Ray Silverstein (the author of The Best Secrets of Great Small Businesses) and I were quoted in, of all places, the Small Business Focus newsletter of the Union Bank of California for an article entitled “Know Your Best Customers.” With all due respect, I have to disagree with Ray regarding his customer classification system:
According to Silverstein, the A customers typically represent 20 percent, Bs 30 percent and the Cs the remaining 50 percent. The As are solid customers (or even prospects) for whom you’re happy to extend extra service. The Cs are those for whom you provide what he calls "reasonable, though not exemplary, service." You don’t want to get rid of them, but they’re never going to bring you much profit.
So who are the Bs? They’re the ones who think they are A customers, but aren’t. They’re demanding even though they are not your best customers, Silverstein says. They pay their bills late, which requires additional administrative staff time. They return merchandise more frequently than others.
I agree with Ray that Bs are a real PITA and I later go on to say in the article that Bs are not worth working with at any price. However, I strongly disagree with his suggestion that small business owners should provide “reasonable, though not exemplary, service,” to 50% of their customers. Maybe I’m more ivory tower than Ray, but I think that specifically planning to provide mediocre service to a single customer is absurd - nevermind 50% of them! My feeling is that if you don’t want to do you best for a given customer, then you shouldn’t be working with that customer.
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