Why don't people just pay or don't use non-essential service

[SFH0791]

Could someone please explain the logic behind this?

We're a luxury service, People use our service because they have higher disposal income. 99% of the customers are not a problem but a select few, when it comes payment it is the end of the world???

Just use a cheaper alternative? Do they just wana feel special by using a luxury service whereas their income doesn't allow it?

Do I need change business model and take payment upfront however sometimes the payment is in £000's, If I ask for too many details or sign too many paper work the lead just goes COLD from a HOT lead!

Tips appreciated

 

[MBE2017]

Your business, your decision.

 

[Mr D]

Figure the risks, factor that into pricing and - if you can identify common elements in the 1% - require payment from them up front.
Or deposit from everyone.

 

[Forgot password]

If 99% of your client base pays you full price on time every time then you haven’t got a problem so don’t change anything.

Sorry but I suspect you don’t have a luxury business at all. ‘Why’ you ask.

A. If you had a business of any sort let alone a luxury business dealing with the upper echelon of society then you must be a switched on cookie and as in my answer a 1% bad payer would not be looked upon as a problem that needs answering.

B. Switched on cookies would have solved this problem fairly easily.

C. So it’s the lack of details that ensures the client hands over £000’s (good work if you can get it)

D. ‘Or sign to many paper work’ was the killer clue for me.

Anyway prove me wrong and I will eat my words.. what’s your website?

 

[billybob99]

If the lead goes from hot to cold when asking for cash, they weren't a lead in the first place, and probably didn't have the money they thought they had.

You just move on, and focus on the 20% of your top clients making most of your revenue.

You don't need to change anything, you just need better, qualified leads.

 

[obscure]

they have higher disposal income. 99% of the customers are not a problem but a select few, when it comes payment it is the end of the world???

Just use a cheaper alternative? Do they just wana feel special by using a luxury service whereas their income doesn't allow it?

Why do you think they can't afford it. There are just as many rich people who don't want to pay, even though they can afford it.

 

[Alison Moore]

You'll always get some clients who will be awkward over payment, regardless of how well off they are. Of course they might have a complaint which is why they're not paying and often people won't tell you their complaint until you push them into it. It's up to you whether you ask for money upfront - it depends on the service you offer as to whether its appropriate. In a previous company we stopped all credit terms when we had a lot of major clients go bust on us in a short period of time.

 

[Ashley_Price]

Why do you think they can't afford it. There are just as many rich people who don't want to pay, even though they can afford it.

And then there are those who are "asset rich" and "cash poor".

Just because someone has £1 million property, you don't know what their status actually is, perhaps they also have maxed out credit cards.

 

[SFH0791]

If the lead goes from hot to cold when asking for cash, they weren't a lead in the first place, and probably didn't have the money they thought they had.

You just move on, and focus on the 20% of your top clients making most of your revenue.

You don't need to change anything, you just need better, qualified leads.

You haven;t worked in the Luxury Industry!! ask them too many questions and they'll leave!!!

 

[SFH0791]

You'll always get some clients who will be awkward over payment, regardless of how well off they are. Of course they might have a complaint which is why they're not paying and often people won't tell you their complaint until you push them into it. It's up to you whether you ask for money upfront - it depends on the service you offer as to whether its appropriate. In a previous company we stopped all credit terms when we had a lot of major clients go bust on us in a short period of time.

Wow, that must have been quiet a wreck train!!!

 

[arnydnxluk]

We're a luxury service, People use our service because they have higher disposal income. 99% of the customers are not a problem but a select few, when it comes payment it is the end of the world???

Do I need change business model and take payment upfront however sometimes the payment is in £000's, If I ask for too many details or sign too many paper work the lead just goes COLD from a HOT lead!

If a lead goes from HOT to COLD over some paperwork then perhaps the lead wasn't so HOT in the first place and you need to reconsider how you assess those leads. Alternatively perhaps you're asking people to deal with an unnecessary amount of paperwork. For example if I were interested in buying a luxury watch from you but you asked me to deal with the same amount of paperwork as when buying a house then I too would probably walk away !

Surely it's the same amount of paperwork whether someone pays upfront or at the end of the process, so any leads turning COLD once you pull out the paperwork for payment upfront are doing you a favour by not wasting any more of your time.

In terms of nonpayment, you just need to factor this into your business model. The right solution is the one which suits your business but it could be writing off nonpayment, passing debt to collection agencies or taking full or partial payment upfront.

Improve your leads and decide how to deal with nonpayment. Taking payment upfront seems like a sensible solution to both of those problems to me.

 

[Root 66 Woodshop]

As the saying goes...

Never judge a book by it's cover.

 

[billybob99]

If a lead goes from HOT to COLD over some paperwork then perhaps the lead wasn't so HOT in the first place and you need to reconsider how you assess those leads. Alternatively perhaps you're asking people to deal with an unnecessary amount of paperwork. For example if I were interested in buying a luxury watch from you but you asked me to deal with the same amount of paperwork as when buying a house then I too would probably walk away !

Surely it's the same amount of paperwork whether someone pays upfront or at the end of the process, so any leads turning COLD once you pull out the paperwork for payment upfront are doing you a favour by not wasting any more of your time.

In terms of nonpayment, you just need to factor this into your business model. The right solution is the one which suits your business but it could be writing off nonpayment, passing debt to collection agencies or taking full or partial payment upfront.

Improve your leads and decide how to deal with nonpayment. Taking payment upfront seems like a sensible solution to both of those problems to me.

Don't waste your time mate, standard response > You haven't worked in the Luxury Industry!!

 

[tony84]

Unless you get paid upfront, there will always be problems with customers paying. But how much of an issue is it?

In 9 years, I have taken one person to court, write off about £900 and had to chase a handful of people. Im happy with that, literally 95-99% of our customers are fine.

I suspect if I charged upfront I would have lost far more.

 

[SFH0791]

If a lead goes from HOT to COLD over some paperwork then perhaps the lead wasn't so HOT in the first place and you need to reconsider how you assess those leads. Alternatively perhaps you're asking people to deal with an unnecessary amount of paperwork. For example if I were interested in buying a luxury watch from you but you asked me to deal with the same amount of paperwork as when buying a house then I too would probably walk away !

Surely it's the same amount of paperwork whether someone pays upfront or at the end of the process, so any leads turning COLD once you pull out the paperwork for payment upfront are doing you a favour by not wasting any more of your time.

In terms of nonpayment, you just need to factor this into your business model. The right solution is the one which suits your business but it could be writing off nonpayment, passing debt to collection agencies or taking full or partial payment upfront.

Improve your leads and decide how to deal with nonpayment. Taking payment upfront seems like a sensible solution to both of those problems to me.

This would work if it was a fixed Price business but I deal mostly on hourly basis, some months the customer will spend 100 hours and other months less than 3 hours.

In terms of paper-work, we always have them sign our contract which includes a payment clause but even with that few clients don't seem to care.

We have come up with a solution today as to accept clients if they have American Express Gold card or centurion card but then that will exclude us from our foreign client such as the Chinese or Japanese.

 

[SFH0791]

If 99% of your client base pays you full price on time every time then you haven’t got a problem so don’t change anything.

Sorry but I suspect you don’t have a luxury business at all. ‘Why’ you ask.

A. If you had a business of any sort let alone a luxury business dealing with the upper echelon of society then you must be a switched on cookie and as in my answer a 1% bad payer would not be looked upon as a problem that needs answering.

B. Switched on cookies would have solved this problem fairly easily.

C. So it’s the lack of details that ensures the client hands over £000’s (good work if you can get it)

D. ‘Or sign to many paper work’ was the killer clue for me.

Anyway prove me wrong and I will eat my words.. what’s your website?

