LucidTrac Blog

Knowing When to Let Go: How to Identify a Bad Investment Customer

written by Victor Ocasio / victor@lucidtrac.io on Saturday 10/15/2022
updated on Sunday 04/14/2024 14:21 UTC

As a business owner, you're always looking for ways to grow your company and increase profits. But did you know that not all customers are created equal? In fact, some customers can actually be bad investments that drain your resources without providing any return. So how do you know when it's time to let a customer go? Keep reading to find out.

Knowing When to Let Go: How to Identify a Bad Investment Customer written by Victor Ocasio
 

There are three main signs that a customer is a bad investment: they're unprofitable, they're unratifiable, or they're not generating enough returns. Let's take a closer look at each of these signs so you'll know what to look for.
 

Unprofitable Customers

The first sign that a customer is a bad investment is that they're unprofitable. This means that the cost of serving them is greater than the revenue they generate. For example, let's say you have a customer who always wants rush delivery but is only willing to pay standard shipping rates. This customer is costing you money because you have to pay extra to get their orders delivered quickly. As a result, this customer is not worth keeping around.

 

Unratifiable Customers

The second sign that a customer is a bad investment is that they're unratifiable. This means that they're not worth the effort it takes to keep them happy. For example, let's say you have a customer who is always complaining and demanding discounts or freebies. This customer takes up a lot of your time and energy without ever being satisfied. As a result, this customer is not worth keeping around. 

 

Customers Who Don't Generate Enough Returns

The third sign that a customer is a bad investment is that they don't generate enough returns. This means that they don't provide you with the growth or profits you need to justify keeping them as a customer. For example, let's say you have a customer who doesn't spend much money with your company and doesn't refer any new business your way. This customer isn't providing the growth or profits you need, so they're not worth keeping around. 

 

Knowing When to Let Go: How to Identify a Bad Investment Customer written by Victor Ocasio

 

In conclusion

There are three main signs that a customer is a bad investment: they're unprofitable, they're unratifiable, or they're not generating enough returns. If you see any of these signs in your own customers, it may be time to let them go so you can focus on more profitable relationships.

Thanks for Reading; And Have a Day Full of Happy Minutes

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