Customer Experience News & Trends

6 rules for firing a customer

Most customers keep your business going. But a few are enemies to progress — and you’ll probably be better off without them. Here’s how to tactfully fire the worst customers.

Of course, firing a customer is nothing to take lightly. You have to make sure the customers you let go are more harm than good to the company, employees and morale.

“The truth is, bad clients hurt your company a lot more than they help it,” says Michael Houlihan, author of The Entrepreneurial Culture: 23 Ways to Engage and Empower Your People. “And often, getting rid of them frees you up to do so much more productive work toward building your business that cutting one terrible client loose means you can bring in several other better clients.”

Here are six rules to keep in mind when you’ve determined a customer needs to go:

1. Plan it

Never tell a customer, “You’re fired,” especially on an emotional whim. When you’ve identified customers who are a drain on business — perhaps because they berate employees, make unreasonable demands or are a drain on resources — create a plan. Consider:

  • when to fire him/her (at the end of project, the fiscal quarter, etc.)
  • where to do it (a neutral location, in his/her office, your offices, etc.), and
  • how to say it best.

2. Know your replacement

You don’t want to give names, but you can invoke a new customer.

Houlihan suggests something like this: “We’ve recently started working with a new customer and due to time constraints will no longer be able to continue our work with you. We recommend that you reach out to …”

3. Phase them out

You can explain that you’re taking the business in a different direction, and that means transitioning away from parts of the business or certain projects. Give a solid time frame so they have ample time to figure out what they’ll do.

For instance, you might say, “In three weeks, we’ll be done with this order. At that point, we’ll have to devote our time to the other projects and customers. We wanted to let you know now so you have plenty of time to make changes.”

4. Call it like it is

Not all customers will take the hint or go without asking more. Be prepared to lay it on the line, especially if they were contentious from the start. They’ll likely continue with that kind of attitude.

Use polite directness. Houlihan suggests something like this: “I think you’ll agree that our working relationship has become strained. I don’t think we can satisfy you anymore. I know several companies that provide the same kind of services and would be happy to give their names to you.”

5. Explain how you’ll wrap it up

You want to make all the details of how the relationship will end clear. Explain the duties that you’ll fulfill — which will be at least everything you are contractually obligated to do. Give a hard date and time, and stick to the deadline.

6. Move forward

Some bad customers might suddenly realize just how wonderful you are after you’ve decided to part ways. So they’ll promise to change their ways, their terms or how they’ll do business going forward.

Unfortunately, the chances of that happening are slim. So don’t give in. Your time will be better spent focusing on customers who are valuable and appreciate your level of customer service.

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