Mate behave yourself, I'm not going to compare who has the bigger carrot.

Unless you get paid upfront, there will always be problems with customers paying. But how much of an issue is it?

In 9 years, I have taken one person to court, write off about £900 and had to chase a handful of people. Im happy with that, literally 95-99% of our customers are fine.

I suspect if I charged upfront I would have lost far more.

Thank you, Someone gets my point but I'm trying to limit losing that £900 or X amount. I work hard to obtain the client, make sure whatever he needed was meet by my team yet so I expect to be compensated.

I might try pre-authorizing X amount on their Credit card but that only remains active for 7 days.

 

[fisicx]

What is this luxury service?

 

[SFH0791]

What is this luxury service?

Chauffeur, Security and Dedicated Private Driver

 

[Mark T Jones]

As suggested above, the problem appear to lie either in your targeting or in your system.

It's good that you have selected a target market, but you are relying on some broad and unsubstantiated assumptions - in particular that wealthy people are free spenders. I'd suggest a lot more research in that area.

On systems; basically, make it easy to buy (and pay!)

 

[fisicx]

...in particular that wealthy people are free spenders.

The opposite is often true. They are wealthy because they aren't profligate.

I know a bloke who is a millionaire but hates spending money. He argues over every penny. When he got some building work don't he timed their arrival and departure each day and refused to pay day rates when they didn't put in the full 8 hours.

 

[Mark T Jones]

The opposite is often true. They are wealthy because they aren't profligate.

I know a bloke who is a millionaire but hates spending money. He argues over every penny. When he got some building work don't he timed their arrival and departure each day and refused to pay day rates when they didn't put in the full 8 hours.

There are many takes on it - including 'new money' vs 'old money'.

In the days of selling costly new-tech door-to-door, the early adopters were typically in the poorer areas.

 

[AllUpHere]

There are many takes on it - including 'new money' vs 'old money'.

In the days of selling costly new-tech door-to-door, the early adopters were typically in the poorer areas.

Haha, we call it the chav factor. Where do you think most of the big televisions reside in this country? It's certainly not in big country houses, it's in housing estates (well it would be, but they are now called executive develpments due to chav factor).

 

[Bob Morgan]

CHAV = Council Housed And Violent!

 

[Mr D]

CHAV = Council Housed And Violent!

Council housed doesn't work so well when people are in non council social housing.
Or indeed in ex council housing that's now private.

 

[Bob Morgan]

Council housed doesn't work so well when people are in non council social housing.
Or indeed in ex council housing that's now private.

Tenanted Sub-Prime Repossessions! - Rather like 'Pre-Owned!'

 

[Root 66 Woodshop]

I'm living in a private rented house... we're actually looking at buying it... but that's another story...

Not everyone renting in council properties are "CHAVS" I know quite a lot of hardworking people who live in council homes... Shouldn't categorise everyone as the same... it's a bit unfair...

 

[bodgitt&scarperLTD]

CHAV = Council Housed And Violent!

I prefer Council House Associated Vermin, personally.

 

[billybob99]

I prefer Council House Associated Vermin, personally.

This is the new official term to be used from this day forward.

 

[AllUpHere]

You don't have to live in a council house to be chav. The term is much more far reaching (using my definition anyway). You can live in a million pound house that's all bought and paid for and still have a lot of chav characteristics.

Money does not buy good taste.

 

[Chris Ashdown]

Chauffeur, Security and Dedicated Private Driver

Hide a wireless mic in the back of your car, and listen in to your rich clients, you may well learn information that's worth far more than the outstanding payments

 

[tony84]

I cant work out if people on here are joking or not. Are you all that far up your own arses or am I just miss reading it?

I was brought up in a council house, even spent a little bit of time in homeless families to top it off.

I remember meeting one of the richest people I have ever met, he was also the rudest person I have ever met (refused to shake my hand because HE was late and was annoyed) and if he spoke to me the way he spoke to his receptionist, I would probably have a criminal record (obviously the chav in me).

