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inside salespeople or e-commerce to deal with them. If this results in the same or marginally less business but with considerably reduced costs they have now been promoted to iron customers.
Another approach which we have seen used with considerable success is to have a sales manager sit down with business-to- business (B2B) customers and tell them frankly that you are losing money dealing with them, and as business people they should fully understand this problem. Discuss with them how to best deal with the issue. Can they offer to you a bigger share of their spend or can you provide them less service? The formula is simple: more revenue to make them profitable or a less service-intense business model to reduce your costs. Either way you win. If they baulk, wish them well dealing with your competitors. Be unfailingly polite and respectful of their past relationship with you and all will go well. We have never had nor even heard of a customer being very upset about this when done appropriately.
One exception should be made when dealing with lead customers, as some lead customers are strategically important, perhaps because of their importance as references, because they may be the next Microsoft or perhaps because they provide large volumes to keep your production going. In that case we would let our salespeople keep a small percentage of lead customers.
A key problem for many firms in implementing this approach is trying to have one employee, whether external sales, internal sales or customer service provide two quite different levels of service. Imagine that hotel chain Four Seasons decided in a moment of lost concentration to buy the Motel 6 chain. What would it be like if you transferred a front desk clerk from the Motel 6 to a Four Seasons and vice versa? The image is rather comical, both sets of customers would be quickly outraged by the normal behaviour of the front desk clerk from the other world. The Motel 6 business model means that the front desk must move each new customer through in short order. Meanwhile at a Four Seasons, it is expensive, but the service is outstanding. You can talk about your day to the desk clerk as long as your heart desires! Now this perhaps is an extreme example but the principle remains. It is nearly impossible for one person to offer great service to one customer and then offer a considerably lower, though appropriate, level of service to the next. When you have