5 Times It's OK to Fire a Customer

Posted by Michele Nichols on Tue, Jan 26, 2016

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“The customer is always right” is one of the most overused adages in business, and there is a significant degree of truth to it. However, there are times when it is your right or even your obligation to turn down a customer’s request or to respectfully end the relationship altogether. The strength of your business is built on the nos as well as the yeses.

In Launch Team’s 30 years in business, we have occasionally had to re-evaluate our fit with a client. Based on our experience, here are five scenarios in which to consider firing a customer:

1. When your customer’s leadership has internal disagreements regarding their needs

Though internal communication can overcome a great deal during a time of transition, leadership has to be on board. Time and again we have worked with clients on a project only to learn partway through that not all of the key players are on the same page. In order to begin a project with large scale implications for a company’s business plan or marketing plan, we ensure that all key members of the leadership team are aligned regarding:

  • Perception of value
  • Objectives to be met
  • Means of evaluating results

2. When a customer demonstrates that they don’t value and respect your people

Though this sounds like a given, we have known businesses who have struggled with this problem. The most often overlooked sign that your customer does not respect your staff is when they don’t respect your timerepeatedly being late to meetings or not showing up at all. Although rescheduling might seem like good customer service, this behavior will erode your margin in the long run and make it difficult for you to create value for your customer. And here’s your biggest reason to say “no” to these customers: The cost of turnover is higher than lost revenue.

3. When a customer claims that everything is an emergency

When every project you undertake with a customer is a firefight, it creates and unhealthy balance with the work you are doing for other clients. If a $10,000 client’s work takes priority over work for a $100,000 client simply because the former is louder about having an immediate need, there is a problem.

Though we know that emergencies do come up, and we always work quickly to accommodate them, we have learned that the customer who does not know how to plan and prioritize can be a problem and is sometimes detrimental to our business as a whole. Our best advice on handling these clients? Set up a relationship in which your team controls the timeline and is given the authority to be proactive in moving projects forward; this will help ensure that all customers receive the attention they need and deserve.

4. When there is a conflict of interest

Given the relatively narrow markets we work in, we are often asked how to handle conflicts of interest. The photonics industry, our most prominent area of specialty, is a pretty small world, but few of the players are direct competitors. Each company has a unique set of capabilities. In fact, many companies that have a small overlap in product offerings are also each other’s customers.

To avoid complications, here is our rule of thumb: We begin every new client relationship by asking for the company’s top competitors, and we keep those competitors on a list of companies we cannot do business with. And if an existing customer considers a new relationship a conflict of interest, we honor that. We are always loyal to our existing customers.

5. When you lack the capacity, resources or expertise to serve the customer

Sometimes the “no” comes before you begin working with a customer, or when they ask for work beyond your initial agreement. You can’t be all things to all people. Our focus is B2B marketing within the high tech science and manufacturing industries. We see many leads come in – whether from client referrals or inbound lead generation – who are interested in product launch, for example, but don’t necessarily fall into this niche. Before engaging with a prospect, consider whether or not they are in your sweet spot.

In addition, a customer’s project may be too big to take on or may require internal tools that you don’t have. When you take on work that is beyond your expertise, you are setting yourself and your prospective customer up for failure. You are also diluting your brand by working outside of your usual scope and producing work that is less cost-effective and less successful.

As we discussed in a recent video, being honest about your capabilities is key. Especially in the high-tech manufacturing an optics markets, we often hear customers say, “I’m ok if you tell me you can’t do it. I’ll still do business with you in another capacity, but only if you tell me the truth up front.” Lacking capacity or resources can mean missing deadline or quality targets, which are the fastest ways to lose a customer.

 

What are your customer deal breakers?

Topics: Business Insights, Client Relations