 

[tony84]

Thank you, Someone gets my point but I'm trying to limit losing that £900 or X amount. I work hard to obtain the client, make sure whatever he needed was meet by my team yet so I expect to be compensated.

I might try pre-authorizing X amount on their Credit card but that only remains active for 7 days.

All businesses lose money on customers. It may be through non payments, customer trying to wangle out more than was agreed or whatever it is. It is the way of the world, you have to budget it in. I am all for doing what you can to reduce those losses but you need to work out how much of a problem it actually is and if changing things will result in you losing more money or not.

As an example, I have lost £900 in 9 years, I am over the moon with that. I budget for more than that.
If I lost £5k in 9 years, I would still be ok with it.

If I lost £9k in 9 years, then I would probably start to look at my processes a little more.

If I started charging upfront, I would obviously lose less money on cases submitted, but how many customers would I lose? I dont know the answer to that. I would obviously lose the dodgy customers but how many good customers?

 

[AllUpHere]

I cant work out if people on here are joking or not. Are you all that far up your own arses or am I just miss reading it?

I was brought up in a council house, even spent a little bit of time in homeless families to top it off.

I remember meeting one of the richest people I have ever met, he was also the rudest person I have ever met (refused to shake my hand because HE was late and was annoyed) and if he spoke to me the way he spoke to his receptionist, I would probably have a criminal record (obviously the chav in me).

I'd just like to say that although I first introduced the 'chav' topic to the thread, It would seem I dont share the views of other forum members on the subject.

We use the term 'chav', to mean anyone who will be attracted to 'bling' or anything that may signal to other chsvs that they are doing well. Whilst chavs who are skint will have fake Burberry and cheap jewelry, chavs you have made a few quid will have a massive telly, a Range Rover sport, Lois vuitton luggage and massive watches.

Chav factor has nothing to do with money, and certainly nothing to do with living in a council house.

 

[richard10002]

Could someone please explain the logic behind this?

We're a luxury service, People use our service because they have higher disposal income. 99% of the customers are not a problem but a select few, when it comes payment it is the end of the world???

Just use a cheaper alternative? Do they just wana feel special by using a luxury service whereas their income doesn't allow it?

Do I need change business model and take payment upfront however sometimes the payment is in £000's, If I ask for too many details or sign too many paper work the lead just goes COLD from a HOT lead!

Tips appreciated

3 tips -they may, or may not, be appropriate:

Firstly, if you turnover £100,000 a year, your non payers represent £1,000, leaving you £99,000. If you turnover £1 million, your non payers represent £10,000, leaving you £990,000.

and so on....... in relative terms, whilst irritating, it doesn't seem like such a big problem, so you could write it off as a cost of doing business. If you want to claw it back in some way, you could give some attention to reducing your costs by this amount, whatever it is. I'd guess it would be a rare business that couldn't find savings of 1% of turnover.

Secondly, one of your posts suggests that a lot of your business is repeat business.... If they dont pay once, stop providing your service. That particular client wont let you down ever again.

Thirdly, don't let anybody get away with it without some kind of action. It's for you to decide whether it's worth pursuing it all the way to a court hearing. The threat, (in the nicest terms), is often enough to get someone to pay.

 

[SFH0791]

As suggested above, the problem appear to lie either in your targeting or in your system.

It's good that you have selected a target market, but you are relying on some broad and unsubstantiated assumptions - in particular that wealthy people are free spenders. I'd suggest a lot more research in that area.

On systems; basically, make it easy to buy (and pay!)

We do our due diligence, however there is a certain amount you can check about a client especially if they live in foreign country.

This is why I like the way they do Business in UAE, don't pay a supplier or your cheque bounces = Prison lol

Hide a wireless mic in the back of your car, and listen in to your rich clients, you may well learn information that's worth far more than the outstanding payments

I like freedom not prison lol

All businesses lose money on customers. It may be through non payments, customer trying to wangle out more than was agreed or whatever it is. It is the way of the world, you have to budget it in. I am all for doing what you can to reduce those losses but you need to work out how much of a problem it actually is and if changing things will result in you losing more money or not.

