Inside Small Business | Small Business & Home Business Marketing

Some of Your Customers Are Thieves

Mike Michalowicz, Serial Entrepreneur

Picture this. Your doorbell rings. Two guys wearing ski masks are standing there, holding big black bags. They ask if you have any money. You say that indeed you do, then invite them in and ask if they’d like beer while they ransack your house. You chat with them as they stuff your prized collection of DVDs into the bags. You hold the door for them as they carry your new wide-screen plasma out to their stolen truck. You follow them out and hand over a stash of rainy day cash they’d missed, then wave as they drive away.

Insane, isn’t it. More likely your house has chain locks and web cameras and a pit bull named Spike, not to mention an alarm system straight out of a Bruce Willis flick, and you’ve never departed your house without leaving the TV on, full blast.

So let’s get real. Chances are you’re doing something just like this in your business. Okay, maybe not with a cold beer, but you’re inviting total strangers in that are robbing you blind. They’re called Non-Paying Customers. They’re not thieves, per se, but the effect is the same: they come, you invite them in, they take from you, then they leave without paying you a plug nickle, or at least the full value of what they’ve taken. The more this happens, the more money you’re losing.

The equivalent of our metaphoric pit bull named Spike is a new attitude on your part. It begins with the understanding that there are three types of customers out there: those that pay, those that don’t pay, and those that don’t show up at all. Obvious? Perhaps, but don’t take this lightly. Because too many businesses, especially new businesses, are so hungry for customers that they happily take in anyone who comes along; paying or not. Serving them may help some of your numbers, like revenue or hours billed, but it if isn’t stuffing your bank account full of bottom-line cash, its bad business.

But wait, you say. Any customer is better than no customers, right? An easy assumption, but it’s wrong, and it’ll cost you. Because every minute you spend with a non-paying customer is a minute you could be spending with the real deal, which means you’re taking a double hit: not only are you expending time with no return, you’re sacrificing valuable time that should be bringing dollars in the door. For every minute you waste on a free-loader, the equivalent minute spent on a paying customer costs you twice the time for half the money that you should be earning. Any way you cut it, that’s bad math and bad business.

So let’s look at those three types of customers again and put them in order. Paying customers are great. No customers, that’s actually fine. Non-paying customers, not good. How can no customers be “fine?” Because you’re not expending time and incurring costs, which is the case with non-paying customers. Which means, you could instead be investing this non-revenue time in building your business, looking for real customers and contributing other value-adds.

It’s gut-check time. Are all your customers paying their way? Get real about this and separate the wheat from the chafe, and then send the chafe packing. Or better yet, convert them to paying customers, whatever that means in your business. If they walk, say thank you before the door hits them on the butt as they leave, because you’ve just freed up time to make your business better in other ways. Better to not render a service or incur a cost with no ROI than to not get paid.

You’re probably thinking this is easier said than done, and you’re right. But it’s worth the pain. Look closely at your client list and ask a few tough questions about what you see there. Do they pay you willingly? Do they shout out when they have a problem, allow you to fix it, and then pay you for your time and effort? Or do they act like they’re entitled to your time? Can you get them to pay using a method that is acceptable to your business? If the answers are no, then you need to learn to say the same thing to these customers: no. It’ll be awkward, it’ll hurt like hell, but it’s like getting a shot – it’s all for the best, and it’ll heal what ails you in the long run. The good news is that they all won’t run for the door when they sense your new get-tough attitude, and for those that stick around you’ll have turned a bad apple into apple pie.

Remember, you’re in a game in which winning or losing is a bottom-line

proposition, not a numbers-through-the-door statistic. At the end of the day, all that really matters from a business perspective – not to undervalue the personal relationships involved – is how much money you have in the bank, not how much is owed to you. Look for and cultivate solid paying customers, and nothing else. The non-payers, those thieves at your door with the ski masks and a bag, need to be converted to non-customers instead of being invited in for that glass of wine and access to your jewels.

So now you know. Start kicking the dead beats to the curb and bolt the door behind them. When you do, you’ll have the time and energy to be a more gracious host to your honored guests, the ones who pay their bills, ones to whom you’d happily give a cold beer. Who knows, you might even want to change your name to Spike.

Related Topics: Customer Service, Entrepreneurship, Marketing    1 Comment    

Product Sourcing the Drop Ship Way

By Jeremy Hanks, CEO of Doba

Many retail merchants looking for products to sell without the high costs of inventory and the hassles of packing and shipping products have discovered the perfect solution—drop shipping. With drop shipping, you list and sell a product at whatever retail price you set, collect your money, and then order the product from a drop-ship wholesale supplier. The supplier packs and ships the product directly to your customer.

Drop shipping is the ideal low-risk solution for starting a retail business, particularly for online merchants. You don’t need a great deal of startup capital to launch your business. With a drop ship supplier and an eBay account or your own webstore, you can immediately start selling products online. You order the product only after you receive payment from your customer, so if the product doesn’t sell, your loss is limited to any listing fees you paid. If the product does sell, you can simply ramp up your marketing and sell more products.

To implement drop shipping in your retail business, you have two choices—either search for drop ship suppliers on your own and negotiate with each one individually or gain access to multiple suppliers through a product sourcing marketplace. Several websites offer drop ship supplier lists that you can purchase online. Many such lists, however, can be challenging to work with, and some are outright scams. In addition, even after you have a list of suppliers, you must contact each one individually, negotiate prices, and then learn each supplier’s system for taking orders and managing your account.

A reputable product sourcing marketplace offers several benefits:

• Access to dozens or even hundreds of drop ship suppliers.
• A single account to keep track of.
• A single, consistent interface for ordering products.
• Lower wholesale prices by leveraging the buying power of its many members.
• Additional services, including education, product and market research tools, fraud protection, and professional customer support and technical support.

Doba is committed to simplifying and streamlining the process of product sourcing for eCommerce entrepreneurs who are looking to start or grow their retail business with the drop shipping solution. Check out Doba for yourself and sign up for Doba’s Free 14-Day Trial at www.doba.com/partners/logoworks

Author
Jeremy Hanks the co-founder of Doba. He leads the company in executing against its strategic vision and coordinates and oversees day-to-day operations of the business. Prior to co-founding Doba, Jeremy spearheaded the development of numerous businesses in the supply chain, wholesale distribution, and retail industries. He founded GearTrade.com, an online marketplace for used and distressed inventory, where he was the company’s President and CEO. He led the company through a merger with e3vertical, where he was CEO and focused on providing ecommerce and supply chain management solutions for small and midsized businesses. He holds a Bachelor of Science degree in Business Management from Brigham Young University.

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Related Topics: Customer Service, Internet, Supplier Relationships    5 Comments