Demarketing - approach to transformation

Demarketing - An approach to transformation - Change is king - Almost all entrepreneurs, managers and marketing executives surveyed answered this question intuitively with „Yes„, and thus systematically fail to recognize Negative effects of adverse customer relationships. The Presence, importance and impact of unwanted customers hardly anyone is aware of. At least they don't talk about it. And yet studies show that almost every company across all sectors is affected. Often massively affected!

The customer is king! Demarketing - approach to transformation

It is hardly surprising that the topic „Dealing with unwanted customers“ has hardly found its way into the brand management, marketing and sales management practiced in companies to this day and is still very much a taboo in corporate practice. After all, the customer is king! Always and everywhere! But what happens when customers consciously or unconsciously become very expensive kings? 

Many companies with free service hotlines have had to experience this painfully when a number of customers overuse the free offer and thus lead to very negative contribution margins. Unfortunately, this phenomenon cannot be limited to one service or one industry. Every company that also sells products online, for example, knows how quickly a high number of returns can melt away the profits generated.

Much worse than negative contribution margins or customer lifetime values related to individual customers, however, are negative indirect spillover effects, e.g. on the brand, as impressively demonstrated by the traditional brand Lonsdale would have almost driven them to economic ruin. Demarketing - approach to transformation.

The high popularity of the brand among right-wing extremist customers led to rapidly falling sales figures among the actual target customers and the withdrawal of important sponsors. A customer or a group of customers can therefore trigger massively undesirable effects, even if they are highly profitable when viewed in isolation. Conversely, there are situations in which it is worth cross-subsidizing unprofitable customer relationships if they are expected to have particularly positive spillover effects in terms of brand messages. 

Deficient customers in terms of demarketing

Deficient customers in the sense of selective demarketing are, on the one hand, unprofitable, strategically insignificant customers and, on the other hand, originally profitable but strategically insignificant customers who are also unprofitable and strategically insignificant when their derivative negative spillover effects are taken into account. Demarketing - approach to transformation. Here you can find out more about our Approach.

The Central negative effects of deficient customers in the sense of selective demarketing are, among others:

• Negative effects on the brand image and possibly on the profitable target segments with the consequence that profitable customers turn away or potential customers no longer shortlist the brand.
• Loss of control over your own image, because unwanted customers are usually also dissatisfied and communicate this to the outside world.
• Unwanted influence on strategy development, because unwanted customers tie up a disproportionate amount of resources, which are then no longer available for target-oriented design.
• Negative effects on employee satisfaction because employees have to deal with „difficult“ customers and are frustrated.
• Waste of resources because unwanted customers block channels that are no longer available for wanted customers (e.g. service lines), which may result in wanted customers leaving.
• Potentially promising customer relationships remain unused because resources are tied up with undesirable ones.
• Disruption of internal process structures that were planned in such a way that negative customers were not assumed.
• Negative impact on corporate culture (Code of Conduct: Every customer is important to us vs. reality: We have to separate ourselves from customers somehow, no matter what)

As shown, the causes of unwanted customers can be very diverse and, in addition to loss of brand value and negative contribution margins, can also have a very negative impact on employee satisfaction.

Why companies end customer relationships - Demarketing - Approach to transformation

Because relationships that are terminated unilaterally by the provider can trigger a strong feeling of injustice among customers and boycotts and shitstorms are often the result. Marketing departments are afraid of negative reviews on internet portals. They often irrationally hope that the customer relationship will be „good“ again. There is a fear of playing into the hands of competitors if the customer goes there. And much more.

Selective demarketing specializes in resolving this dilemma. This involves the targeted exclusion of deficient customers through the use of marketing instruments while avoiding negative consequences for the company. This approach was first introduced in the 1970s, but it is only in recent years that it has been scientifically and methodologically developed in projects to such an extent that we have been able to develop a management process based on it. Please also read our article on the subject selective demarketing.

What is selective demarketing? Demarketing - approach to transformation

Essentially, selective demarketing starts with an analysis of the existing customer portfolio. Marketing activities are examined to determine the extent to which they address the „wrong customers“.

Based on these findings, specific demarketing and marketing goals are defined and a strategy is developed that includes instrumental and procedural modifications to ward off unwanted customers. 

