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. So let’s look at exactly why they’re bad for business and how they affect your business goals.
CUSTOMERS WITH LEGITIMATE PROBLEMS
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.
WHAT ARE 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.
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.
THREE REASONS WHY YOU NEED TO FIRE PROBLEM CUSTOMERS
While there are many reasons why you need to fire problems customers, we’re focusing on the top three.
#1: 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.
#2: OPPORTUNITY COST OF PROBLEM CUSTOMERS
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.
#3: EMOTIONAL COST OF PROBLEM CUSTOMERS
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.
And this goes back to building out your marketing plan
- Which customers do you love working with?
- Which customers are profitable?
Having a clear picture in your mind of who you want to work with can ensure that you cut the losses early. Or better yet, you identify bad prospects and can avoid them entirely.
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.
If you enjoyed this article, you may also enjoy our article on Building Business Systems. It will help you to skyrocket your sales, and attract investors.
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