When a customer’s demands cause you to lose money, it’s time to cut ties
Over the course of your working life, I am sure you have been fired at some point. Maybe when you were a teenager working a really horrible job. Or possibly when a customer wasn’t happy with the service you provided. But at some point you will find yourself on the other side of this. Once in a while you need to fire a customer and that can be very tricky.
I know what you are thinking: Firing a customer sounds insane. It’s so hard to find customers, why would you ever get rid of one? Years ago I never would have fired a single customer. I took every one I could get and was thrilled to have them.
Over time though, I have realized that there are a lot of bad customers out there. There are customers who are slow to pay — or never pay. There are also customers who agree to a price and then beat you up so bad at the end of the job that you are almost doing the work for free. Finally there are customers whose demands are so ridiculous that you know you can never please them and probably don’t make a profit on that work either.
These types of customers can be damaging to your business. They require many hours of internal work to manage them: keeping track of orders, answering emails and making sure that you get paid for the work you do. Sometimes this means making sure that drivers show up really early in the morning or with a certain truck so that the customer stays happy. Over time, you can see how draining these customers can be.
When this happens, the first thing I do is raise my price. Over the years, I have realized that my time and my employees’ time is valuable. When a customer wants very specific delivery times or last-minute orders, I believe they should pay for that. That is why I approach these particular customers and explain, in detail, why I need to charge more. Sometimes they are reasonable and understand the increase.
When they don’t understand, that is when I have to make the decision on whether or not I walk away from that business. Understand that I never take this decision lightly. As I mentioned before, there are only so many customers out there and there is a chance that walking away from this particular work can have big repercussions.
Should the decision be made to no longer do this specific work, I always do it in writing. In the past I have sent certified letters. Now I usually send an email and follow up with a call. I want written proof of what I said and I want to be able to clearly get my thoughts and reasoning for my actions across to the customer.
Honestly, I have never experienced a customer understanding why I decided to stop working with them. Most are furious and very upset about the decision. In the end, I try to always remember how much easier my days will be when this particular customer doesn’t owe me thousands of dollars or when they can no longer ruin my day by sending emails with ridiculous demands at 1 a.m.
About the author: Alexandra Townsend is co-owner of A Royal Flush, based in Philadelphia.
Have you ever fired a customer? What was the problem that led to that decision, and how did you handle it?