It goes without saying that each individual phase is accompanied by ethical/legal reflection to ensure that all demarketing activities are carried out in accordance with the law and the corporate mission statement. Demarketing - approach to transformation.

Selective demarketing is part of corporate transformation

​Transformation means change through critical reflection in order to START NEW, CHANGE the STATUS QUO and EXPAND BUSINESS.

Selective demarketing is not just an approach to transforming customer orientation - away from the „customer is king“ broadband antiseptic and towards the radical „the trusting and value-creating customer is king“ philosophy. 

But selective demarketing is much more than that. It not only focuses attention on the desired customers, it sharpens brand awareness, it increases the importance of corporate and marketing ethics, it focuses on employees (employees first, customers second), it frees up resources and creates space for change. Have you already read our article about Damage to image read?

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Frequently asked questions

Advantages and proven methods at a glance

Professional coaching is characterized by a structured, solution-oriented approach that supports you in achieving your individual goals. In contrast to general advice or seminars, coaching is tailored precisely to your personal situation. Your coach accompanies you at eye level and helps you to develop your own solution strategies - because sustainable change always comes from within.

The proven methods used in our coaching practice include systemic coaching, solution-focused short-term therapy according to Steve de Shazer, non-violent communication according to Marshall Rosenberg and mindfulness-based approaches. Each method has its own particular strengths: systemic coaching looks at your situation in the context of your entire environment, while solution-focused approaches focus specifically on resources and images of the future.

A key advantage of coaching is confidentiality. Everything you discuss with your coach remains in a protected environment. This security allows you to talk openly about challenges that you may not be able to address in your professional environment. For managers in particular, this protected space for reflection is invaluable for identifying blind spots and opening up new options for action.

Practical tips: How to get the most out of your coaching

The success of a coaching process depends largely on your own willingness and preparation. Before you start coaching, you should take the time to clearly formulate your goals. What exactly do you want to change? What specific results do you expect? The more precise your objectives, the more focused the coaching process can be.

Between the individual sessions, it is important to actively integrate the insights you have gained into your everyday life. Keep a coaching diary in which you record your progress, challenges and "aha" moments. This reflection reinforces the transfer effect and makes your personal development visible. Many of our clients report that the time between sessions is crucial for lasting change.

Be open to new perspectives and be prepared to question habitual thought patterns. A good coach will challenge you without overwhelming you. Trust the process, even if individual steps seem unfamiliar at first. The best results are achieved when you get involved in the collaboration and play an active role in shaping it. Our experience at Ihr Coaching Institut in Frankfurt has shown that clients who have this basic attitude achieve their goals much faster and more sustainably.

Conclusion

Demarketing - approach to transformation is not a topic that can be reduced to a simple formula. The most important findings from this article:

• Professional support makes all the difference: Whether in a business or personal context - an experienced coach measurably accelerates development processes.
• Individual fit counts: There is no one-size-fits-all solution. The right method and the right coach are crucial to success.
• Act now: Knowledge alone changes nothing. The first step is always the most important - and often the most difficult.

If you are ready to take the next step, we are at your side as experienced sparring partners. A non-binding initial consultation will clarify whether and how we can support you.

Scientific basis and effectiveness

The effectiveness of coaching has been proven by numerous scientific studies. A meta-analysis by the International Coach Federation shows that 80% of coached individuals experience a significant improvement in their self-efficacy. Other studies show positive effects on stress reduction, decision-making quality and interpersonal communication.

Research provides impressive results, particularly in the area of leadership development. A study by the Manchester Consulting Group showed an average return on investment of 5.7 times the coaching budget invested. The improvements were reflected in increased productivity, higher employee satisfaction and improved working relationships.

Neurobiological research explains why coaching is so effective: new neuronal connections are formed in the brain through targeted reflection and new experiences of action. This process, known as neuroplasticity, enables lasting changes in behavior. At Ihr Coaching Institut, we work exclusively with evidence-based methods that put these scientific findings into practice. Our certified coaches combine sound specialist knowledge with many years of practical experience.

Tim S. Tabrizi is the founder and managing director of Ihr Coaching Institut (Frankfurt). Certified Executive Coach (ICF, DBVC) with over 15 years of experience. 35 coaches throughout Germany. LinkedIn profile | Your coaching institute on LinkedIn | Author page →