How To Fire Your Worst Customer

As a marketing writer, most of the topics I choose to cover are focused on building your business. Ways to promote, sell, motivate or acquire customers are all important and deserve the biggest share of the conversation when it comes to marketing your business. One thing most business owners don't consider, however, is whether their best business decision may actually involve FIRING some of their worst customers. While this may seem like an illogical suggestion (particularly in a bad economy) – having the wrong customers can be costing your business in unexpected ways and holding you back from real success with the temptation of short term profits.

You may be stuck in a raw deal with minimal margins, or be losing the ability to service new and more profitable customers as a result of tying up your resources with a single customer. Additionally, you might have issues with employee turnover due to burnout from servicing a demanding or abusive customer, costing your business as you continually need to recruit and train new team members. There is no single definition for a "bad customer" – particularly since we tend to see customers in general as always being a positive thing. The fact is, however, that bad relationships can occur in business, just like in life. Part of the challenge you will likely face (if you haven't already) is how to extract yourself from those relationships without burning bridges or creating enemies.

Here are a few steps for how you can navigate dealing with your worst customers, and professionally get rid of them with your dignity and reputation intact.

1. Uncover the real issue. The thing about "bad customers" often is that it can often be due to a combination of circumstances that evolve over time. Few people enter into a business relationship they know will be negative from the start. When it comes to identifying your worst clients, part of what you must be willing to do is looking deeper to uncover the real issue that has caused your relationship to sour. Is your main customer detached from the day to day and now you are dealing with a subordinate who lacks ability or knowledge? Could it be a clash of personalities between your employee and the customer causing the friction? Digging deeper to learn the real issue is a necessary first step to give you insights on how to handle the problem and most importantly, to learn whether this is really a customer you need to get rid of.
2. Fix what you can fix. Once you get to the heart of the issue causing the negative relationship, you need to try and make an impact on your own end. If there is an irreparable difference in personality between your team members working with the customer, try changing the team on your end. If there is a contractual issue, try to work with the right people to resolve it. Showing good faith to fix what you can fix from your end will be important not only to try and salvage the relationship, but also to demonstrate to your customer that you are really trying to make the relationship work better.
3. Raise the issue. Once you have exhausted all possible solutions on your own end, it may be time to raise the issue in a sensitive way with your customer. This should obviously be treated with care, but in the best of cases, your customer may not realize the issue they are causing for you and your employees and be open to making a change. Even if they are not, this is an important step if you eventually do decide to "fire" them as a customer.
4. Establish a "3 strikes" approach. Assuming your activities to fix the issues are not working, you need to establish a clear path forward. This is not always something that you can communicate to your customer, but internally your employees need to know that there is a process that you will be using to put the customer on final notice before you make a decision. These "strikes" can be anything from repeated negative behaviour to recurring months with low margins.
5. Terminate and refer. Once you have reached the point where a change must occur, you owe it to your customer to be upfront about the issue and your intention to terminate your relationship. Your aim at this stage should be to remain positive and resolute by following through on your decision. This is the point where you can lose the respect or trust of your employees if you fail to take action, so making the hard decision a reality is crucial. You should also have a strategy in place to help your customer get to their next relationship as well. Just because your relationship with a particular customer was not positive does not mean another organization might not be able to have a more productive one, so do your best to find a good referral and make the connection for your customer. 
6. Move on. In the first few months it will be easy to focus on the lost revenue from that customer, no matter how minimal it may have been. Losing the drain of that customer, however, can be the best thing to happen to your business. Use the fresh start to refocus on all your other current customers to make sure none of them get to the same stage – and more importantly, put a plan into place to replace that customer with one you and your team would be thrilled to have.

This post is republished from my original article on the Amex Open Forum website. It is part of "Small Business Friday" on this blog, where I share ideas and marketing techniques specifically to help small businesses stand out. To read more articles like this, visit the "Small Business Friday" category on this blog.