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How firms ending relationship with the difficult or dysfunctional customer


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How firms ending relationship with the difficult or dysfunctional customer

  1. 1. How firms ending relationship with the difficult or dysfunctional customerSummary: the customer of an companies is not always right, dysfunctional customerbehavior can affect employee other customers and the other organization, there are the“problem customers “a service manager have to know how end the relationship with the“problem customer “Dysfunctional customer behavior can create both direct costs and indirect costs for theorganization; both are the expense for organizationThis article is to describe how to relationship end -due to lack of customer profitability.The usage of customer valuation techniques and the preponderance of unprofitablecustomer relationships, and to identify various ways of managing unprofitable customerrelationships by means of bunch analysis.The lesson shows that many companies in the industry lack knowledge and use ofcustomer valuation techniques I have tried to understand for that an organization, howand when? End the relationship one of the customer,my article is the problems involved are analyzed based on examples from the servicessector, and relationship oriented strategies and processes are outlined, firms mayidentify some customer who are not in their targeted segment, who are not profitable inthe long run, or who are difficult to work with or dysfunctional, a company may not wantto continue in a relationship with every customer,However gracefully exiting a relationship may not be easy, customers may end up feelingdisappointed, confused or hurt if a firm attempts to terminate the relationship,Relationship endings: relationships end in different ways – depending on the type ofrelationship in place, in some situations, a relationship is established for a certainpurpose and /or time period and then dissolves when it has served its purpose or thetime frame has elapsedSometimes a relationship has a natural ending or an ending may occur because thecustomer is not fulfilling his or her obligation,For example: A bank may choose to end the relationship with a customer who regularlyhas insufficient funds in the checking account, whatever the reason for ending therelationship, firms should clearly communicate their reasons for wanting ( or needing ) toterminate it so that customers understand what is occurring and why,Should firm’s combustion their customers? a logical conclusion to be drawn from thediscussion of the challenges firms face in customer relationships is that perhaps firmshould seek to get rid of those customers, who are not right for the company, more andmore companies are making these types of decision based on the belief that troublesomecustomers are usually less profitable and less loyal and that it may be counterproductiveto attempt to retain their business,For example: I worked for a service oriented company in Dhaka, Bangladesh. We had afew very good customers we gave them services regularly through L/C /cash/ credit
  2. 2. based. One of our customer recruit a new CEO, who thought that we were taking moreprice so he was trying to do his new orders in some of our competitor’s factory, althoughwe owe them a big credit. Fortunately, they failed to continue in the new company forpoor quality and service. They came back to us for workout this order. In the mean timewe find out this history of their cunningness. So, we decided to help them work out herebut after they pay our debt in full. They were in a tight position of shipping deadline, sowe got paid in full. And after complete this order we send them a letter with closing ourbusiness for good.Although it may sound like a good idea, dismissal customer is not that simple and needsto be done in a way that avoids negative publicity or negative word of mouth, sometimesraising prices or changing for services that previously had been given away for free canmove unprofitable customers out of the company ,When addressing potential customers, the finer the targeting in respect of theircurrent product portfolio, present phase in life, or perhaps current events in their livesor current transactions, the greater the probability of successful Cross-selling, up-selling or initiation of a customer relationship. It is only with the aggregation of all theavailable information along with a real-time evaluation of current change indicators, avery high number of segments and finally effective campaign support that systematicand targeted marketing becomes possible.But in situations firms have service encounters that fail because of dysfunctionalcustomers dysfunctional customer behavior refers to actions to terminate relationshipswith customers and other stakeholders, at a profit, so that the objectives of all partiesare met, and that this is done by mutual exchange and fulfillment of promises".The further investigation is by the following research questions:(1) What do suppliers know about the profitability of their customer relationships?(2) How many unprofitable customer relationships do suppliers have in their customerportfolios?Is lacking profitability a common phenomenon among business-to-business suppliers?(3) What is the suppliers’ view of relationship marketing and dissolving unprofitablerelationships?It is modeled as a function of a customers lifetime duration, revenue flows and firmcosts associated with serving the customer From an economic point of view, relationshipdissolution becomes an issue in those cases where the real or anticipated costs outweighthe benefits of relational exchange Suppliers do not always correspond to this economicrationale and commonly engage in unprofitableHelping a client find a new supplier who can better meet its needs is another way togracefully exit a non-productive relationship, if the customer has become too demanding,the relationship may be salvaged by negotiating expectations or finding more efficientways to serve the client, if not both parties may find an agreeable way to end therelationshipFinally, participants were invited to respond to a set of questions describing their own
  3. 3. Firm. Also stated is the percentage of respondents who were not familiar with themethods. Especially noteworthy is the low awareness concerning customer lifetimevaluation. Although there is an intense discussion on lifetime measurement in academia,business-to-business firms managers in charge of handling customer relationships in theindustry investigated are, to a large extent, not even aware of it. Information oncustomer profitability is scarce in the industry as the methods to measure it are notused commonly.Published By: