We all know customers are not always right -- whether their behavior that oversteps the bounds of civility or they issue invalid claims or unreasonable demands or make an out-and-out error.
But owing to their status as the lifeblood of any organization, customers are always worthy of fair and considerate treatment. Wise organizations focus on helping them “discover” an error or misconception on their own rather than rubbing their noses in it.
There will come times, however, when it is appropriate to consider firing a customer. When the emotional or economic toll exacted from serving continually abusive or extremely high-maintenance, low-profit customers starts to outweigh the return on the investment, it is time to impose a customer exit strategy.
Weighing the costs. Business owners may anticipate having to replace lost revenue or fear potential negative word-of-mouth that might ensue from severing their ties with a client. This often keeps them from lowering the boom on highly toxic or bottom-line-eroding customers. And in the viral world, the word-of-mouth concern should definitely be figured into the decision.
Yet such projections usually prove to be worse in the imagination than in reality. People pay closest attention to word-of-mouth perceived as credible and from a reliable source. The customer whom a business desperately needs to fire is often perceived by others as a perpetual victim and corrosive influence. Consequently, their tales of woe and great injustice may bediscounted by friends, colleagues and even family.
Customers should be encouraged to exit for one of three reasons: They’re costing you too much financially, taking a steep emotional toll or violating a key value of the organization.
Most businesses, after all, want their revenue to exceed expenses; this is not always possible at the outset but it's desired over time. Acquiring new customers always takes a "sunk cost" in advertising, marketing, sales and solicitation expenses. If there’s not sufficient return on that initial investment over time, perhaps rethink whether continuing the relationship makes sense.
The emotional costs pertain to the wear and tear on front-line associates. Some customers are so taxing or abusive that the damage they do to employees' self-esteem or everyday resilience robs a business of enthusiasm to effectively serve more deserving or valuable customers.
The final reason to bid customers adieu is the clear violation of a key organizational value. This extends beyond morality or ethics infractions (those consequences are often cut-and-dried) to more nebulous values-based scenarios. If a company's reputation is built on responsiveness and a customer's chronic demands for special attention cause serious delays, parting ways might be wise. Exhaust all reasonable options before cutting the customer cord. In some cases, special efforts can save profitable but difficult customers on the verge of being fired.
Saying goodbye. The process is a bit like disarming a bomb; the act should be done carefully. The goal is to subdue animosity without unleashing a disturbing aftermath. Sometimes customers are so incensed at losing a favorite punching bag -- even though it’s the business owner who’s losing revenue -- they move quickly from anger to vindictiveness, seeking punishment. Limit the chance for such backlash by handling firings in cool-headed but sensitive ways.
Rational firings should be laced with up-front motives and clearly spoken rationales, with a focus on how continuing the relationship will negatively affect the business (not on how a parting will help long-suffering staffers feel like they won the lottery). The phrasing of the breakup should go something like this. “Mr. Jones, we’ve greatly appreciated your business for the last year. We have elected to apply our limited resources in a new direction and will not be soliciting your business in the near future. Should you want to continue our relationship it will likely need to be at a higher price [or greater volume, faster cycle time or lower cost.]"
Emotional scenarios. As furious, defensive or protective as an owner may feel in emotionally charged situations, demonstrating rage will simply fuel the customer’s anger at being let go.
Provide a rational explanation, explaining that continuing the relationship will harm the business: how harsh treatment of service reps impairs productivity or how a difficult relationship steals time from other clients. The goal is to give the customer a signal that he or she is unwelcome if the unwanted behavior persists.
The parting words should go lie this: “Ms. Jones, I must ask you to leave. The morale of our associates is critically important to their well-being and to the well-being of our organization. While we are by no means perfect, our employees must not be repeatedly subjected to actions that demean them as people.”
Firing any customer, no matter how toxic or marginally profitable, might seem heresy in today’s highly competitive, digitally connected markets where companies fight tooth and nail to attract new business. Yet courageously ending relationships with those who continually turn a blowtorch on the front line or who over time siphon more funds from the bottom line than they return sends a message about what a business stands for.