Is it time to fire a customer?

All business relationships have a season – a beginning and an eventual end.   I remember working for a restaurant company years ago that had the policy “never let a customer leave unhappy.”  The idea was that in a service business it was worth losses to build a great reputation, and so we should do anything to please them.

It worked well…. until some folks figured out that they could milk the system.  I remember one family in particular would come in and eat.  They would order their favorite items, laugh, joke, and generally enjoy themselves until it was about time for the check.  At this point, the mood would turn.  The patriarch would say in a grave voice “I am not happy with the service today” and thus would begin the back and forth that would ultimately end up in a manager comping their meal, and apologizing for our failure.  The next week the same thing would happen.  This was demoralizing for the workers, and could not have really been to the benefit of the customer.

Sometimes it’s best to go with “Win-Win, or No-Deal.”  Today I want to talk about when it’s time to say that your relationship has gotten to the point of “No-Deal.”

It started out with such promise.  You had a product or service that your customer needed – you began your relationship with them, and they have been with you a long time.  Perhaps they have been with you since the beginning, or maybe they are a large dollar volume.  How could you let that end?

• You need to make a profit.  The primary reason that your business exists is profit.  Before some of you complain that I’m sounding a bit like Gordon Gekko, there’s more to sustainable business than profit, and of course you MUST serve customers well.  If you serve without making a profit, everyone loses.  You need to take a look at your list of clients and determine which ones are profitable.
• How much revenue do you get from this client?
• How much does it cost you to serve this client?
• Is there any opportunity to increase profitability of this relationship (e.g. incremental services or products, serving new groups or other parts of the same company?)

• You need to have a Win-Win relationship.  I worked with a company where one client was profitable, but was demeaning and very difficult to deal with.  Every meeting with him was grueling.  How well could they serve their other clients after  verbal beating by him?

 At the end of the day, your goal is to add value to your clients in a way that helps you sustain your business, too.  When you do the analysis and determine that isn’t working, and can’t be fixed, it’s time to say good-bye.