Divesting or Losing Customers

Divesting customers based on

- customer not profitable to you

- customer is a slow payer

- customer is hard to handle, ie unduly rude, obnoxious and/or troublesome

- your capacity constraints, such as lacking expertise, physical capacity or financial resources to provide a particular service; underestimating consumer demand or the impact of the regulations, etc

- changed strategies, eg decide not to provide certain products and services

- unable to manage customer's expectation

Risks in divesting include

- other customers' business unable to cover your costs of losing a customer

- loss of a valuable source of information, experimentation and innovation

- a competitor could benefit from this customer's change of loyalty

- not understanding links between the divested customer and your other customers, eg organisations may have common stakeholders, such as directors/ shareholders/managers, with one of your other customers

(source: Vikas Mittal, 2008)

 

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