Why You Should Immediately Fire Problem Customers

Why You Should Immediately Fire Problem Customers

Firing customers? That seems a very foreign concept to most business owners who are desperately trying to find new customers and new business.

However not firing problem customers is likely costing you huge amounts of time, money and aggravation.

You’ve likely heard that old business cliché, “the customer is always right”. I’m not too sure who originally came up with that, but I’m pretty sure they didn’t mean that you should behave like a doormat to your customers or anyone else for that matter.

Unlike red wine, problem clients don’t get better with time.

But first a clarification. I’m not talking about customers who have a legitimate cause for complaint. Customers who have a genuine complaint are valuable intelligence assets. It’s often these sort of customers that can help you uncover weaknesses in your business.

They may even reveal something that was causing you to lose business without you knowing because other unhappy customers didn’t complain – they simply stopped buying from you.

Fixing legitimate complaints from customers can strengthen your relationship with them and makes your business more robust. A customer who sees you responding to, and resolving their genuine complaint is far more likely to buy from you again and recommend you to others. They feel validated, respected and taken seriously.

Problem Customers

Let’s define problem customers. For whatever reason there’s a percentage of the population who is never happy. They’re always whining, dissatisfied and feeling like everyone is out to take advantage of them.

You could shower them with gold and provide your product or service for free and they’ll find something to complain about. These people are like a cancer sucking the life out of you and your business. I suggest you cut them loose as quickly as possible.

I have without exception, across multiple businesses and industries, found that it’s the low value, price sensitive customers who complain the most, waste huge amounts of your time and who always need to be chased for payment.

The high value customers who are the most profitable tend to pay on time, treat you with respect and value your services.

It seems counterintuitive but it’s been proved true in every business I’ve ever been involved with.

I suggest that every 12 months or so as part of your house-keeping activities, you fire these low value, problem clients.

The Financial Cost Of Problem Customers

As business owners we often get faked out by thinking as long as we keep the gross sales numbers high, there’s bound to be enough net left over to make it all worthwhile.

However, if you ran a true profit and loss statement on these problem clients, which took into account all the time you spend chasing and appeasing them, you’d find very often that you make very little, if any, real profit on them.

In fact most of them would likely result in a net loss when taking into account the low value they bring coupled with the time and energy needed to deal with them.

Opportunity Cost

Another reason you should immediately fire low value customers is because apart from sucking up your financial resources, they are also causing you to lose out on opportunities.

Firing problem customers gives you more time to spend on acquiring high quality, high value customers.

With the squeaky wheels taking up all your time and energy, it’s often the high value, respectful customers who suffer a lack of attention.

Firing them gives you the time needed to show more love to your existing top 20%, high value customers. This builds loyalty and can very quickly result in an increase in sales to these existing high value customers that far outweighs any loss of sales that resulted in firing problem customers.

Another beneficial side effect of firing problem customers is that it creates scarcity without being disingenuous. It sends a message that you only have a limited supply. With limited supply, people have to play by your rules and pay accordingly.

Emotional Cost

Problem customers are often the ones that make your life miserable.

Business should be fun. If you allow someone to suck the fun out of it, then you’re losing out on one of the major benefits of running your own business.

If it’s no longer fun, no amount of money can compensate for being miserable. If it’s no longer fun you’re likely not doing it right.

Take time out periodically to review which customers are causing you the most pain in your business. Then channel Donald Trump and deliver them the news they deserve.

You’ll feel like a huge weight has been taken off your shoulders and you’ll have renewed energy to focus on high value customers.


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3 Comments

  • Murray

    Reply Reply May 15, 2013

    Any insight into profiling a potential problem customer before they become a customer?

  • Business Rescue

    Reply Reply June 16, 2013

    Hey Alan! Great article! I totally agree in getting rid of problem clients. I call them problem children. Over the years, after burning out chasing after them, I have decided to send all of them to my competitors. Now my business booms and I really enjoy being in business. Best decision ever.

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