February 28, 2015 Relative Creative, LLC

Is It OK to Fire a Client or Customer?

It the business world, many business owners/managers and entrepreneurs think that the practice of “Firing the Customer” is an atrocity. They reason that if you fire a client, it could possibly be harmful to their Marketing efforts or Appearance if word got out that there may have been issues between a customer and their business (which is why we’re covering this topic here). Also, we’ve been unfortunately and unjustifiably taught at some point in our live to believe the lie that “The Customer is Always Right”. I should expound on that very lie, but will save that for a later date in order to do it proper justice (and stay on course here).

So let me ask two important questions before I spill my thoughts on this practice:

  1. “Is losing profitability and efficiency (which negatively affects your organization’s pricing structure and impacts your other clients) by retaining one client/customer ‘justifiable’ in order to maintain a positive appearance in the marketplace?”…  and
  2. “What does a person/company gain by either keeping or firing a customer that does not provide value to the organization?”

Just this past week, we effectively terminated a relationship with a client that, upon initial project overview, we thought would be a profitable venture for both parties involved. However, without knowing the client beforehand, the client’s level of comprehension of processes and practices, or their level of commitment to the project, the first-glance-judgement we made as to the overall success of the project was merely a hypothesis. A guess. Little did we know that this project would be much more time consuming and challenging that we originally anticipated – not due to the work involved – but due to the client’s inability to comprehend the process in which the work had to be accomplished (even though a step-by-step guideline was given to them from the beginning). On top of the comprehension issue, the client had a very non-complying attitude with our staff, and demanded immediate results on time-consuming processes without providing the necessary information/products needed to complete the work. In essence, this person was pulling up to the gas station and demanding that their tank be filled without unlocking the gas cap for the person servicing them. Furthermore, their inability to timely pay their invoices put the project behind schedule, as we have a policy of stopping all work when client’s accounts are behind – something this client also knew from the beginning. All in all, the client took up a large portion of our time, and the project began to sink past the break-even point and into the red….we were losing money, losing focus, becoming inefficient with other projects (due to the countless interruptions from this particular client), and getting frustrated with the client overall.

In a situation like the one spelled out above, continuing to service such a client would not cost us any extra money, but it would cost our other clients money, as we would have to increase our rates to make up for the loss. This isn’t fair to the “Good” clients we have, as they are not causing the problem. So we did what we thought was best….we humbly and justifiably terminated the engagement.

Will this effect our overall appearance in the marketplace or impact our Marketing Efforts? Maybe.

Some people may not choose to work with us because there is a possibility of our disengagement if they are not a good fit…but that is a risk we’re willing to take. We’re betting that most people will see that we care deeply about our client base as a whole, because we’re (analogically speaking) willing to pluck a few bad weeds from the soil of our client-base so that the garden in whole produces bigger and better crops.

So in our opinion….Yes, it is perfectly OK to “fire” a client/customer just as you would an employee who does not perform well or costs you more time and money than they make you. Remember: If you don’t pluck the weeds, your garden will soon be overran, will not produce good fruit, and you may be forced to till it under.

Relative Creative, LLC

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