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The Customers You Want (Part 1): Identifying and Keeping Your Best Customers

It goes without saying that the degree of satisfaction our customers experience with us and our services plays a vital role in our business’s bottom-line. However, it's also important to appreciate the fact that the satisfaction we feel towards our customers is also a major contributor to our personal and financial success. I'd like to share how this is so.

BACKGROUND

About 25 years ago, researchers at Harvard University examined the dynamics at play between vendors and their corporate customers. Their findings showed a very high correlation between the satisfaction and productivity in the vendor’s employee group and the satisfaction rates experienced by that vendor’s corporate customers. In other words, if a vendor had high employee satisfaction rates, that vendor's customers also tended to have high levels of satisfaction with the vendor’s products/services. The research findings became the foundation for a customer-relationship management model called "the Service-Profit Chain", that to the best of my knowledge is still in practice today.

In a previous career, I was charged with implementing this model within our group of customer service reps (we called them "Account Managers"), servicing over 2,000 corporate customers. At the time, the CEO (to whom I reported) kept talking about two particularly intriguing findings within the research that prompted his decision to make the shift to the model within our company. These two findings were:

(i) The research gave indication as to what turned a satisfied customer into a *loyal* customer. The researchers found that whenever a vendor scored higher than 90% satisfaction on customer service, those customers were far more likely to be “loyal” customers. Upon further review, it was discovered that what moved a customer from "satisfied" to "loyal", was the vendor’s commitment to "delighting" their customers rather than simply satisfying them. That is, the service goal was to go so above-and-beyond, the client would end up experiencing the vendor's customer service as an unexpected pleasure.

(ii) It identified tangible return on investment data from turning a satisfied customer to a loyal one. In short, the research found that not only was a loyal customer far more likely to renew their contract with the vendor, the contract value at renewal went up, on average, by 11%. On top of this, a loyal customer tended to become what the researchers referred to as an "apostle". That is, they spread the word about what great service their vendor provided them and thus, they ended up directly/indirectly sending referrals and new business to the vendor.

IDENTIFYING YOUR BEST CUSTOMERS

While I'm sure that you're committed to providing excellent customer service to all your customers, the reality is that not all customers are equal. Some have far more value to you and your business, than others. To identify these high-value customers, I'd like to offer the following "2 x 2 rating grid" that I adapted from an article I found recently, in which two variables (i.e., profitability and relationship maintenance effort) are used to organize your customer group. Analyzing your customers in this way allows you to more easily see which customers are most valuable to your business.

Here is an overview of each of the quadrants:

Zone 1 - Low Maintenance / High Profit  (The Target Customer!)... They appreciate your service. They pay on-time, every time and never quibble about pricing. They trust you completely, always leaving you alone at the property to complete the shoot. They love your work and ask very little of you. These high-value clients are the ones you should give a disproportionate amount of your time and attention to.

Zone 2 - High Maintenance / High Profit... They pay well but often make you jump through hoops. These clients are tolerable, so long as they keep paying well and on time.

Zone 3 - Low Maintenance / Low Profit... They treat you well but always purchase your lowest-priced service package. They provide quasi-steady income but are not viable for the long-term growth of your business, as they either give too few shoots in a year to impact your revenue goals or request too many low value shoots that serve to eat up calendar space that could've been given to higher revenue/more profitable customers.

Zone 4 - High Maintenance / Low Profit (The Customers to Avoid!)... Very low ROI on the time/effort you give them. They are often very demanding, giving little/no appreciation in return. They often try to negotiate lower pricing for the promise of more work (that never seems to materialize). They can also be emotionally draining for you, insofar as they're often either quick-tempered and/or judgmental. They certainly don't see you as a strategic partner in their marketing efforts, nor do they value your work, as evidenced by the fact that they always seem to be giving away your photos to third-parties (e.g., builders).

For those who've been in this business for some time, I'm sure that intuitively, you've sensed that certain clients have more value than others and you've acted accordingly. So, using the language of this model, what do you do in your customer service practices to "delight" your customers, so as to ensure their ongoing loyalty?

