So where do you draw the line for the cost of business?
It’s a question that a dozen entrepreneurs would likely give you a dozen different answers for, and one that I thought would be an interesting topic for consideration this week because the more I even think about it myself, the more answers and variants thereof that I begin to rationalize in my own head! Is it as simple as saying, “If I don’t make at least X% profit, it’s not worth my time…” or does sanity play into it, a la, “I don’t care if you make me rich if you’re also going to make me insane…” or possibly even along the lines of, “I’m in a bad mood today, so I’m not selling to you anymore!”?
The concept stems from a rather intriguing move by Sprint earlier this week in which the company informed about 1200 of their customers that they have about a month to transfer their numbers to competing carriers because they will no longer be doing business with them. The company stated that these customers being disconnected are basically high maintenance customers, meaning that they average over 40 calls per month in to their call centers for customer care, while the average number of calls across their entire subscriber base of over 53 million subscribers remains a mere 1-2 calls per month. It has also been stated that the decision wasn’t made strictly on call volumes requesting assistance – an investigation was done for each case to determine whether t was in either party’s best interests to continue the business relationship, but for this particular group, Sprint ultimately decided to give them the boot.
And my first reaction to this story was one of considerable anger, especially because I’ve been a Sprint customer myself for several years now, and I know I’d be mighty upset if I came home to find a letter stating that my cell phone carrier didn’t want my business anymore! It’s quite the bold statement, if you think about it, because especially in such a competitive industry where free phones and discounted service plans and referral bonuses are offered to gain customers, it’s hard for any of us to even consider the notion that our own hard-earned dollars are worthless to the enormous corporations who normally crave them! I mean, don’t get me wrong – the letters themselves seemed to be worded politely enough:
“Our records indicate that over the past year, we have received frequent calls from you regarding your billing or other general account information. While we have worked to resolve your issues and questions to the best of our ability, the number of inquiries you have made to us during this time has led us to determine that we are unable to meet your current wireless needs.
Therefore, after careful consideration, the decision has been made to terminate your wireless service agreement effective [insert date ~30 days out]. This will allow you to pursue and engage with another wireless carrier….”
…but regardless, getting broken up with is never an easy thing to deal with, even if you do happen to be miserable in your current relationship and have often times threatened to leave and go somewhere else if things don’t change! We, as consumers, want to be the ones who make the decision of where we spend our money – this just doesn’t happen – and obviously that’s why the story has made headlines in the way that it has. People worry that Sprint doesn’t want their business, that the company doesn’t care about it’s customers anymore, and that they could very well be next on the list. What kind of a company turns away business, anyways?!
This is how I felt for a while, until I put myself in their shoes and really started to see Sprint’s side of the story…
Now Sprint is a large corporation, so it’s more difficult for us to visualize it like this, but consider that you own a small business – maybe you’re the only employee. You’ve got plenty of work and barely enough time in the day to handle all your clients, but you’re growing and in business terms, that’s great! But when you sit down to determine what’s holding you from additional growth, or maybe just improving your level of service with your existing clients, you come to realize that not all of them receive the same amount of attention as the rest. Out of ten customers, nine of them are ideal – they understand how things work and you have a pretty good working relationship, but as for that last guy … man, do you just dread answering the phone when he calls! It’s always the same questions that you’ve answered two or three times already, he gripes constantly about how you’re overcharging him, and you’re honestly not really sure why he remains a customer anymore, but month after month he’s still around … complaints and all. When you finally hang up the phone, you feel a little bad for even thinking about it, but you really have to wonder if he’s worth your time anymore.
Seriously, is that one trouble customer worth your time anymore? You’re currently looking to expand your business by bringing another employee in to help you, but at the same time, if you do the math you could handle taking on a few more clients by yourself in the same time that it takes to deal with the less-than-pleasant guy. And it’s not that his money is any less green than the other folks, but when you factor out cost per hour, you learn that you could be making the money of two or three other customers in place of his ever-demanding paycheck. So as a good businessman, do you take the hit, continue to pull your hair out every time this jerk calls for help, following the adage that “A good businessman never turns away business…”, or do you draw the line and simply say, “I’m sorry, but it’s not in my best interests to continue our business relationship based on the needs you present as a customer.”?
And as I said, it’s tough to visually scale that model from the small business up to the 53 million subscriber corporation that Sprint is today, but consider the last time you ever called in for some assistance yourself and sat on hold for what seemed like forever. If those 1200 high maintenance subscribers tend to call in over 40 times per month, chances are you’re waiting on hold for them to get those same rerun questions answered over and over again – statistically speaking, assuming 1 call per month for the rest of us means that those 1200 subscribers … out of 53 million total … account for nearly half a million calls into customer care each month, or 1% of their total number of calls! That’s 1% of your calls from 1/500th of a percent of your total customer base – it doesn’t take an accounting major to realize that some money is simply being wasted here, and since Sprint is in the business of making money and I’d prefer for my rates to not have to go up to help support these challenged customers, at the end of the day I’ve got to stand behind them with their decision.
Of course, the devil’s advocate asks the question, though, “What might happen if we were to see other businesses begin to adopt such practices???” Retail stores begin to identify those who tend to browse more than purchase; online merchants implement No Return policies for specific customers who return more than their share of unwanted items; I only agree to syndicate my columns to newspapers who are actually going to pay me – where does the insanity end?! While I don’t think we’ll see it go quite as far as any of those examples, it’s still worth bringing to light if for nothing but to remind the customer in all of us that just because we’re not content with the services that we’re paying for doesn’t necessarily mean that the person on the other end of the line is particularly thrilled with us in the grand scheme of things, either!
Business, like any other relationship, is still a two-way street and as such, either party always has the option to walk away and cut its losses at any time. But then again, for a customer that’s so unhappy as to call in forty or fifty times a month anyways, maybe the act is actually more of a blessing in disguise…
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