Most marketers have heard or even quoted John Wanamaker’s assertion, "Half the money I spend on advertising is wasted; the trouble is I don’t know which half." Here is a not-so-old adage for your consideration:
All the resources I continue to invest in an unprofitable account compound the loss; the trouble is I don’t know when the account became unprofitable.
When the economy was growing a number of organizations began to look more closely at customer profitability initiatives in order to determine which accounts were actually profitable and which should be eliminated. Today’s economic retreat has created a customer shortage as consumers have cut back their spending. As a result, customer experience improvement initiatives that are designed to retain all current customers now seem more in fashion.
I’ll have to admit that the idea of eliminating any customers – particularly in an economic downturn - seems counter intuitive. After all, what company wants to retire a revenue producing account? As we know, profitability does matter, and in most industries unprofitable customers are those who do three things: they order rarely, they pay slowly or not at all, and they make unreasonable demands.
Well, wait a minute, what about those situations where we let our own customer experience goals and programs outpace the rate of return?
Customer Experience Scope Creep
Scope creep is a phenomenon that occurs when the scope of a project is not properly defined, documented, or controlled. Typically, the scope increase consists of either new products or new features of already approved designs, without corresponding increases in resources, schedule, or budget. As a result, the project team risks drifting away from its original purpose and scope into unplanned additions.
Scope creep is also possible with service models as it relates to the customer experience. You can see it when extra value-add reporting or resources have been attached to an account without a corresponding change in the original statement of work or pricing.
This type of scope creep doesn’t happen overnight. Account management and marketing teams change over time and in the process new relationships and customer expectations are often established.
It’s a difficult move, particularly in today’s environment when accounts demand extra services that they don’t want to pay for; but once you discover that the account has become unprofitable you need to adjust the relationship by realigning the service model - or eventually plan on retiring the business.
[1]
[2]
[3]