The notion of “firing your worst customer” has been around for a while now. Some experts advise business to end relationships with bad customers, while other experts strongly disagree. As usual the silver line is in the middle and what will help you the most with that decision is defining a bad customer.
What is a bad customer?
Of course, that depends on your business, but there are some common threads defining a customer as bad.
– A bad customer is one that brings you less profit than the expenses you have to service him. It may be that the customer seeks help way too often and your customer care department virtually works just for him. It may be that the customer demands lower cost for your products or services. It may be that the customer gives you very short deadlines and you and your employees have to work extra.
– A bad customer is one that alienates your employees from the company. A customer, who is always unhappy with the product, or service you offer and tortures your employees with endless questions and doubts, will eventually make your employees seek another job. Losing them will probably cost you more than the profit you gain from this customer’s business.
– A bad customer is one that is always unhappy with your product. You turn backwards to satisfy that customers desires, but it is never enough. Demands keep coming, but what you receive in return is just the same.
– A bad customer is one that is not only demanding more and more, but openly disliking your product, or service. This customer will manage to turn away other existing or potential good customers.
– A bad customer would be late with payments and always ask for some extra time. Just imagine if the customer goes broke and you will never be able to collect what you are owned.
– A bad customer will remain bad in the future. Think hard before defining your customer as bad. Will you be able to change the relationship in the future? If not – then it is a bad one.
– A bad customer is one that is taking too much of your time. Instead of properly servicing your good customers you will end up pouring resources into servicing your bad customer with no result. If he is constantly unhappy and it is not because of a misunderstanding or a real issue, than there is nothing you can do to make him happy – he will just stay unhappy for the time being. And after all why did you start your business? To keep unhappy customers? I don’t think so!
How to fire your bad customers?
The next step after defining which of your customers are bad is to decide how to let them go.
You may choose to undertake a more settle approach and make the conditions of your exchange unprofitable. Of course, first comes to mind raising your prices for that customer. Other solutions are to be late with delivery, for example. There are endless solutions, what is important is to be polite, reason your decision and hit him where it hurts.
If it is the kind of customer, who wants everything on the spot, then delay. If it is the kind of customer, who always asks for late payment, then require payment up front. By choosing this solution you will play it safe. If the customer is really irrefutably bad the business relations will soon end.
If there is a chance for saving the customer, he will make some compromises and meet in the middle.
You may prefer to be straightforward and end the business relationship with the customer right away. In such a case first and foremost make sure you won’t regret your decision. Then be polite and reason yourself. In case you don’t have a good reason you can give the customer, make up one – the last thing you want is marketing disaster and scandals.
You may say that for the moment you already have contracts for the amount of product you can produce and unfortunately, you won’t be able to service the customer any longer. Or you may say that you are going to try to go in a different direction with your business.
Be even more straightforward – tell you bad customer that you are looking to develop business relationships with customers, who actually like your products or services and respect your company.
And finally refer the customer to a peer company. That particular customer may not have been correct with you, but that doesn’t mean you shouldn’t be. Don’t leave him hanging! Refer the customer to a peer company, which will better satisfy his needs.