Bartram Eletrical Supply Company CMO Jacen Spring asked her marketing analysts to conduct a review of customer profitability. Her goal was to find unprofitable customers and try to bring them out of the red.
The research uncovered about 100 clients. Spring’s team created a campaign aimed at increasing their spend, as well as a complementary one to encourage those clients to increase their use of online services like support and purchasing. At the same time Spring worked closely with the support and Web teams to improve self-service options, which included tasking Spring’s team with creating educational content and a plan to boost engagement in the company’s online customer community. She set a timetable for the service improvements and campaign, and a deadline for the clients’ profitability to improve. Any laggards would be “politely escorted to a competitor.”
The initiative was a smashing success, with 90% of the unprofitable customers either becoming slightly profitable or at least being break-even after a year.
Now came the hard part: Jacen planned to “fire” those remaining costly customers. She faced two main challenges: Saving face for the company—at some future point those unprofitable customers could become desirable; and communicating to the salespeople that they would lose those clients. She knew that the right communication strategy would take care of those two concerns. But the big issue was firing Coastal Construction, which was one of Bartram’s top-10 customers in terms of revenue.
Although a big spender, Coastal negotiated margin-killing deals and was a continuous drain on service and support resources. She sat back, report in hand, and debated how best to approach the situation—which included telling the CEO and Coastal’s account rep her plan.