The Art of Firing a Customer

Alternative Options to Firing a Customer

There may be several reasons you feel reluctant to say goodbye to that troublesome customer. Maybe your business is not in a position to proactively rid yourself of a revenue source. Or perhaps you see the customer as having potential to grow into a very large account and you wish to ride out the early growing pains.

In either scenario, it is recommended that you establish an open channel of communication with the customer. Set-up a meeting to discuss the issues at hand and determine what must change for the relationship to work again. The bigger the customer or the bigger you see their growth potential, the harder you may work to salvage the relationship.

Another recommendation is to speak with your employees that deal directly with the client. Do they see them as being as difficult as you do? Have them describe the levels of stress they create in comparison with other accounts.

If you are leaning towards letting a customer go, one unique solution is to inform them that you will be raising your prices. Choose a rate that makes dealing with them worth your time and effort. They may agree to the new pricing, in which case the once-difficult customer suddenly has become more profitable to deal with. Alternatively, they may choose to find another supplier (which might be exactly what you had hoped).

How to Fire a Customer

When you’re ready to fire a customer, it’s important to handle it in the right manner. The business world is based on relationships and you should avoid burning bridges at all costs. People frequently change roles at companies and you never know when a relationship will come into play down the road.

Here are some tips and advice on how to fire a customer:

• Use the appropriate channel.
  When firing a customer, it is generally recommended to handle over the phone or in person. A letter or email should follow, allowing you to document the act.
• Provide reasoning for termination.
  Humans enjoy closure. Nobody wants a relationship to end without understanding the reasoning behind the decision. When firing a customer, you should inform them why you chose to do so. For instance, you could explain that they no longer meet your yearly minimum turnover quota, or that their quote-conversion level was too low.
• Give fair notice.
  When firing a customer, you are terminating a professional relationship. Giving your client adequate time to find another supplier is the professional thing to do. Typically, this might be 30 days.
• Set expectations on next steps.
  To break ties with your customer as quickly and painlessly as possible, it’s usually best to give a very concrete set of next steps. This allows you to manage their expectations and also avoid any misunderstandings. Formulate these next steps in a simple, straightforward bullet list.
• Recommend your competition.
  This step might not be appropriate for everyone. In fact, it may seem quite strange to willingly send free business to your competition. But this tactic can actually be very effective. Not only will you come across as a pro in the eyes of your customer, but you also get to send a problem client to waste your competition’s time.

Knowing When and How to Fire a Customer

• Perform an assessment of your existing client base to understand which are causing more headaches than they’re worth.
• Take into consideration all the aspects a bad customer may be costing your business. It’s not always a dollars-and-cents discussion, as troublesome customers can severely impact employee morale and company culture.
• Determine if you are in a position to let go of a bad customer. As painful as it may be, there are reasons why you may try to repair a damaged relationship.
• When firing a customer, it’s OK to give your competition a recommendation. While it sounds counter-intuitive, it can actually be very strategic.