If you run your own business, you are likely to run into a difficult client at some point in the life of your company. However, knowing if the customer is difficult enough to walk away from or if you should try to maintain the relationship can be an excruciating decision.
According to the Chartered Institute of Marketing, the cost to acquire a new customer is somewhere between 4 to 10 times more than keeping an existing customer. In addition, for most companies, about 65% of their revenue comes from existing clients.
Making the decision to fire a customer is not an easy one for these reasons and more. There are a number of factors to consider before severing the relationship.
Have You Done Everything You Can to Make Things Right?
Before you severe a relationship with an irate customer, take a look with fresh eyes at your end of things.
- Does the customer have a valid complaint?
- Can you fix the complaint?
- If you do fix the complaint, does the customer seem satisfied or only find other things to complain about?
- Is there someone in your company who would work better with this customer than the current rep?
Do You Owe the Customer Work or Products?
Another thing to look at is whether you owe the customer something. For many service industries, for example, the customer may pay upfront before work is completed or pay in advance for a large order of a product.
- Are you completing a service project and are only half finished? Then you will either have to refund the customer’s money or finish the job before severing ties. The last thing you want is to get a reputation for leaving customers hanging.
- Did the customer prepay for product that has not yet been delivered? Again, you’ll need to either refund the money or deliver the product.
How Much Time Does this One Customer Take up?
Track the time spent putting out fires with difficult customers. Toggl is a free online tool that allows you to track time spent on tasks by project.
For example, you can track:
- Time spent by employees on the phone with a client.
- Time spent fixing issues.
- Time spent doing damage control.
- Time spent at the spa trying to distress from customer yelling at you for an hour. (Okay, maybe don’t count all of that time, but it is a point about how much time a difficult customer can suck out of your life.)
Is It Worth Your Peace of Mind?
Maybe the customer pays you well and is one of your biggest customers. Perhaps you’re frightened to fire the customer because he may say bad things to other potential customers and cost you business.
At the same time, there are some scenarios you should never tolerate.
- A customer who calls and verbally abuses you and your staff by cursing, calling names and demanding solutions that aren’t reasonable.
- Threats against your body or property. You never know when a customer might be mentally unbalanced. It isn’t worth the risk.
- Maliciously spreading falsehoods about your company online or via networking circles. While firing this type of customer might not stop the vicious rumors, you will be able to say that you let him go as your client, which will speak volumes.
Changes in Customers or Company
Another reason you might decide to let clients go is that their needs have changed or your company has changed and can no longer meet their needs.
You may love your customer and think he is the best thing since the invention of video games. Still, if his company has grown to the point that he needs a full time database administration service and you only offer trouble shooting, then you are doing him a favor by letting him go and suggestion some companies that offer the services he needs. He’ll remember this and recommend you to others.
Perhaps the focus of your company has changed. You may have started off selling widgets to homeowners but now want to sell only wholesale because of the volume. It can be hard to walk away from loyal customers, but sometimes it is necessary for your company to grow.
Communication Is Key
Whether you are severing ties because a customer is a pain in the neck or needs have simply changed, do so professionally and decisively.
- Send a letter explaining that you are terminating services.
- Address the customer by name.
- Offer alternatives if the parting is amicable, such as another company that offers what the client needs.
- Wish him luck in his future endeavors.
If you aren’t decisive with your termination of the relationship, a difficult client may see it as an open window to remain with your company and continue to harass you. You must end the relationship in a firm but professional way. You may even want to have your legal department look over the wording of the letter to be on the safe side.