Post from Guest Contributor Chris Blanton, editor of Ingenious Business Guide.
Sometimes you just need to let a customer go. If a client is abusive to staff, or demanding but you’re unable to satisfy or reason with them, you may have to show them the door.
It can be valuable to periodically evaluate your customer base and jettison the ones that are no longer a fit. Many companies routinely rid themselves of their “D” class unprofitable customers. It is a valuable strategic practice that will not harm customer relationships provided you do it correctly.
Excluding outright abuse from an out-of-control client, decide whether to terminate only after you’ve had a chance to reflect and cool down. Tell the client you need to check on something and will tell them later how (not if) you will solve their problem. Don’t stall them, just find a reason to get back to them. Then make the decision when you’re rational.
The Wrong Way to Fire Customers
Unfortunately companies often terminate clients at the wrong time, stating inflexible policies as ultimatums or offering tactless suggestions during a fevered disagreement, and this can sully a good reputation. Handled improperly, disagreements can also cause former customers to feel betrayed and act vindictively. Read about the Rule of 200 to learn the ramifications of a heated exchange. This is where excellent companies differ, proactively heading off this behavior before it begins.
The Right Way to Fire Customers
When you’ve chosen to discharge clients, the best practice is to allow them to fire themselves. How do you do this? By progressively removing value from the business relationship.
A business relationship is like a playground teeter-totter. As the supplier, you sit on one side and the customer sits on the other. You load your side with goods and services and the client loads his side with money. In this way the teeter balances.
If the totter becomes angled and you notice that you are dragging the ground, how do you right the teeter? Either by lightening your load (removing services) or increasing the customer’s (increasing payment.)
In the same way, gradually make the business relationship less valuable for them and more valuable for you. For instance, when you raise prices with the Grandfather Discount, exclude them from the offer.
Of course you will continue to provide the customary excellent service you give everyone, but gradually remove enough value from them while increasing the value to you so that ultimately the teeter-totter will right itself. Or the customer will get off the teeter. Simply put, he’ll terminate himself.
Will he leave immediately? Maybe not – and this method won’t leave you with the satisfying feeling of instant closure. But even when a customer is incredibly difficult to deal with, the decision to terminate should be made rationally, not emotionally.
Will he leave upset? No. Not if you put the choice to quit in his hands and he exercises it. You can even recommend an alternate vendor if you wish. And if he does choose to get upset, he won’t have anything concrete with which to slander you.
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