Your most important customers

Seth Godin has had a couple of posts recently about how to treat your best customers. One of the thing that he observes is that the way you define “best” is not necessarily the most obvious. Is a customer that pays full price always better than one that recommends your service to five of their friends?

In defining the best customers, my mind wandered to the opposite extreme, the worst customers. This reminds me of something that happened a few years ago. It’s only fair to note that I heard this “through the grape-vine.” It could be completely true or mostly made up, but where-ever it falls I think it’s an interesting anecdote.

As a reaction to, potentially, being taken for granted, customers often remind suppliers how important they are and how much money they allow the supplier to make. Undoubtedly this is a standard negotiation tactic. But where it goes wrong is where the clients self-image doesn’t match reality.

This anecdote starts with a client demanding extra resources, more commercial concessions and some impossible deadlines. Their argument: we’re you’re most important customer. We, therefore, get what we want.

Discussions had not resulted in any change in their stance. This is what we want (a lot). This is how much we will pay (not much, or at least enough to offset the pain).

The anecdote ends with a meeting. In the meeting are senior figures from both organisations. The supplier is presenting and the Powerpoint effectively has a single slide. The slide shows a simple bar chart. The bars are ordered with the largest on the left, the smallest on the right. The axis are unlabelled.

After pleasantries, the presentation starts with a statement followed by a simple question.

“This chart represents our top ten customers by revenue for the last year. Which bar are you?”

The client quickly points to the bar on the far left, the largest.

“I can’t name them, but that bar represents around £x.”

The figure was left to hang in the air. It was nearly double what this client had spent in the last year and they knew it.

The relationship had deteriorated to the point where the client was asked to make two more guesses before it was revealed that they were, in fact, the second bar from the right. It was still, I should add, a reasonable chunk of change but it quickly became clear that their “most important customer” argument would need some refining.

Anyone who has worked with difficult clients will probably be smiling at this, though of course the fact that it got to the point where this strategy was even thinkable shows a failure for both parties. While it worked, for a short time, this is a strategy that you’d only try if walking away was a reasonable option.

I guess what I’m saying is that relationships work both ways, and the best ones are made out of mutual respect. Not everyone is out to screw you. You might think that taking your supplier or client for a ride makes them your best customer or your best supplier but in the end it will likely come back to haunt you.