As the title suggests, this theory divides customers into two groups: money makers and penny pinchers. I developed the theory based on my experience providing service for small to medium-sized businesses, though that’s not to say it would necessarily exclude individual consumers or large-scale businesses too.

It goes like this: we can say that there are two very basic approaches to turning a profit. One is to set up shop and supply or make something and expect customers to just come to you based on their demand for what you sell and given the geographic area you cover. These types of businesses may not even feel that they are responsible for being experts on what they sell; their purpose is just to sell it to you and make a profit. Let’s call these guys penny pinchers; the nickname will become clearer as we drill down further.

Penny pinchers want to increase their profit, but they’re not going out of their way to find new customers or find better ways to serve their current customers. When the population and economy of their geographic region stagnate, they will naturally have to put pressure on costs to increase profit. This will entail putting pressure on their suppliers. It may come in the form of telling suppliers to lower their costs, but it will definitely come in the form of arguing with their suppliers over everything: damages, shortages, “unsellable” products, delays in shipping that cost them time and money, inconvenient or misleading programs, etc. This is why we call them “penny pinchers:” they aren’t focusing time and energy on getting new customers or keeping current ones, so spending 35 minutes on the phone arguing with their supplier over a $22 credit seems like a good use of their time.

Another way to turn a profit is to set up shop, and go find your customers. Take responsibility for understanding your products and their needs. Get excited about your products and make a mission out of maximizing your customers’ happiness. “Wow” your customers with your service to shatter any little thought they might be having about taking their business somewhere else. We’ll call these folks money makers.

Spending 35 minutes on the phone to chase down a $22 credit seems like an absurd waste of time to a money maker. To them, that half hour plus could be spent making a couple simple phone calls to customers to help secure their commitment for another season. They see bottom-line growth as something that happens as a result of expanding your top-line, rather than the result of cutting costs.

Nested within these two types of companies will be two different attitudes. Penny pinchers might not be very outgoing, so they will probably have no problem taking on a condescending tone when dealing with suppliers or customers. Their life is about just sitting in that shop, paying taxes, and trying to squeeze every dollar out of it that they possibly can, so they don’t want to make friends with their suppliers’ customer service and sales departments. Such a relationship holds no value for them, other than the objective value of negotiating lower prices and arguing over credits for “unsellable” items.

Money makers appreciate people and value relationships, so they are more likely to be friendly with their suppliers or even strike up relationships with them. They understand the accountability that often comes with the territory when they engage in such relationships.

Manage penny pinchers they way they manage you. Give them their credit but draw the line and let them know, it won’t hurt their feelings. If penny pinchers become so demanding it’s not worth it, let your sales department know or dump them as customers if you can. Don’t second guess their complaint just because of their reputation for complaining, consider it as though they were your favorite customer (but only for a moment).

Allow money makers to flourish. Nurture them by providing them with the knowledge they seek, and take care of their issues expeditiously. You stand to gain from both types, but if you help your money makers grow, you will grow right along with them.