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There's a legendary story about a French bank. Apparently, their elderly customers took up too much time dealing with the banking clerks and did little business of value.

So the bank decided that it wanted to give the elderly customers the ol' heave-ho.

But how do you get rid of elderly customers without igniting a PR bush fire? You simply increase the height of the steps leading to the bank.

The elderly customers were distraught, angry, frustrated. And, one by one, these customers decided to move their business to another bank down the street.

Progressive Insurance did one better.

It moved its agents off the street completely. Progressive insurance found a profitable niche in motorcycle riders. But not all motorcycle riders.

Not surprisingly, not all motorcyclists have kamikaze brains. Progressive found that older motorcycle drivers tend to be very safety-conscious, and therefore a better-than-average risk.

So Progressive hid its signs.

It advised its agents to locate themselves in offices off the street; in office buildings that would be a bit of a mission for customers to find.

Because when the insurance company dug deep it found that most of the customers who came off the street were pretty much those who made the most claims. By eliminating the off-the-street customer, Progressive took home a bigger paycheck and was able to service its existing clientele a whole lot better.

Which is why Lexus profits keep jumping off the scale.

Lexus and Infiniti were interested in wooing a similar target audience—namely, clients who loved luxury cars and were willing to pay the big bucks.

Um... except for a tiny difference in qualification. Infiniti went after customers who drove BMWs and Jaguars. Lexus stayed back and put out feelers for those who owned Mercedes cars and Cadillacs.

The balance sheet told the story well. Lexus's customers were historically the most loyal in the industry. They were very hard to convince, but once convinced they became fierce evangelists.

Infiniti's customers seemed just as loyal at the start, but soon became more demanding as they constantly badgered the company for trendier styles and greater performance—thus leaving Infiniti with a monster migraine its its hands.

Are you headed to migraine city too?

You wouldn't go on a date with the next person who walked through your door; and, yet, you have no qualms in accepting any client that comes your way.

Needless to say, if you do, you'll inherit the Infinite migraine. Your customers will push you around, not pay the invoices on time, and end up being the most pedantic, irritating pests on the planet.

The way out is to create barriers. Create a system that filters out customers before they become headache clients. Some of the best ways to filter a client is to create a barrier with a form.

Humans hate filling out forms. It's boring. It's tedious, and we do it only because we know that we have to fill out the darn form. But in doing so, we indicate our seriousness. We fill all tax forms in the greatest detail. We fill in forms that get us to school, university, marriage and divorce.

But before you pull out the forms, do one more thing.

Sit down and work out exactly whom you'd like as your client. Who is that person? Is it a Mercedes owner or a BMW owner? Is it the motorcyclist off the street or the older motorcyclist?

Once you've qualified whom you want, get the clients to qualify themselves. Whip out the form. Get the clients to give you the information you need. And do it today.

Raise the height of the steps in your company too. And you'll quickly get customers whom you adore. And who adore you in return.

Continue reading "Barriers to Entry: Do They Improve Customer Qualification?" ... Read the full article

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ABOUT THE AUTHOR

Sean D'Souza uses age-old psychology, marrying it to modern technology, on his Web site, psychotactics.com. Can "psychological tactics" make a difference? Go there and find out.


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