It can be very challenging for a business owner to finally admit that it’s time to…
“Fire the Customer”
Let me be very clear here, the truth of the matter is that not every customer is a good customer and if you allow a bad client/customer to stick around too long, they may just run you out of business. Of course you want to take absolutely spectacular care of your best customers and turn them into customer evangelists, but when you end up with a customer terrorist the best course of action is to politely send them to your biggest competitor! (I’m only half kidding here)
I cannot tell you how many times I’ve seen businesses almost go bankrupt trying to please difficult customers that drive them crazy, use of tons of resources, always complain, pay late and argue about the price. When I sit down with the business owner and make them take a good hard look at the relationship with a customer like that it usually becomes pretty obvious that they are actually losing money every time they deal with that customer. So how do you avoid getting into that kind of a situation? Here are a few ideas…
Set Clear Expectations
At the beginning of the business relationship take the time to sit down with your new client and be exceedingly clear about how the relationship will work. Explain to them specifically what you promise to deliver, how your pricing is structured, the best ways for you to communicate with each other, what to do if there’s a problem – and exactly what you expect from them as well. Put it all on the table, leave nothing to chance, don’t assume anything. It’s one of my absolute favorite business quotes as it relates to accountability inside of an organization – and creating accountability with your clients:
“Ambiguity Breeds Mediocrity”
If you failed to do this at the beginning of the relationship, try to have this conversation the minute you start to feel uncomfortable and think that the relationship might be headed south. If at all possible you want to have this conversation while there is no emotion or dysfunction in the client relationship. If you try to have this conversation after something big has gone wrong, it will just deteriorate into finger-pointing, excuses and blaming.
Develop Red Flags
Go back and look carefully at every time in the past that a client relationship has imploded, what was the pattern? What were the warning signs that things were getting off track? Did they start to become overly demanding? Did they start paying late? Did they start asking for you to do extra work and not want to pay for it? Did they call up one of your employees and scream at them? Did they make a mistake on their end and then turn around and blame you for it? These are the sort of things I’ve seen in the businesses I’ve owned and when one of these red flags popped up I immediately started examining the client relationship to either improve it or terminate it.
One of the best pieces of advice I ever got about hiring people was:
“Hire Mean and Fire Nice.”
In other words, be really tough in the interviewing process, push hard to make sure the person really is a good fit and truly wants to work in your company, be aggressive in explaining exactly what the job will entail so that the candidate knows precisely what they are getting into, what will be expected of them and what it will be like to work in your company. If they still want to work with you after this sort of an interview, then you likely have a good candidate. However, if things go wrong and they don’t turn out to be a superstar, be very kind, generous and fair when letting them go so that you can help to avoid ill-feelings, nasty rumors or even a lawsuit. To me, it’s exactly the same when accepting a new client. Be tough in the interviewing process (that’s right, you interview new customers just as much as they interview you as someone they want to do business with) to make sure that this potential new customer meets your “Ideal Customer Profile.” Are they the kind of person that you want to do business with? Will they be a good partner? Are they the kind of client who can bring you new customers and more business? Do they have the financial resources to pay on time and in full? Are they nice people that you would enjoy working with? If the answers to a lot of these questions are no – you are better off to recommend that they go to your top competitor and let them deal with a potentially disruptive customer.
Now I understand that sometimes you need every customer because you need cash flow, but when your business is stabilized and you’re not scrambling to bring in every single dollar you can, then I highly recommend you backup and start to pursue and accept only the best customers. I also highly recommend that as soon as a customer starts to trip a few of the red flags, you either fix it right away, or fire that customer!
I hope you found this helpful – John