Variety seekers are looking for new experiences and deal seekers only consider price. Although the behavior of these customers is extremely unlikely to change, companies have more than doubled promotional budgets in the last five years. Save your money and send these scamming customers to your competition.

Many of your existing customers may be costing you money to keep Investigate the assumptions that it costs five times more to acquire a customer than to retain one and that existing customers increase their level of spending. Do they purchase at full margin or discounted prices?

Do you think it costs more to serve new customers than existing ones? What additional cost did a new vendor incur when you went to a new doctor, tried a new restaurant, changed your CPA or flew on a new airline?

Furthermore, scammers will have you believing your advertising budget is devoted entirely to attracting new customers. However, much is meant to reinforce and maintain awareness among current customers.

Although wallet share is very important, many customers scam organizations because they demand an unreasonably high level of service or are totally price driven. They aren’t helping you by backing up the truck and filling it with discounted goods or demanding fee concessions at the expense of your generating a profit.

You don’t want to keep all of your customers, so focus only on the profitable. Scamming customers may complement you saying they delay purchases and wait for you. If waiting means a “special offer,” no business ever lasted by giving its products or services away.

While some people do want a relationship with an organization, the scam pointed out in Loyalty Myths …it’s only about 10 percent. Today’s customers have access to almost unlimited information and, with the exception of very high-end products and professional services, exhibit very low commitment.

While many organizations think long term customers are less price-sensitive and will happily pay a premium to do business, the same research shows some “believed to be good customers” scamming by consistently paying between 5 and 7 percent less than new customers.

Are long-term customers more desirable than short-term? The belief, and often the scam, is that long-term customers stay around longer, so they must purchase more.

If your primary customers are new homeowners, and you sell lighting fixtures or garage doors that homeowner is unlikely to do business with you again for a long time. If you’re the local dry cleaner, supermarket or Chinese restaurant… a “profitable” long-term customer is desirable.

Long-term companies should invest in service and quality improvements that increase repeat business. Focus on customers’ needs and demand a relationship between the investment and getting more “profitable” business. Develop the right processes, people, and resources to create profitable repeat business and measure the results.

Customer scams are a fact in modern business life, easily perpetrated on the non-prepared. Information abounds, people normally seek variety and want a good price. Strive to keep only the profitable customers…send the rest to your competition.

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