When to Fire A Customer

“The customer is always right!”

If you are in business, you have heard that over and over again, but I have news for you, the customer is NOT always right!

Very often customers come with unreasonable demands, become rude or abusive, and make invalid claims.  More often than not this is led by emotion rather than by a logical assessment of the situation.

When all discussions and attempts to resolve a situation fails, and there has been a complete breakdown of trust and relationship that cannot be fixed, you are presented with the choice of firing your client.  See the article “When Should A Customer Or Supplier Relationship Be Salvaged“.

So when should you fire your client?

When the relationship cannot be salvaged.

  • The relationship can’t be salvaged.
  • Neither Party Wants to salvage the relationship
  • The relationship should not be salvaged from a business perspective.

In my experience, more often than not, the relationship with your customer can be salvaged, and it simply takes the right amount of influence and communication skills to have both parties shake hands and apologise.  See the article “When Should A Customer Or Supplier Relationship Be Salvaged“.

When they are costing you too much financially

  • The amount of costs managing the client or meeting their needs exceeds potential profits generated or forecasted from the client.

Have you calculated what your customer is worth?  Most entrepreneurs haven’t … as a matter of fact statistics show that 98% of entrepreneurs don’t know what their customer are worth or cost them.

See the article “How Much Is Your Customer Worth To you?”

If your client is contributing to a significant portion of your profits, you should be trying to salvage the relationship, so long as none of the other points apply.  If there is no way to salvage the relationship, then adjust your income and cash flow forecasts to incorporate those loses until you can replace that customer.

When they become abusive

  • Physically abusive
  • Emotionally abusive
  • Rude or demanding

Whenever emotions are involved, clients can become emotionally abusive and rude, often even resulting to physical abuse as seen in retail outlets.

Should you put up with it and forgive?  Well let me ask you this … If it was anyone else that was being verbally or physically abusive to you, would you tolerate it?

I am not saying go in swinging a baseball bat, but the answer should always be NO.  Your staff rely on you as the boss to look after them and protect them.  They are in essence part of your family are they not?

That said it is FIRST important to understand where the customer is coming from, and what sparked the abuse.  Always make sure you have the full story from all sides before you make any judgement or decisions.  Also remember that people respond in different ways.  It does not mean they hate you or even mean it when they are rude or verbally abusive.  We’ve all been on calls where we have been on hold for 30min only to have our problem not resolved and increasing our vocabulary by several new words.

Verbal abuse should always be addressed with the client by a senior manager/director (on the same or higher level than that of the customer), and the client should be told it is not acceptable in a very diplomatic way.  The right type of negotiator or mediator would be able to get the client to understand the issue, resolve the issue, and most likely get an apology.

In the case of physical abuse, there really is no route other than firing the client.  Allowing your staff to be beaten physically does not set a proper example as a leader.  If the staff member wants to lay charges of assault, then support him/her.  I am however not referring to a customer throwing a stapler against a wall (which can be dealt with differently), but rather the physical assault of a staff member.

When they are not following the key values of your organisation

  • Dishonesty and disloyalty
  • Breakdown of trust
  • Lack of Respect

Very often we will get clients that simply don’t measure up to the values we have set in our organisation.  This could be anything from honesty, trust, commitment, loyalty, respect, equality, etc, based on what you as an entrepreneur has set as a standard for your business.  Your company’s value statement.

Do we really have to fire clients if they aren’t honest or trustworthy?  Unfortunately, there is no magic formula to calculate this answer as it is purely a moral decision you as the business owner needs to make.

Weigh in the cost of that client to your business and take into account how any such transgression of your value system could affect you, your staff and your business moving forward, both from an values and financial perspective.

Often entrepreneurs say they need to compromise, but my question to that is “ok, but when do you stop compromising”.  Remember it’s a snowball effect.  It’s like a relationship with a partner.  In the beginning you compromise who you are to impress, and several months down the line of constantly having to compromise more and more to keep up the facade, the cracks begin to show, you eventually explode and the relationship ends simply because you were not true and honest about who you were, what you wanted and what your value system was.  A relationship with your customers are no different.

Set the boundaries of your value system within your organisation.

In closing …

At the end of the day, when to fire a client boils down solely on the boundaries you as an entrepreneur has set for customers.

But before we decide to fire a client simply because their pride is getting in the way (or yours for that matter), try defuse the situation.  Let’s face it that if you had to fire each client with a pride or ego problem you’d probably be out of business.

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