Do Not Be Afraid To Terminate Troublesome Customers

As a business owner, you are responsible for exceeding customer expectations and providing superior customer service. Even if your business does not involve a formal contract that details exactly what should be expected, there is typically a clear understanding of what the customer expects and what you are willing to deliver. If you breach your end of the bargain, for example, by serving a subpar meal or losing a customer’s laundry and refusing to make things right, you are guilty of failing to meet the customer’s expectations and thus of providing poor customer service.

Regrettably, not every entrepreneur places a premium on providing superior customer service. They are only interested in making a profit and will damn the customer if they have a problem. Such entrepreneurs were the subject of the column you mentioned, with the implication that if you develop a habit of failing to meet your customers’ expectations, you will not last long in business.

Now consider the inverse. Just as the customer has the right to expect to receive value for money when doing business with you, you have the right to expect that your customer will not make unreasonable demands (or the contract). If a customer orders hamburger, he should not anticipate it tasting like steak unless you specifically advertise it as such. If a customer brings a cotton shirt to be laundered, he should not anticipate receiving a silk shirt in exchange. It is only when the customer’s expectations diverge from what is realistically expected that you will encounter difficulties.

We have all dealt with customers who were unreasonable, excessively demanding, condescending, difficult to please, and occasionally even dishonest in their dealings with us. When reasonable expectations become unreasonable demands, you must determine whether the customer is causing more harm than good to your business.

Thus, here is the line in the sand between “the customer is always right” and “sometimes you have to boot the customer” – when a customer crosses the line from being an asset to being a liability to your business, you should consider booting that customer.

This is easier said than done if that customer accounts for a significant portion of your revenue, but even then, you must consider what your business would be like without that problematic customer. Wouldn’t it be better to spend your time dealing with the difficult customer on sales calls that could help you expand your client base and grow your business (a business that is reliant on a single client is a house of cards)? Would your employees be more content if they were not required to deal with this customer? Would you sleep better at night knowing that you won’t wake up to a dozen phone messages from him?

The simplest way to determine how much trouble a customer is worth is to compare the revenue he generates to the time and expense required to meet his expectations. If a customer pays you $1,000 per month but requires $2,000 in time to keep happy, this customer is actually costing you money. A few of these types of customers will quickly put you out of business.

For instance, I once had a client whose business contributed several thousand dollars per year to the bottom line of my software company. However, from the moment the contract was signed, this client proved to be problematic. He and his employees called our office ten times a day and monopolised the time of my tech support team with IT issues that had nothing to do with the service we were contracted to provide. It became so bad that my employees cringed whenever the phone rang, fearful that it would be this client calling again.

When the time came to renew this client’s contract, it was an easy decision for me to terminate him. I merely performed the math. This client increased my company’s revenue by thousands of dollars but cost me at least that much in handholding and support, not to mention the mental anguish he caused my employees. I chose not to renew the contract and politely invited the client to pursue other opportunities.

The ideal customer relationship is win-win, which means that your customer benefits from your product or service and your business benefits from delivering it. The relationship must be founded on mutual regard and sincerity. When the relationship devolves into a win/lose situation, you must be prepared to act. If the customer believes he can bully you and extract more from you than he paid for, the relationship and your business will suffer as a result.

Consider that you do not require me to smack you in the face with a stupid stick on this one. You’re aware of who your difficult customers are and that you’ll eventually have to deal with them. You must consider the long-term value of each customer, not just their current value.

Is the customer making demands that exceed what is reasonable? If a customer consistently demands more than they are entitled to and becomes irate when you refuse, consider terminating the relationship.

Is the customer abusing your good graces? Certain customers may mistake your eagerness to please for weakness and attempt to extract more value from your relationship than is reasonable. If the customer has a history of exploiting you and attempting to obtain more from you than they deserve, consider evicting them.

Is this customer an embarrassment to your business? Let’s face it; nothing is more detrimental to your reputation than an unhappy customer with a large mouth. And regardless of who is at fault in the dispute, a dissatisfied customer will eventually badmouth you – even more so if they were at fault. If you have reason to believe a customer may one day air dirty laundry in public, consider evicting them.

Is the customer a timely payer? If you have a customer who is consistently 90 to 120 days late with payments despite the fact that your contract expressly states otherwise, this could be a sign of future problems. Consider terminating the client if you believe they are a payment risk.

What is the best method for avoiding a customer boot? The best course of action is to have a contract that clearly defines the terms of the relationship. Contracts that I use in my various businesses clearly define the services that will be provided, the associated costs, and the timeline and terms on which those services will be rendered. If there is a breach of the contract, we prepare an addendum outlining the changes and their impact on the contract. Do I still have to terminate some customers? True, but not very frequently. It’s difficult for a customer to complain when everything is laid out plainly above his signature.

What if your business is not contract-based? Then, display a poster in your store or distribute a handout that clearly defines what your customer can expect from your business, and then follow through on your promise. If you have a poster or handout that clearly describes your services, rates, scheduling, and return policy, for example, the customer should have very few reasons to complain.

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