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Tuesday, March 29, 2011

How to Fire a Bad Customer

When you're trying to hold on to every last customer, you might not realize that some of them are doing your company more harm than good. "One thing most business owners don't consider," writes Rohit Bhargava at the Influential Marketing Blog, "is whether their best business decision may actually involve FIRING some of their worst customers."

Definitions for "bad customer" will differ, but they might refer to...
  • Those who require an extraordinary amount of attention
  • Those whose demanding or abusive treatment of your staff causes high rates of turnover
Bhargava has this advice for how to handle your bad customers:
  • Identify the real problem. Because relationships sour over time, the source of a conflict might not be readily apparent. Don't proceed until you have a good sense of what's really going wrong.
  • Take responsibility for your mistakes. "Showing good faith to fix what you can fix from your end will be important not only to try and salvage the relationship," he says, "but also to demonstrate to your customer that you are really trying to make the relationship work better."
  • Present the issue to your customer. They might be receptive to your feedback, and they might implement positive changes that move them back to the "good customer" column. Or they might push back. If that happens...
  • Establish a three-strikes-and-you're-out policy. "This is not always something that you can communicate to your customer," he notes, "but internally your employees need to know that there is a process that you will be using to put the customer on final notice before you make a decision."
  • Terminate and refer. Handle the "firing" with a positive attitude, and demonstrate your goodwill by helping the customer to find another vendor.
Losing any customer will cause a likely drop in revenue—but you'll free up resources to find and build more profitable partnerships, and let your most valuable resource (your Team) know just how much they are valued.

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