How to Fire Customers and Improve Business

cancelled customerFiring a customer is one of the hardest things to do. It requires objectivity and faith in a good economy; incredible courage in a bad one.

“The customer is always right” is the battle cry for many service-oriented companies. It works, but it has limitations that have a long-tem affect on morale, loyalty, and profitability.

When your customers have reasonable expectations, it’s easy to honor their requests. But when they cross the line to unrealistic demands and abusive behavior, the “always right” policy is questionable.

There are three issues:

  1. Customers are not always right. Sometimes they are misinformed and can be educated. Others, they are obnoxious, unrealistic, and abusive. Expecting your service team to take undeserved punishment increases stress and reduces morale.
  2. Rewarding bad customers reduces benefits for good ones. Your budget has limitations. When resources are allocated towards pacifying customers with unreasonable expectations, they aren’t available for the deserving. When your good customers realize that there was an inequity (and they will), they become alienated.
  3. Your demanding customers are not your profitable ones. Rewarding them reduces your resources without a return on investment.

I fired my first customer in the summer of 1993.

The decision was especially challenging because our management team had just participated in a workshop based on Stu Leonard’s two rules of service. Rule one was that the customer was always right. Rule two was if the customer is wrong, re-read rule one. There were examples, growth curves, and raving fans featured. The benefits of a customer-focused organization were undeniable.

Nowhere in the workshop did they prepare us for John Ballard Doe (named obviously changed.) He called to complain that we had rented his name without his permission. He said that he always requested not to be mailed and coded his orders so he knew who was sharing his information. I was the COO at Ballard Designs at the time. John had used “Ballard” as a middle name for identification.

We had a strict no mail policy and flagged every customer who opted out. Mr. Doe wasn’t flagged. The customer service representative (CSR) who took his call apologized and offered an item of his choice that was $50 or less. She explained to him that he might still receive some catalogs because it took a while for the rentals to cycle through.

Our CSR’s were authorized to compensate customers when we erred. It saved time and improved relationships.

One month later, Mr. Doe called again with the same complaint.

The CSR explained again that it took several weeks for names to cycle through the system. (It’s much faster now, but that’s how it was, then.) He was not pacified. Since he had already been compensated, he was sent to the department manager. After listening to his complaint and reviewing his order history, the manager offered another item.

The next month, he called again. This time, his complaint was escalated to me. When I reviewed his customer history, I noticed that his order was taken be one of our best CSR’s. While there was a possibility that he told her that he didn’t want to be mailed and she didn’t flag him appropriately, she rarely made mistakes.

The documentation noted that he was threatening in the previous conversations. I listened to his complaint, and then asked why we should pay him three times for one mistake. His tone and words changed quickly to ugliness. It was then that I decided to fire him.

I told him that it was time to sever our relationship. We would not accept any orders from him or his addresses in the future. His attitude changed. He asked me to reconsider. He offered to send the two free items back. My decision didn’t change.

When I finished the call, I told my customer service team what I had done. You could feel a difference in the room. It was as though everyone felt relieved.

Four months later, I received a package from Mr. Doe.

It turned out that he was a photographer who published coffee table books. He sent me a copy of his book with an apology, a request to be allowed to order, and a promise to behave. The customer service team and I agreed to give him a second chance. He became one of our best customers.

After that experience, firing customers became easier. If you decide to try it, please know that it rarely ends that way. Most customers go quietly in the night. Some shout out online. You have to be prepared for anything, but I remain an advocate of firing bad customers.

Start with a few rules:

  • Firing a customer is the last resort. Try to resolve issues first.
  • If you fail to deliver on your promise, fix it instead of firing the customer.
  • If customers are abusive, don’t require your CSR’s to listen. Allow them to terminate the call with a request for the customer to call back when calmer. If the abuse continues, consider termination.
  • Include everything in your decision from the lifetime value to the complaint history. The objective is to move your company forward.

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