How to Know When to Fire a Customer

The customer is always right. We hear this business cliché time and time again, but do we ever stop to think if it’s actually true? We’re here to tell you that it’s not! The customer is most definitely not always right, and it’s important to be able to fire a customer in the same way that you would fire an employee who is causing the company grief.

Some customers are simply not profitable, or cause more of a headache than they’re worth. You shouldn’t be trying to please everyone because this is ultimately a waste of time, energy, and resources. You’re better off understanding who your profitable customers are, and how to attract more of them. When you are attracting the right customers who are in line with your brand and what it stands for, you will be providing better service and fostering loyalty with these customers. The more loyal your customers are, the more frequently they will come back, and the more positive word-of-mouth they will spread.

So how do you know when to fire a customer?

  1. The customer abuses company policies and drains resources. Every business has experienced the customer who takes advantages of warranties, return policies, or sampling. These policies have been put in place to ensure great service for customers who will in turn be loyal and come back. If a customer is continually taking from a business and it is apparent that they will not be converted into a satisfied customer, they need to be politely turned away.
  2. The customer delivers a much lower return on income than others. This situation is more difficult to spot because the customer is not intentionally causing any issues. However, in the long-run your employees are utilizing more resources to serve this customer than the customer is contributing back in return. They can usually be phased out by reducing the amount of effort employees invest into them over time, which will guide the customer out the door without any hurt feelings.
  3. The customer abuses employees. Some customers can be real jerks, and it doesn’t matter how much they are spending with your business if they are draining employee morale while doing so. The toll this takes on employees will decrease productivity and leave them wanting to quit. You may suffer a short-term loss in revenue but in the long-run you will have created a more sustainable, profit-generating environment.

Now you’ve decided to fire, but how?

First and foremost you want to ensure you aren’t going to generate negative word-of-mouth by firing a customer unfairly or unprofessionally. Follow the next three steps to settle things amicably with the ex-customer.

  1. Try to clarify disagreements. Take the customer aside and communicate to understand both sides of the story. The customer may be acting out because they feel they have been wronged by the company. Don’t mistakenly fire a customer because they are upset with your service, and if there was a service mistake on your end, it’s important to rectify it. If you were not in the wrong and they are still upset, empathize with them, but explain rationally why you cannot help them.
  2. Be professional. Use a polite tone of voice and calmly explain why the business will not be a good fit for them in the future.
  3. Suggest alternatives. Guide them to a business who may be a better fit for them so they leave feeling like they have another option.

Most importantly, learn from the experience and define why the customer was a bad fit so that you can avoid getting into similar relationships in the future.