So when DO you decide that enough is enough? This week the Frog examines the difficult subject of ‘firing’ your customers!
This week I reached an overdue adulthood milestone. An old friend was in town, so we decided to meet up over a coffee… in Starbucks.
I’m ridiculously unfamiliar with the Starbucks culture – it all seems so complicated! In my little world, there are only two choices when it comes to coffee – black…or white. So I found myself bamboozled when I arrived at the till to be met with a massive board listing my choices, from venti caramel machiattos to tall java chip frappucinos. As I stood mesmerised – what category does a mug of strong black coffee come under? – I couldn’t help but overhear a customer giving the poor barista a hard time. She didn’t want a coffee – it was too hot. Their smallest cups were too small, but their next size up was too big. Then, after being presented with the iced drink she ordered, she announced that it was too cold. All through the tirade, the barista – desperately attempting to smooth the situation – was being verbally trampled by a customer who quite clearly just wanted to whine. After exhausting her diatribe, the customer stomped off with her too small, too cold, iced drink to sit down.
While I was ordering (grande filter with an extra shot – look at me, getting down with the lingo!), I embarked upon the standard small talk after witnessing such a scene. I rolled my eyes, nodded my head at the customer and took the opportunity to sympathise with the barista. She told me that this particular customer visited every single day; and each day caused a drama of some sort – all a variation on what I had just observed. I asked the barista whether she’d mentioned anything to her manager… her manager had told her to simply “suck it up and take the money. She’s a customer after all”.
My friend is a business owner; so when we sat down I made a throwaway comment about how lucky he was. After all, in his position he could tell a customer like that to go and not come back – he doesn’t have “the company” forcing him to bite his lip. I was quite shocked to learn that he’d never brought himself to do it – and one of his customers was far worse.
My friend explained how the customer in question had been a patron of his business for over a decade – a repeat customer who employed the services of my friend’s company every month, year after year. However, he was also exceptionally high maintenance and for some time had been taking advantage of their long-term relationship. He would monopolise an inordinate amount of time each month, submitting frivolous queries and insisting that he dealt only with the business owner – my friend. He would frequently demand a service above and beyond the scope of his payment and even what the business provided! Each month, the business would invoice the customer and then have to follow it up with a myriad of additional invoices and telephone calls to secure payment. Each month produced a nonchalant and flimsy excuse about why his payment was late. My friend was exhausted by him.
Yet for some reason, he was more than a little shocked when I asked why he didn’t just fire his customer and end their business relationship.
It’s probably worth mentioning that my friend subscribes heavily to the adages that ‘money is money’ and ‘the customer is always right’. Actually, I think it would be fair to say that most of us graduated from that school of thought. However, there’s also another motto that we should sometimes pay attention to – ‘every rule has an exception’…
My friend and I listed the benefits he received from his relationship with this customer:
- He generated a regular income.
- He provided a guaranteed income – although, the amount was by no means considerable.
I asked my friend to consider what he was investing in order to maintain the relationship:
- At least one non-invoiced day a month to answer the deluge of non-appropriate queries and service requests.
- The creation of multiple invoices, the accompanying letters and administration.
- Another few hours telephoning to chase payments.
- Payments paid into the bank at least two weeks later than scheduled each month.
By the time we established what he was investing to keep this customer, he realised he wasn’t making very much money from the relationship at all. Effectively, he was receiving a low-yield in exchange for a high-maintenance relationship. The profitability my friend had unconsciously used to justify the continuation of this demanding association was practically non existent. So I asked him – is it worth it? Funnily enough, we returned to our “firing the customer” discussion pretty quickly after that.
Understandably, given the duration of their relationship, he was reluctant to fire the customer outright; so we chatted about what he could do to start balancing the scales of their relationship.
From Monday he’s going to announce the introduction of administration fees for repeat invoices, a defined scope of what’s included in his service fees, a list of activities deemed “extra” and a list of additional item charges. While he’s not firing his customer outright, it does shift him to a position where either their relationship is rebalanced or his customer decides to take his business elsewhere. Either way, my friend is going to be a happy man and the integrity of his business & reputation will remain intact.
I’ve always thought of firing customers in terms of fine bone china – to be used carefully, sparingly and only with select “guests”. If you have china in that cabinet of yours, remember it’s there – take advantage and use it when you need to! Most of us – including my barista – only have access to the ceramic mugs…
So, my question to you today is: do you have customers you need to fire?
For more information, or help with dealing with difficult customers, please contact us at www.bright7.co.uk