Can I Fire a Customer?

Yes, you can fire a customer and you need to fire more than just one!

The end of the year is a perfect time to be honest with yourself and your business. How much time do you spend on customers that are doing nothing but taking time away from you that would be better spent on other activities?

The last few weeks I’ve been trading messages with a great client regarding a customer who a few years ago was a great customer, but due to changes in their expectations, has become a major pain. It’s easy to think the pain is not that much of a hassle, but in the emails and phone calls, it’s clear it is sucking the life out of the salesperson.

You ask what’s changed?

Simple — the customer had a change in leadership and now expects far more out of their suppliers. Problem is what is now expected doesn’t match the price they’re willing to pay. Initially, the salesperson gave in, but it quickly became a real issue as the demands grew at the same time they wanted to pay less.

Can you relate to this scenario? I bet you can. It might not be exactly the same, but I rarely work with a client without finding at least a few of their customers that are doing more than sucking time and resources. The solution does not have to be as complicated as you think. In fact, the biggest issue is you getting over the emotional hurdle of convincing yourself you’re going to fire a customer.

The easiest way to fire a customer is by taking a price increase.

Base the price increase on the realization of the added work you do for them. Don’t hold back. Go for it. The customer will respond one of two ways — they either reject it and, in so doing, you simply stop selling to them and the problem is solved; or they agree to pay the higher price, in which case now you’re being paid for the additional effort and you win.

If taking a price increase is not possible, then you spell out clearly “terms of agreement” as to what you will do for the price they’re willing to pay. I like this approach now, as you can use the Dec. 31 date as the perfect time to put in place the new “terms of agreement.” The terms spell out clearly what you will do and what you will not do, and you state you’re doing this as part of the annual review of the business.

You can’t afford to have unprofitable customers. Don’t think for a moment the cash flow is good or any other lame excuse. Unprofitable customers will sink your business. Just ask any business that has filed bankruptcy. Use the new year as your perfect time to make your move to ensure you’re only selling to profitable customers.