Most companies wouldn’t hold onto a bad, unprofitable business practice. So why would they hold onto bad, unprofitable customers?
Breaking up his hard to do — but sometimes it’s the most sensible thing for the good of your company, customers and overall experience, say Marshall Goldsmith and Alan Weiss, authors of Lifestorming.
“We advise our clients in professional service to consider firing the bottom 10 to 15% of their clients every two years,” the authors say.
Why? Many customers made sense at a different point for businesses, but eventually some can become bad for business and not profitable.
On a larger scale, in the corporate arena, the customer loyalty experts suggest companies “triage” customers so the most-loyal and highest-potential customers get the most attention. Then, the least-loyal and lowest-potential customers might eliminate themselves from the relationship.
Who you fire
Of course, you don’t fire customers just because they’re challenging. Challenges can be met, and problems can be fixed. But there are times and reasons to purge.
Here are seven situations when you want to consider ending customer relationships.
When customers:
- complain constantly about trivial matters and are problem-prone
- are consistently mean or abusive to your employees
- don’t have the potential to give you more business
- don’t refer new business
- aren’t profitable (perhaps even cause you to lose money)
- engage in or suggest unethical or questionable activities, and/or
- no longer fall into your mission or values.
Still, you don’t just ditch longstanding customers or old friends who suddenly don’t fit the mold. But when you are deciding which customers to let go, consider the likelihood that the situation could change. If it’s likely to change, don’t give up on them yet.
But customers who present more than one of the issues should be the first you refer elsewhere quickly and tactfully.
How to do it
Here are steps from the customer service experts at Groove that you’ll want to take when you’ve decided to part ways with some customers:
- Be appreciative and positive. You don’t have to end customer relationships on a sour note (even if it’s a sour situation). Thank customers for trying your products, working with your employees or experiencing your services. It can be as simple as, “We really appreciate you giving us a try.”
- Frame the situation. You don’t want to say anything that could be considered a personal attack, such as, “We find you difficult to work with” or “You always demand too much.” Instead, frame it in a way that puts you at some fault by reminding them of documented situations that led you to this moment. For instance, “Your request for X was outside the scope of what we offer, and you acknowledged that you wouldn’t be satisfied if we couldn’t do that” or “You’ve contacted us after the last five shipments to say you weren’t satisfied with your order. It seems we aren’t doing a good enough job to keep you happy.”
- Extend goodwill. You can often end the relationship quicker and more tactfully if you do something that makes departing customers feel like the winners. That may be an offer to refund fees or cancel the last invoice. It helps them walk away feeling like it was a good ride while it lasted. Say something like, “You shouldn’t have to pay for an experience that didn’t make you happy. That’s why I’m going to issue a refund for this past month.”
- Apologize. You might be thinking that these customers owe you an apology, but you’ll end on a much better note by apologizing to them. An apology prevents them from feeling like the wrongdoer and helps them move past resentment sooner. Say something like, “We’d like to think that our product/service/staff is a good fit for everyone. But it wasn’t in this case, and I’m sorry for that.”
- Offer alternatives. Don’t leave customers hanging. Let them know how they can pick up where you’re leaving them off. Say, “You might want to try X, Y or Z. One of them might be useful to you now. Best of luck.”
