Business invest time to attract customers, but some customers are simply not worth having. So some business think that they should fire the customers they lose money on.
-Is it acceptable to fire customers who cost you money?
-Is it acceptable for the company to focus efforts on profitable customers or should they all be treated equally?
-What is the downside of finding which customers are profitable and discourage those that are not profitable.
I think that it is not ethical to only serve the profitable customers because I believe everybody should be treated equally. But at the business side, there's nothing wrong with wanting to make more profit. So I can't really decide how to answer those question.
I want some opinions from you guys on these three questions. Thanks.
One of the best sources of a company's business is word of mouth. If I, as an unprofitable customer, am treated rudely, I'm going to tell my family or friends. Does the company want 10 or 20 people knowing that a customer was treated rudely? Of course not.
For a 9th-grade project, my granddaughter dressed as a Goth and visited several upscale stores in a mall. She was ignored, insulted, and virtually refused service because of how she looked. Not only did she include this treatment in her school report, her family and friends also were told about the clerks' rudeness.
The department store, Marshall Fields, used the slogan, "Give the lady what she wants," for many years. It told a story about a customer who returned an item several years after she'd purchased it. The store took back the item and used it in many publicity to show that the store served customers and gave them what they wanted.
It's good business to treat all customers fairly, ethically, and politely. Profits are made or not made because of word-of-mouth.
. . . used it in many publicity *brochures* to to show . . .
Pricing structures ought to be such as to not lose money on any customer.
The focus and catering ought to be on the profitable customer, however, Ms Sue makes a point above. Generally, if one has a pricing structure to make all customers profitable, the higher costs for the low volume (low profit) customer will tend to have them look elsewhere.
Thanks for your inputs, and thinking more into the question, this is more on ethics. Can you give me some more reasoning on the ethics point of view?
You might want to explore the basic concepts of right and wrong. The major religions promote the concept of "Do unto others as you would have them do unto you."
Check this article, especially the parts about normative and applied ethics.
http://en.wikipedia.org/wiki/Ethics
I have another example of ethics in a retail environment.
When my companion was quite ill and had trouble getting out of the car and walking, he needed his glasses adjusted. I went into the R-X Lab store and explained the situation. Although it was a blustery, cold February day in Michigan, a technician cheerfully came out to the car, assessed the fit, returned to the building, and came out a couple of minutes later with the adjustments made. Of course, there was no charge. We were delighted with this service.
A couple of years later, I mentioned this incident to another employee of this store. She smiled and said that it was not uncommon, and that they've often helped their customers in the parking lot.
This is treating all cusomers equally, even going out of their way for a dying man who never used this store's service again.
The decision of whether to fire customers who cost you money or to focus efforts on profitable customers is a complex one with varying opinions. Let's explore different perspectives on these questions:
1. Is it acceptable to fire customers who cost you money?
Some argue that businesses are profit-driven and have the right to maximize their financial returns. From this perspective, it is acceptable to fire customers who consistently cause financial loss. This approach allows the business to allocate its resources more effectively and focus on customers who generate profit.
On the other hand, some argue that it may not be ethical to fire customers solely based on their financial impact. Customer relationships are built on trust and loyalty, and abruptly terminating such relationships can damage a company's reputation. Additionally, there could be external factors affecting a customer's spending habits temporarily, and the business might miss out on potential future profitability by prematurely cutting ties.
2. Is it acceptable for the company to focus efforts on profitable customers or should they all be treated equally?
Prioritizing profitable customers is a common strategy in businesses aiming to optimize their resources. By identifying and catering to the needs of the most valuable customers, companies can enhance customer satisfaction and increase overall profitability. From this standpoint, it is acceptable for companies to focus their efforts more on customers who bring consistent financial returns.
However, treating customers equally remains an important value for many businesses. Providing excellent service and experience to all customers, regardless of profitability, builds brand loyalty, positive word-of-mouth, and long-term sustainability. Companies aiming for customer satisfaction and goodwill often take a more inclusive approach, investing time and resources into finding ways to improve the profitability of their lower-performing customers.
3. What is the downside of finding which customers are profitable and discouraging those that are not profitable?
The downside of solely focusing on profitable customers and discouraging unprofitable ones is a potential loss of opportunities and negative consequences. By disregarding lower-performing customers, a company may miss out on potential future growth from customers whose circumstances may improve. It may also neglect the opportunity to learn from unprofitable customers and uncover valuable insights to improve overall business operations.
Furthermore, a business's reputation can suffer if its practices are perceived as discriminatory or unfair. Neglecting certain customers based solely on their profitability can create a negative image and harm the company's brand.
In summary, there are different perspectives on whether it is acceptable for businesses to fire unprofitable customers or focus efforts on profitable customers. Considering both ethical considerations and business objectives, finding a balance that values all customers while aiming for profitability is crucial. Companies should carefully evaluate the long-term consequences and implications of their customer management strategies.