As an example, I have lost £900 in 9 years, I am over the moon with that. I budget for more than that.
If I lost £5k in 9 years, I would still be ok with it.

If I lost £9k in 9 years, then I would probably start to look at my processes a little more.

If I started charging upfront, I would obviously lose less money on cases submitted, but how many customers would I lose? I dont know the answer to that. I would obviously lose the dodgy customers but how many good customers?

That is amazing if you only lost £900 in 9 years. I have outstanding currently just this month £3,100 with customer playing ping pong email with me.

3 tips -they may, or may not, be appropriate:

Firstly, if you turnover £100,000 a year, your non payers represent £1,000, leaving you £99,000. If you turnover £1 million, your non payers represent £10,000, leaving you £990,000.

and so on....... in relative terms, whilst irritating, it doesn't seem like such a big problem, so you could write it off as a cost of doing business. If you want to claw it back in some way, you could give some attention to reducing your costs by this amount, whatever it is. I'd guess it would be a rare business that couldn't find savings of 1% of turnover.

Secondly, one of your posts suggests that a lot of your business is repeat business.... If they dont pay once, stop providing your service. That particular client wont let you down ever again.

Thirdly, don't let anybody get away with it without some kind of action. It's for you to decide whether it's worth pursuing it all the way to a court hearing. The threat, (in the nicest terms), is often enough to get someone to pay.

I rather write that off in advertising but you're correct I need to stop chasing small amounts however even a nice threat means good-bye to the client but I now don't care, I have decided from this month on any client that involves too much headache and contract value is low - Bin them, let another company deal with the headache.

 

[nelioneil]

The opposite is often true. They are wealthy because they aren't profligate.

I know a bloke who is a millionaire but hates spending money. He argues over every penny. When he got some building work don't he timed their arrival and departure each day and refused to pay day rates when they didn't put in the full 8 hours.

Exactly. As an example, Warren Buffet goes to McDonalds daily and uses coupon vouchers to rescue the cost of his meals.

 

[Stas Lawicki]

I'd say you need to get better at understanding your clients.

I've worked with billionaires on projects where they have queried costs down to pounds and pence. I've worked with a lottery winner who just wanted to splash the cash as far and wide as possible. I know folk who have nothing but save every penny for the 'luxury' item they are after and blow thier income on the one or two things they want.

I would suggest being a driver to the rich isn't a luxury to them at all. Security to some is considered a necessity (although plenty of 'rich' folk don't have either). The less complicated you make it, the better. It's more to do with trust and being reliable.

TVs?! Most big houses, yachts, flash apartments were littered with them. Then as technology moves on and gets cheaper, us mere mortals can afford them. The same is true today of most 'new tech'. The mainstream doesn't get to see it until it's cheap enough to be mass market. But again, not all. I worked with another client who had several houses in London and all he wanted was the basics of technology.

So in conclusion, you can't herd cats. I don't think you're 100% certain on your market as I don't think you'd be asking these questions. I also don't think you'd call it luxury! You're supplying people to fill roles and duties - not overly luxury is it?

A feather pillow is luxury to me. I have several.

 

[billybob99]

A feather pillow is luxury to me. I have several.

Are Ferrero Rocher's luxury items?

 

[Stas Lawicki]

Are Ferrero Rocher's luxury items?

Way out of my league!

 

[Mr D]

There are many takes on it - including 'new money' vs 'old money'.

In the days of selling costly new-tech door-to-door, the early adopters were typically in the poorer areas.

In the days of selling anything door to door the houses with the money were the poorer areas.
Lower mortgage, low rent.
People who started out trying to flog to the expensive estates didn't keep the job long...
All the money tied up in mortgage or rent, cars, subscriptions etc.