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Is Every Customer a Good Customer?

Not always. Have a process in place to fire troublesome clients.
September 16, 2009
URL: http://www.entrepreneur.com/article/203364

The goal for most people when they start a business is to find and build a solid customer base. Out of eagerness or desperation to build the business, entrepreneurs commonly take on any customer--good or bad. After all, a customer is a customer, right? Wrong. Some won't be a good fit for your business.

Of course, there's a balance. Not every customer is going to be a dream, and there will always be customers who are more demanding than others--maybe more demanding than they're worth. But you need to draw a line in the sand when the stress of catering to one customer negatively impacts other customers. Parting ways might be difficult, but your company's welfare may depend on it.

Some customers may have needs that extend beyond your resources. In other cases, simply meeting a customer's expectations is too much of a challenge. In some cases, you may not be generating the income necessary to maintain a company as a customer.

There are other dangers, as well: If a difficult customer is impacting your ability to service your other customers, it could drive your good clients away. If a complaining customer starts speaking negatively to others, that puts your reputation on the line.

If a customer continually complains about your product and service and you can't make adjustments to meet the client's needs, there's no reason to continue dealing with that customer. The reality is, you can't be everything to everyone. It's far better to focus on what you do best and attract the customers you can best help . . . and enjoy helping.

If the customer is a financial drain, be honest with yourself and determine the dollar amount you need to make per customer or per hour. If this customer is not meeting your minimum requirements, it's time to adjust your rates or move the client to a company that's a better financial fit. You're in business to make money, not donate your time. After you assess the financial impact of a customer, use this information to help set your prices in the future so you can avoid this situation again.

Be candid with a difficult customer; let the customer know the impact he or she is having on your company. Try to develop solutions. Keep in mind, the customer might know that he or she is challenging. Sit down and walk through the issues, which might resolve the problem. Perhaps you can agree on a procedural change or an increase in fees that will help compensate for the extra work the client is causing. If you can't work out an arrangement conducive to both parties, it may be time to part ways. Take a gentle but firm approach so that you both walk away feeling it's a mutual decision. Providing advance notice and a plan to work through the transition will help maintain your credibility and a level of customer satisfaction.

The immediate impact of losing a customer might be a financial drain, but the increase in your productivity and that of your staff could make up the difference. Also, the costs associated with handling the customer go away.

The best way to avoid bad customers is to avoid bringing them aboard altogether. Have a clear understanding upfront what the customer is looking for from you as a provider. In turn, be honest about how you can meet (or not meet) his or her needs. Find out why the prospect left a previous provider, if there was one.

At some point, preferably before you start your business, spend an hour or so with an attorney to explain your business. This can help determine when a customer contract might be necessary to avoid legal problems down the road if you need to fire a customer. Depending on the job and the requirements, having a contract in place might help make the departure a smoother transaction.