Firing A Customer

A reader writes: “I have learned that it is best to review all my contracts three to four times per year and ‘fire’ the least profitable ones. This allows me to focus on the good accounts. Do you agree?”

The short answer is “Yes and No.” Think about what it cost you to acquire this customer and the cost of replacing them with the same business. Of course, if you are losing money or having to invest a lot of time and resources in a problem account, it may be time to move on. That is an internal judgement call that only you can make on a case-by-case basis.

My first question is “What is your criteria for firing an account?” Again, if the account is a money loser and the customer will not budge on specifications or pay, then you may need to end the relationship. Are your margins reasonable for this type of account? Are you truly as productive as you can be by utilizing the best technology, training and tools to protect/enhance your margins?

My second question is: “How do you go about firing them?” Do you simply give them a 30-day notice? I hope not. My way of “firing” a customer that was costing me in time, resources and aggravation was to make sure the place was really up to par and then submitting a reasonable raise in billing based on the specifications. An alternative was to keep the same price but make adjustments in the task/frequency schedule to reduce my labor costs. Always give them options whenever possible.

My third question is: “Have you tried all other avenues before taking this drastic step?” I highly encourage you to look at the overall value of this customer, their connections to other business and trying to identify creative ways of keeping them.

Customers are like teeth. Only brush and floss the ones you want to keep. Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean...

Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net.