Trade ‘Em In : Some Clients Not Worth the Bother
When Mark Tracy founded the American Commerce Exchange bartering company in Toluca Lake, he was eager to build a critical mass of customers. But he learned that some customers can be far more trouble than they are worth and should be dropped as soon as possible. Tracy was interviewed by Karen Kaplan.
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The American Commerce Exchange is a bartering group made up of business owners and professionals. It operates like a credit card company, but instead of paying for things with cash, you pay with your services. For example, if you own a flower shop and you need a new transmission for your car, you can go to an auto shop in the group and charge $600 to your account. Then to make it up, you provide $600 worth of flowers to other members of the group. We make money by charging a brokerage fee on all transactions and by the membership fees that people pay to join.
There are 550 active members of the exchange in the Los Angeles area. There are printers and restaurants and doctors and carpet cleaners. Some people do $500 worth of business in a month; some do $10,000 a month. Altogether the exchange trades about $350,000 worth of goods and services a month.
When we started, we just went out and sold 75 accounts in three or four months. We needed to have members in order to breathe. Over time we realized that there are flaky people who drag the system down. We learned not to waste our time and effort with those kinds of accounts.
Over the years, we have figured out ways to spot the people we want to avoid. We get credit reports on potential members to make sure they are financially stable. If we find someone with a very poor cash flow, we’re extra careful. Somebody on the edge will say anything just to survive. That means it is hard to trust them.
If you go to a business and the owner is yelling at the employees, that’s not the type of account you want because you don’t want to send your clients there. A person who blows his own horn a lot and makes unfounded promises also needs to be watched carefully. Another red flag is somebody who is always busy and doesn’t return your phone calls within 24 hours.
Sometimes we lose members when they deal with one of these flaky guys. If you have one bad apple in there, it can spoil the whole barrel. That’s why from the get-go you want to sign up quality accounts.
There are some real slick guys out there, and they still burn me every once in a while. If you’ve got a customer that is just not playing fair, you want to get rid of him or her as fast as possible by whatever means possible. Our employees don’t like dealing with those people, and neither do our customers. Getting rid of them really solidifies our company.
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AT A GLANCE
Company name: American Commerce Exchange Inc.
Owner: Mark Tracy
Nature of business: Trade and barter company
Location: Toluca Lake
Year founded: 1982
Number of employees: 8
Annual sales: $360,000 in cash and $150,000 in bartered goods
