We all know customers are not always right — their behaviour oversteps the bounds of civility, they issue invalid claims or unreasonable demands, or make an out-and-out error.
When the emotional or economic toll exacted from serving continually abusive or extremely high-maintenance, low-profit customers starts to outweigh the return on the investment, it’s time to impose a customer exit strategy.
Weighing the costs
Business owners may anticipate having to replace lost revenue or fear negative word-of-mouth that comes from severing ties with a client.
This often keeps them from lowering the boom on highly toxic or bottom-line-eroding customers. And in the viral world, the word-of-mouth concern should definitely be figured into the decision.
Yet such projections usually prove to be worse in the imagination than in reality. People pay closest attention to word-of-mouth perceived as credible and from a reliable source.
The customer you desperately need to fire is often perceived by others as a perpetual victim and has corrosive influence. Consequently, their tales of woe and great injustice may be disregarded by those who matter.
Customers should be encouraged to exit for one of three reasons:
1.They’re costing you too much financially
Most businesses want their revenue to exceed expenses; this isn’t always possible at the outset. Acquiring new customers always takes a ‘sunk cost’ in advertising, marketing, sales and solicitation expenses.
If there’s not sufficient return on that initial investment over time, consider whether continuing the relationship makes sense.
2. They’re taking a steep emotional toll on your staff
Some customers are so taxing or abusive that the damage they do to frontline employees’ self-esteem or everyday resilience robs a business of enthusiasm to effectively serve more deserving or valuable customers.
3. They’re violating a key value of the organisation
This extends beyond morality or ethics infractions (those consequences are often cut-and-dried) to more nebulous values-based scenarios. If a company’s reputation is built on responsiveness, for example, and a customer’s chronic demands for special attention cause serious delays, parting ways might be wise.
Exhaust all reasonable options before cutting the customer cord. In some cases, special efforts can save profitable but difficult customers on the verge of being fired.
The process is a bit like disarming a bomb; the act should be done carefully. The goal is to subdue animosity without unleashing a disturbing aftermath. Sometimes customers are so incensed at losing a favourite punching bag they move quickly from anger to vindictiveness, seeking punishment.
Limit the chance for such backlash by handling firings in cool-headed but sensitive ways.
Rational firings should be laced with up-front motives and clearly spoken rationales, with a focus on how continuing the relationship will negatively affect the business (not on how a parting will help long-suffering staffers feel like they won the lottery). The phrasing of the breakup should go something like this.
“Mr Jones, we’ve greatly appreciated your business for the last year. We have elected to apply our limited resources in a new direction and will not be soliciting your business in the near future. Should you want to continue our relationship it may need to be at a higher price [or greater volume, faster cycle time or lower cost].”
As furious, defensive or protective as an owner may feel in emotionally charged situations, demonstrating rage will simply fuel the customer’s anger at being let go.
Provide a rational explanation, explaining that continuing the relationship will harm the business: How harsh treatment of service reps impairs productivity, or how a difficult relationship steals time from other clients. The goal is to give the customer a signal that they are unwelcome if the unwanted behaviour persists.
The parting words should go like this: “Mr Jones, I must ask you to leave. The morale of our associates is critically important to their and the organisation’s wellbeing. While we’re by no means perfect, our employees must not be repeatedly subjected to actions that demean them as people.”
Related: The 4 Things Every Customer Wants