For a business to operate as smoothly as possible, it sometimes becomes necessary to prune the client list. How do you know when it’s time to let a customer go?
Irecently read an online conversation in which a PRO expressed frustration over the extra time, effort and cleaning supplies needed to maintain restrooms rented by one particular client because the units were constantly being defaced with graffiti. While there were helpful suggestions on graffiti removal, graffiti prevention tips, and recommendations of damage waivers and ways to bill the client for the extra cleanup time, one comment stood out. Maybe, the commenter wrote, it’s time to dump this customer.
If you are a relatively new business owner, you may be shocked by that advice. After all, you’re trying to build up a customer base and earn money by any means possible. Firing a customer — any customer — seems counterproductive. If you’ve been around the block a few times, however, you realize there are clients who are simply more trouble than they are worth. Truly successful companies can choose who they work for — and who they don’t work for. Being comfortable telling an obnoxious customer where to go may be a sign that you’ve made it in the business world.
Dumping a toxic customer can reduce owner stress, improve employee morale, and in the long run, make a business stronger.
Five types of customers to consider firing:
1. The customer who wreaks havoc on your investment. If your restrooms, hand-wash stations or trucks are constantly being damaged when in use for one particular client and you haven’t found a way to completely recapture the cost of necessary cleaning or repairs, it may be beneficial for you to lose the client.
2. The customer who is slow to pay, late to pay, refuses to pay, or threatens nonpayment. If you like the customer, it’s never happened before, and significant revenue is involved, try to resolve the issue by working with them — maybe allowing them better terms and more time to pay. If it’s an ongoing problem and they are unwilling to address it, don’t continue to work for them. And if a customer uses their business as leverage and threatens to withhold payment or leave for the competition to squeeze extras out of your company or otherwise get their way, stop playing the game and see if they actually carry out their threats.
3. The customer who makes your company look bad. Whether they think they know it all or they are just too cheap to do what’s right, customers who refuse your recommendations when it comes to number of restroom units and frequency of cleaning compromise health and safety, and you may want to cut them off. Having your business name on restrooms that aren’t maintained is the worst kind of advertising you can get. Everyone who uses them — or chooses not to because of the filthy conditions — associates them with your company even though the client’s ignorance or cheapness has caused the problem. When it comes to health and safety, insist that it has to be your way or the highway for the client.
4. The customer who wastes so much of your time that your profit margin evaporates. This customer mistakenly thinks he or she is your only customer, or at least your most important one. They have expectations beyond those of a reasonable customer. Phone calls for a “quick question” last 45 minutes. In-person meetings are frequent and long, plus you are expected to respond to all texts, calls or emails immediately, any time of the day or night, even after-hours or on weekends. They believe they are entitled to special attention and the rules don’t apply to them, but their demands put undue strain on employees and resources.
5. The customer who is verbally abusive or threatening. If a customer makes you or your employees uncomfortable by frequently using inappropriate or insulting language, morale will suffer and you risk losing good employees. Think of it this way, in the long run, who would you rather spend time with, a great employee or a bad customer?
Benefits of firing a bad customer
Of course, you have to be smart and selective. You can’t fire all your customers just because you’re having a terrible day. But if firing your absolute worst customer results in less stress, a happier staff and free time that can then be spent improving service to other customers, it may be worth it.
Commit some of the time you’d spend handholding that difficult client to search for a customer who is easier to work with. Sure, the old business adage says it’s cheaper to keep an existing customer than land a new one, but you may find a truly bad client is the exception to that rule.
Look at the firing of a bad customer as an opportunity to prevent a repeat of the situation in the future. This may be a good time to implement a damage waiver, raise rates, rewrite your standard contract or beef up billing practices.
Know what to look out for when it comes to new customers. If a potential customer comes in bad-mouthing a competitor you know to be reputable, realize that they might be difficult to deal with and could be bad-mouthing your company next. If they loudly complain about your pricing structure, or try to negotiate prices with you, they might be the type who is always looking for excuses to avoid paying their bills in full.
Breaking up is hard to do
An easy way to dump a difficult customer (or feel better about keeping them) is to wait for their contract to come up and then present them with a drastic price increase. Lay out for them how their treatment of your restroom units or their constant unreasonable demands are costing you money, and then double the rate for them. Chances are, they will dump you. Of course there’s a chance the bad customer will agree to the higher price, so make sure your new price is so outrageous that it makes keeping even the worst customer worthwhile.
Try to end things on a positive note. Tell the customer in person while you are unable to continue providing them service, you hope there are no hard feelings. You could even recommend someone else for the job, provided there’s someone you think could meet his or her needs adequately.
Remain professional. In a world where people switch jobs frequently, you may someday encounter this troublesome person under completely different circumstances. You want them to remember you as a class act, not a jerk. Who knows, maybe they were a bad customer because of immense pressure from a boss or terrible job conditions and down they road they’ll be a pleasure to do business with.