When we start dating a new person, there are four possible outcomes:
- Both mutually decide there is no further interest
- One of you can decide not continue the relationship
- You can enter a long-term relationship until one of you decides you’ve had enough
- You can make the relationship permanent and stay together for life
The same four choices are likely in a business relationship. Today we will focus on option 3, with you being the one to break-up with your customer. Another way to say this is that you fire your customer!
Firing a customer sounded like heresy to me until I tried to do it. Then it felt wonderful and best of all, I changed the customer’s behavior and still kept him as a customer. He got the benefit of our excellent service and support and we got the benefit of his checks! But this story will come later.
Why Would You Consider Firing A Customer?
There are two reasons why companies fire a customer:
- According to a Harvard Business Review blog post, 80% of your revenue and profit comes from 20% of your customers and 20% of your revenue comes from high maintenance customers who generate a loss. They suck up your people’s time, tie up the phones, buy and return but skip the “keep” step, and in general, generate unusual overhead costs. The worst part of this situation is that they keep you from serving or selling profitable customers and, of course, they do not recommend your business to others.
- According to a Seth Godin blog, of the small number of customers that cause your organization significant pain, 1% of the customers are responsible for about 95% of the “agony.” His approach is to train the 99% of the people causing the organization pain and fire the un-trainable 1%! Here is what he wrote:
“Successful organizations (and I include churches and political parties on the list) fire the 1% of their constituents that cause 95% of the pain.”
Seth differentiates their behavior from the high cost crowd by implying that these people do not treat you, your employees, or your business professionally. The customer I tried to fire fell into this category.
The Customer I Tried To Fire
This customer was a medical doctor engaged in leading edge research. He was good but no one could be as good as he thought he was! Every time he had a service issue, he demanded instantaneous response, even though he was not entitled to that level of service. When a custom part had to be repaired, he would have one of his “people” call every morning to check on what would be done that day and again in the late afternoon to confirm that everything was on track. You know the kind of customer I am describing. And it was extra bad because he had four of our products and, even though they were very reliable, he still had more problems than most customers (actually 4 times as many).
After putting up with his nonsense for years, our organization finally decided to part company. When I told our CEO about my decision he said, “I admire your patience. We thought you would have done that years ago.” I then arranged to met with the doctor and his wife, also a Medical Doctor and co-researcher, at an airport where they were arriving and I was leaving. I explained that we were at the end of our rope and think that he should start replacing our equipment with our competitor’s products. He refused on the grounds that our products and service were the best in the industry and he would only use the best. I relented when he promised to calm himself down and his wife agreed to control him. I just looked at her and said, “He is a royal pain in the ass.” She smiled at me and said, “Yes he is, isn’t he.” He behaved and we co-existed for many years after that.
The moral of the story is that even the most difficult customers can be trained if your products and services are outstanding. So, don’t put up with bad behavior from your customers. Either train them or, if the behavior is so bad, send them to a competitor, sit back, and laugh knowing they are now swimming with a piranha.