I had the honor of participating in Mitch Jackson’s Spreecast with Seth Godin (segment beginning at 28:45). I took the opportunity to ask if he still supports his earlier claim from Permission Marketing that companies should fire 70% of their customers or if he has revised that notion as technology has evolved to perhaps enable more customers to be served in a cost-effective manner.
Seth qualified his response by discussing various types of businesses based on what they are selling. For businesses selling something they make once, and then duplicate, there’s clearly incentives to create volumes and market share. However, that is not the case for most small businesses. As Seth Godin put it:
“Most small businesses are wandering generalities. They try to appeal to every person in town, every person who walks by, every person who they can touch, but they make nothing that people would cross town for. They make nothing that people care about. If you are going to make it as a small business on the Internet, when everyone else is a click away, how can you possibly make something for everyone? Someone bigger than you, more efficient than you, more cut-throat than you, is going to make something for everyone. You have to make something for someone. And the minute a new customer shows up who isn’t happy with being special, you have to say ‘sorry, go to my competitor next door, go to that other place who sells stuff for everyone, I make stuff for special people.’”
Regarding my question about the continued need also for big companies to decline business, Seth pointed out that some big brokerage houses in Boston found that 2% of their customers were accounting for 95% of their customer service expenses. Simply put, those customers weren’t worth it and the company called them and said: ”we think you could be better served by our competitor, here is their phone number, we’d like you to transfer your account to them.”
In sum, Seth Godin holds on to his view that companies should decline many business opportunities. Have you found yourself saying no to business? Are you considering getting rid of some existing customers?
Loved your question to Seth but I enjoyed you analysis even more.
I have not read Permission Marketing but was intrigued by your question during the Spreecast. Although our law firm business model is a bit different then other non-legal businesses, it’s interesting to note that over the last 5 years, our internal numbers show that we have “declined” 18 out of every 20 incoming new potential clients.
Long ago, and by that I mean maybe 15-20 years ago, I started to notice many lawyers taking on low paying clients or cases that took up all their time and zapped them of all their energy. These cases, for physical, emotional or financial reasons, kept them from being able to have the time or resources to take on cases that would have been a better financial business decision and created more revenue for the firm.
I also remember marketing expert, Jay Abraham, once sharing a thought with me about the word “no”. He said learning how to say “no” in business can be the greatest revenue producer you’ll ever learn in business. Now, in all fairness, we have a business model set up so that most of the cases we decline (not all) we refer out to other lawyers in exchange for a State Bar approved referral fees. The client is happy to be represented by an outstanding lawyer who is glad we made the referral and wants the case and, my firm is motivated to take the time to make the referral in exchange for a referral fee paid at the time the referred case is concluded.
Pro bono cases are important and every lawyer needs to do his or her share of these. I’m not talking about this aspect of practicing law. For this comment, I focusing on the business aspect of the profession.
Another benefit for a small business owner with thinning his client herd or saying no to potential customers or clients is quality of life. I’d rather handle 10 big cases a year and have time in the afternoon to coach my kids on the soccer field than 200 smaller cases a year and work from 7am to 10pm Mon-Friday. Unfortunately for most business owners, they focus too much effort on working hard and not smart. Instead, I’d suggest that they work hard and smart on something they’re passionate about. Now that’s the way to go build your business or sell your products or services.
Thanks for all that you do with sharing your global marketing experience with those of us who live in the OC. Keep it coming!
Thanks Mitch for validating Seth’s advice with specific examples from your legal practice. I think that you touch upon several important aspects here. One, of course, is that it is better to say no upfront than having to go through a perhaps painful client “thinning” process. Second, you don’t necessarily have to leave prospects you reject without any assistance. In fact, a helpful referral to another lawyer you mention means that we should consider the word “competitor” loosely in that you are not necessarily suited for/interested in the same types of business. Third, just staring at the “customer lifetime value” from a pure profit-oriented standpoint could have ethical implications if companies are not helping people in need that cannot afford it and there you bring up pro bono cases that lawyers get involved in as a great case in point. Finally, the quality of life aspect is not to be forgotten, see you on the soccer field! Thank you and stay connected!