Cutting ties

At what point do you deem a customer a nuisance? How about unworthy or even toxic? I’ve been a business owner, and it’s disconcerting to think about losing a customer, especially for a small business. But bad customers can actually cost you more money. Sometimes, firing a customer is the only answer.

Business Collective asked several CEOs and managers when they know it’s time to cut ties with a customer. Some of them said:

* “If a customer repeatedly disrespects your employees, if employees are afraid to pick up when the customer calls or if the customer sucks up a disproportionate amount of your time by being indecisive or making constant (and unwarranted) requests for changes, it's time to move on.”
– Matt Mickiewicz from Hired

* “You have to be aware of how much your time and effort is really worth. Once you know your value, you can better evaluate what business to pursue and which customers to seek or avoid. When you figure out your worth, it helps you zoom out of a difficult situation and look at the larger picture, so the conflict doesn't dominate your decision process.”
– Seth Talbott, consultant

* “The customer is not always right, and all customers certainly aren’t always right for your business. The moment one of your customers becomes more trouble to manage than their business is worth, cut them loose and look for a better partner. You should also refuse to work with customers who are disrespectful to your employees. Having bad customers is the quickest way to poison office morale.”
– Brittany Hodak, ZinePak

* “By the time you decide to fire your customer, you probably should have done so six months ago. Are there certain customers who are taking up a disproportionate amount of your time for the amount of profit that they generate? Then it's time to let go. However, don't just fire the unprofitable ones. If they cause a lot of stress, get rid of them gently but firmly and find replacements.”
– Emerson Spartz, Dose

Angela Gosnell is a global content marketing lead at Ignition. When firing a client, she suggests staying calm, rational and polite, and clearly state the reasons for terminating the relationship. If a follow-up is needed, give them a phone call so nothing is lost in translation. You can start the process with an email, but you should follow up with a phone call to talk your client through the process and answer any questions they may have. She also suggests checking your contract. Do you have terms in place to fire a client?

As we near the end of the year, start going through your customer list. Ask for feedback from your sales and customer service teams. If it’s time to let go of a few clients, get ahead of it before the next round of orders comes in.