In the beginning, we celebrated every new customer. No matter how small the contract or how demanding the client, our answer was always “Yes!” But then we grew. Before we knew it, those small and demanding customers began to distract us from our business goals and our growth.
You’ve heard the clichés: “The customer is always right,” “The customer is king.” That may be true for the customers we choose to keep, but does it ever make sense to let one go?
We realized over time that we did need to let some of our customers go. We began routinely shedding customers that fall into one of these categories.
1. The Bully. If any customer is rude, abusive, or otherwise demoralizing to anyone at our firm, we give them the ol’ heave-ho. While this may seem like a no-brainer, people sometimes hold onto these types of customers for the wrong reasons. We put our overall goals and our team’s wellbeing ahead of any one account. No revenue is worth putting up with disrespect from a customer.
2. The Squeaky Wheel. If a customer constantly complains without merit and costs us more time and energy than it’s worth to keep their business, we part ways.
.3. The Opportunist. If a customer repeatedly takes advantage of policies designed to accommodate special circumstances (e.g., repeated refunds, small orders below typical minimum quantities), they can quickly become unprofitable or distracting. Let them take advantage somewhere else.
4. The Diva. If a customer has high demands on small or infrequent orders, like customization specifically for them, it’s not worth it. Of course if the customer is big enough, customized products or services can be profitable.
5. The Little Guy. Some customers simply aren’t profitable enough. They buy “onesies and twosies” that never amount to enough revenue to cover the overhead for managing the accounts. We’ve worked with very well known companies that we had to let go. A big-box pet store, a very popular grocery chain: contracts we were thrilled to start, but simply weren’t helping us reach our goals. Of course we made sure to tell them we would love to have them back when they are ready for a larger contract.
How we handle the situation depends on the category. For #1s, we simply tell the customer we’re unable to meet their expectations and it’s time to find a new provider. We are polite and firm.
For #s 2-4, depending on the size of the customer or the relationship, we may pursue an honest and open conversation with a key decision maker with the intent of improving the situation. But we’re always prepared to walk away if the relationship doesn’t improve enough to help us with our company goals. We may refer them to another provider depending on the circumstances.
For #5 customers, we try to increase sales to a profitable level, but if we can’t, we always refer them to another provider. Perhaps a friendly competitor that is smaller and more specialized that can handle their requests. If we help them find a better fit, they’ll be that much more likely to come back when they’re ready for the big contract.
Have you ever let go of a customer? Do you have a story to share about how you made this decision or how it ultimately benefited your business? I’d love to hear your stories and thoughts in the comments below.