Client or Customer?
I have just started reading Jay Abraham’s book “Getting Everything You Can Out Of All You’ve Got”. Near the beginning of the book he makes the distinction between ‘client’ and ‘customer’. In the first chapter he quotes Webster’s Dictionary:
“Customer: A person who purchases a commodity or service
Client: A person who is under the protection of another”
Like many small businesses, we are looking at the bottom line and it finding it isn’t where it should be. And, like many small businesses, we are looking to see how we can improve our situation.
For many service businesses, the temptation is to lower prices by offering less service. Moving from having clients to having customers.
I wrote about this earlier in the current economic situation. While the downturn has dragged on longer than many people expected, my ideas on how to handle it haven’t changed. Service related businesses need clients – not customers
Having customers is not a bad thing. Many bushiness, such as MacDonald’s, have made vast profits by having customers. However, moving from clients to customers in a service industry is a one way street. Once you get a reputation for lower prices but poorer service, it is hard to go back.
Then you are in a race for the bottom. There will always be new businesses trying to provide the same service cheaper or faster.
A better strategy is to keep your prices the same, but increase services. Give your clients a reason not to switch to a lower cost service. Implement strategies to keep your existing customers. They may be as simple as a ‘Buy 10 get one free’ coffee card or as complicated as making one of your services free for existing or long term clients.
Don’t get into the ‘race for the bottom’.
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