How do you deal with problem customers? Fire them

Nearly every small business owner who’s run a venture for any length of time will have a story about the customer from hell. That’s right, the customer who wreaks havoc with the staff, the owner and even other customers. 

In an age when a couple of social media rants by one person can start an avalanche of negativity against your business, how do you deal with such a customer who would likely not be satisfied unless you gave them your entire company wrapped up and with a nice red bow?

You fire them. 

You read right. You invite them to do business elsewhere and perhaps give them a referral. Here’s the key, though: You want to refer them to the competitor you’d like to cause the most grief. After all, why should yours be the company that “enjoys” all the fruits of your customer’s business?

Let’s look at some of the other pros and cons of firing a nasty customer:

Reduced revenues: Yes, you’ll lose some revenue in the short run, but it shouldn’t take long to replace that revenue and gain more.

More productive time:  You typically spend 80 percent of your time dealing with 20 percent of your customers.  That’s right, the problem customers. Once they’re no longer in the picture, you can spend more time getting new customers instead of always trying to placate the trouble makers and pay more attention to leveraging the good relations you have with your remaining customers. The most satisfied customers will spend more money with your company over time. Time really is money in this case.

Less stress: Who doesn’t want and need less stress? Business is tough enough without the aggravation and stress of having to deal with a bad customer’s latest antics. The extra stress created by a pesky customer is felt by everyone in your organization, either first hand or through your own frustration manifested in your bad mood, verbal outbursts or worse. Would you rather lose a bad customer or your good staff who have to constantly deal with the fallout?

More creativity: It’s hard to be creative when you’re always focused on dealing with other people’s negativity.  Business owners need “think time” to envision how they can improve their strategies, company culture and how they handle the job of being the company leader. All of that becomes much more difficult when you’re digging in the weeds trying to keep a bad customer in line.

More energy: Progress energizes us, and unsolved problems seem to drain the energy right out of us. Eliminating problem customers is progress.

The question naturally arises as to when should you fire a problem customer. Only after you’ve attempted to reasonably meet their needs and explain to them they’re creating a hardship for your business. 

If you or they can’t adapt after these steps, it’s time to part ways.

Before you proceed, though, put a plan into place to inform your staff as to why and when the firing will occur, deal with any potential social media fallout, reinforce relationships with other existing customers the fired customer might try to influence and replace the old customer with new customers. It’s time to circle the wagons with your staff.

Finally, if firing a customer will cause a significant financial retrenchment for your business in the short-term, make sure you warn your banker and accountant so they understand the company isn’t tanking. You’re just taking a step back so you can take two or three steps forward.

Severing an established customer relationship is never easy. But when the customer exerts a harmful influence on the business and you, it could be time for a change.

David Leavitt is regional communications director at the U.S. Small Business Administration Region VIII office in Denver. Reach him at David.Leavitt@SBA.gov.
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Posted by on Jun 11 2014. Filed under Contributors. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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