.................................................................

In the near future, I’ll be posting Part 2 of this article on customer service, in which I’ll be examining how to spot those truly high maintenance customers (e.g., those that drain our “resources” whether it be time, money, enthusiasm, etc.) and those variables that might prompt us to "fire them".

Finally, in Part 3, I’ll be reviewing the types of questions we should be asking our best clients. Not only does asking these questions have the potential to strengthen our relationship, the answers we get from them often informs future decision-making regarding the direction of our business.

Tony Colangelo is a residential and commercial photographer, as well as a photography coach, based in Victoria, BC, Canada. He is a long-time contributor to PFRE and is the creator of The Art & Science of Great Composition tutorial series.

6 comments on “The Customers You Want (Part 1): Identifying and Keeping Your Best Customers”

  1. I like this post. I've always said that I don't work (for long at least) with brokers that treat me like a vendor. You've articulated which brokers those are, very nicely.

    For me it's simple; I try extremely hard to make every shoot my very best yet, regardless of the home's price point. I give the client extras and say 'yes' to practically anything and everything. But, if they don't have authentic appreciation or it feels like I'm being used, I quickly fire them. That business plan isn't as ridiculous as it might sound: I started off about 4 years ago with the intention of coasting into retirement, so the money wasn't as important as as it might have been a decade earlier... But the results, that I think anyone with a sharp focus on improvement would experience, were somewhat unexpected:

    For every client I fired another one appeared (thank you current RE economy). Soon my pool of clients became more like good friends and these days I have much business than I ever planned on - because how can you say no to a friend? Business 6 days a week if I want it. Price increases? No problem at all. Micro managing or second guessing issues? Literally never.

    Strive to make very shoot your best yet - The good money and great clients will follow....

  2. I do 5 bracket, ambient HDR. I believe, in the end, good quality photography will win out. Especially if the price comes down just a bit. I'm hearing more and more clients complain about colors and pasty looking photos. The problem is time and price.

  3. All I have to say is that everything Tony does is so well thought out. Very concise and on-point. The opposite of my rabbit-trail-seeking thought process.

  4. There could be a 5th realm of good profit, highER maintenance. High maintenance can be a customer that whines about something on every job and then there can be a customer that makes thoughtful suggestions. I don't mind at all if I have a customer that is pushing me to do better work. I'll drop one that is whiny.

    My best customers get my best pricing and prompt service. My favorite customer nearly always says nice things about the photos I deliver and will go out of his way to make sure I'm paid. It's doubly nice that he's the broker. I just wish it was a larger office.

    I have to agree that it's best to get away from any situation where you have done what you feel is your best work and are still getting complaints from the customer. Not every customer is going to work out and some people have learned over time that if they complain, people give them free stuff or immediately knock a hefty percentage off of their normal rates.

    As far as the low maint/low profit, only my best customers are offered below published rates which is usually just the rates I used to charge before the latest price increase. An agent that isn't doing much business with me is going to be quoted straight from the price sheet. I have a bunch of customers that don't use me (or pro photos) all that often, but I don't have any problems with that. I'll take all the work they want to send my way. I'd much rather have a big list of sometimers than just a couple of customers bringing me all of the jobs. I had one agent I loved doing work for about 5 hours away that retired. It was a long drive but to a resort area where I'd photograph one or two expensive homes for sale and spend the next day or two shooting vacation rentals she managed. She put me up in one of the rentals (off-season) for a couple of nights and gave me a couple of dinner vouchers at her family's restaurant. I wouldn't shoot for her frequently, but it was a big check when I did. It showed on the year end reports after those jobs went away. The person that handles those rentals now just uses a cell phone for photos and has no interest in anything better.

    The trickiest quadrant is going to be the high profit/high maint. You have to be able to put up with the demands, but you're being paid well enough. Some people can do that and some can't. As I get older I don't take those sorts of people as seriously as I used to. I think I could live with the higher maintenance customers if they pay well and on time. The plan has to be to get them into a price schedule that makes sense as quickly as possible.

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