The Pareto Principle—known also as the 80/20 rule (and the law of the vital few) —states that for many events, roughly 80% of the effects come from 20% of the causes.
In terms of customer service, this means 80% of your issues are coming from 20% of your customers.
And dealing with problem-customers heaps on hidden costs. Those problem-customers are typically the least profitable to keep.
Just as one bad apple can ruin the bunch, one problem-customer can suck your attention from serving your good customers better.
There’s a very simple concept that’s served me well in my work and it came from an unlikely teacher.
I learned the following growth hack from Van Halen.
They were one of the first bands that really took production-value to the next level. Before them, a big-time band would have three eighteen-wheeler trucks full of gear. But Van Halen’s crew? They had nine trucks.
It was a herculean task to properly unload and connect this complex equipment setup.
Not only was it time-consuming and expensive, it was also very dangerous and could potentially kill people if done wrong. And Van Halen knew that.
Here’s how David Lee Roth recounts the story in his autobiography,
“The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes …” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”
So, when I would walk backstage, if I saw a brown M&M in that bowl … well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.”
Van Halen had a very clever, yet simple litmus test to spot problem-venues based on their attention to detail.
Since learning this, I’ve incorporated the Brown M&Ms story into a customer service growth hack that has greatly reduced customer service problems from that problem 20% of customers.
Here’s what I discovered. If potential customers aren’t reading your requirements, they aren’t taking your business seriously. And they’re going to feel entitled to your time and energy.
Trust me when I say you don’t need them. And you’ll love your business more when they’re filtered out.
For Airbnb Hosting
In my Airbnb business, we noticed that the people who didn’t read the listing carefully were consistently the biggest problems, the most demanding, and always gave the worst reviews.
After implementing our own Brown M&Ms test in our automated seven message sequence, we filtered these folks out. One of the Brown M&M's was if an enquiry asked for a discount, they’d be instantly declined.
When people ask for a discount on the price you’ve valued your hospitality at, that in itself should be a red flag for Airbnb hosts. Ask any host and they’ll tell you these kinds of guests are impossible to please..
LinkedIn Professional Engagement Networks
LinkedIn engagement pods carry a lot of risks and are against the terms of service.
Having your LinkedIn account banned, or engaging in posts that are off-brand can be a very real possibility. Especially free LinkedIn engagement pods.
People drawn to LinkedIn engagement tools want to improve their business, not damage it.
For this reason I made my own engagement networks club where people are trained to understand pod safety and basic algorithm strategy before they get full access, because if people aren’t bothering to read the training emails, they’re going to be a problem later.
This Brown M&Ms strategy nips the potential high-maintenance users in the bud before they become a bigger headache and use up more time.
Benefits of the Brown M&Ms growth hack
For many, the idea of rejecting potential bad customers is terrifying. The uncertainty of filling your book of business with the good type of customers feels risky. But life’s too short for crappy customers. Here’s what you’re missing:
- More time can be spent on the right customers and to develop those already positive relationships.
- The opportunity to enjoy your business more because you’ll have fewer headaches and problem customers.
- It's more profitable spending it on the 20% of customers bringing in 80% of the profits, rather than endless damage control with the bad ones who don’t pay as much and cost more to service.
- More you-time to do as you please and not feel like a slave to your business.
How to apply the Brown M&Ms strategy to your business
If you’re ever noticing a pattern of high-maintenance customers who are the least profitable to your business, this is for you.
When do they start complaining and using up extra time where a regular customer doesn’t?
I’ve found it usually boils down to them not following the instructions or reading descriptions carefully. HOWEVER, if you have a large number of people with the same problem (more than 20% of people), you might just need to give them better information.
Do they ask for a discount before they know the value of what you’re offering? Cheap, miserly people aren’t looking for win-wins. I’ve learned to screen them out as soon as possible.
A good litmus test for these kinds of problem customers is to talk payment right away. It signals you know your value. This may sound crass but it’s necessary. Because if you don’t, like a leech on an unsuspecting victim, they’ll take all they can and be on their way.
Are they demanding and otherwise not respectful of your time before they’ve even purchased anything? Entitled people who believe the customer’s always right can quickly become the warden of your self-created prison if you try to do business with them.
Life is already too short. You don’t need to spend your precious time on unprofitable problem-customers who make you wish that time would go faster.