Insight, analysis & opinion from Joe Paduda

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Nov
24

Some customers aren’t worth it

The work comp managed care world can be brutally competitive, with big dollars (well, big for this relatively small market) riding on buying decisions, and the success or failure of business plans also determined by those decisions. I’ll leave aside the all-too-common lack of objective, dispassionate analysis upon which many decisions are based – that’s a subject for another post.
Today I want to talk about why it can be more productive – and more profitable – to walk away from business than to tie your company in knots, bastardized your operations, cut prices to the bone, and make a host of other concessions in an effort to land or keep a big account.
Because the fact is some accounts just aren’t worth keeping. I’d bet if you look at your customer list there are at least two that take up way more time than any other, that constantly complain and whine and can never be satisfied and don’t pay their bills on time or in full and chew thru account execs like a puppy thru newspaper. Management spends hours each week trying to please the various people at the account, a difficult task because their contacts’ demands are either contradictory or pointless or poorly defined if not all three.
I’ve talked with several vendors over the past few months about this issue, more than once on behalf of the customer’s senior management. The top execs keep hearing about the vendor’s incompetence or unresponsiveness or poor service, which upon investigation is nothing of the sort.
Instead what I’ve found, albeit not in every instance but certainly in more than one, is a relationship that has no or poorly-defined objectives, and/or is overseen by an individual that is not competent or capable, and/or where there are ulterior motives on the part of that individual, perhaps to make the incumbent vendor look bad, or justify his or her existence by appearing tough, or to help out a friend who happens to work for a competitor.
Shocking, I know. Hard to believe this happens in today’s business world, but true nonetheless.
What’s a vendor to do? As tough as it may be, in some cases the best option is to walk away. Professionally and politely inform the most senior customer contact that you aren’t able to meet their needs and requirements (describe those needs in writing in detail), offer to facilitate a transition to another vendor, work diligently to make that transition smooth, and when it’s all over, conduct a post-mortem internally and with the now-ex-client.
And discover that you now have hours more time in the work week, much less stress, higher margins happier employees and a new appreciation for and time to focus on the customers that you actually like.
What does this mean for you?
An opportunity, not a problem.


One thought on “Some customers aren’t worth it”

  1. We agree with Joe. My partner and I have discovered that if our business objectives are not in alignment with the client’s business objectives, then we are likely not a good fit.
    Frequently, prospective clients are not clear on their objectives and need assistance with clarifying them before we can proceed. A question for all parties is “What does success look like.”

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Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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