of a client relationship is communication.  Regularly communicating with clients/customers opens channels for feedback and discussion so client/customer needs are being met.  The challenge is when a client/customer stops communicating.  Communication is two way and if a client refuses to communicate then it’s very hard to guess what they’re thinking or feeling so at that point it’s probably best to part ways.

Determine which client segment to prioritise

We all have limited time and resources so how do you prioritise the order in which to deal with each client segment?

Do you focus on the Loyalists first because they are your advocates or do you deal with Defectors first as they can bad mouth your business?

If you deal swiftly and decisively with the Defectors it will free up your time and resources to focus on the Loyalists.  Defectors drain your energy so it is best to make the decision as to what type of client they are early on and if they cannot be moved out of their current state then advise them you don’t have the skills or don’t have the time to continue to work with them.

Understanding your clients/customers can help improve productivity, staff morale and ultimately the profitability of your business.

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