When to Fire A Customer

By PAUL B. BROWN
Published: September, 2009

While it may be the oldest business cliché there is, the fact is the customer isn’t always right.
And some customers may not be right for you. They may not be profitable. They could be demanding things that pull you away from your core strengths. Or they simply may not be worth the constant headaches.
On those occasions, you may be justified in firing your customer, telling them you will not work with them anymore.
The following items can help you decide whether it is time to say goodbye to the most challenging people you do business with.
A POTENTIAL FORMULA Every customer is bound to make you mad sometimes. And some are certain to have an outlandish demand now and then.
But those are not good enough reasons to fire them.
While there is no hard and fast rule on when it is time to sever ties, John Chisholm, writing on CustomerThink.com offers a reasonable rule of thumb.
You should tell a customer to take his business elsewhere when “the tangible and intangible costs of serving the customer outweigh the cash and any good will received from the customer.”
THE BENEFITS It is only natural not to want to fire a customer, especially in this economy. If you know that severing ties with a client is the way to go, but you are wavering, Debra Ellis, writing on her blog, offers three reminders of the benefits.
Forcing your staff to deal with “obnoxious, unrealistic and abusive” customers reduces morale, she writes. The time you spend trying to satisfy the impossible customer decreases the benefits you can provide to the good ones. And your most demanding customers “are not your profitable ones,” she says. “Rewarding them reduces your resources without a return on investment.”
DOUBLECHECK “Before you decide to end a client relationship, consider how expensive or time consuming it will be to make up the lost revenue,” suggests an item on OpenForum, an American Express Web site.
“Because it is costly to acquire a new customer, first look for ways to boost the profitability of the relationship. Can you raise prices or fees, lower the costs of the goods or services you provide, or reduce customer service? With some creativity, you may be able to find a way to turn things around.”
A HOW-TO GUIDE If you have reached the point where you are finally ready to let that difficult customer go, Tracy Fredrychowski, writing on SearchEngineAcademySC.com, a search engine optimization Web site, offers these four guidelines:
¶Be professional. “Customers should always be spoken to personally, not by letter or phone. Only when the customer is at a distance, is it appropriate to speak with them about the matter on the telephone. But in no circumstances should the contact be other than verbal. E-mails simply will not do in this case.”
¶Keep emotions out of it. Odds are the customer made you extremely frustrated or angry, but now is not the time to vent. Customers often will take being fired personally, “so it is important that you explain your reasons rationally and clearly.”
¶Offer suggestions. Remember after you have fired them, customers will still need someone to provide the product or perform the service you did. Help them if you can.
¶“Stay polite but firm. It is time to move on.”
FINAL CALL Who knows better that the customer is not always right than the people who serve them? This from NotAlwaysRight.com.