Advice for Small Business Owners

Firing Customers

By Elie Kochman on January 29th, 2010

Several months ago, I wrote an article The Customer is Always Right… Sometimes in which I discussed many of the reasons a business should be listening and obeying its customers, even when it seems to go contrary to what the business stands for. However, there are times when not only is it inappropriate to listen to the customer, you should also get rid of that customer as fast as possible.

The first example is where you sell a product, and on occasion, will be asked for a refund. While you need to have a clear refund policy, you also need to know when to give in and issue the refund anyhow. A customer who won’t be happy, and is out of pocket because of your business (whether reasonable or not) is capable of generating a lot of negative attention for your business. Issuing the refund to get the customer to leave you alone will often not only rid you of an annoying customer, but also generate positive feedback for good customer service.

OK, so the first example wasn’t really about firing customers, but about having good customer service. Here’s another example.

If you do work for a customer, and they don’t pay – get rid of them if you can. A good customer who can’t pay will be upfront with you about their situation, and try to arrange alternate payment schedules. A bad customer will keep taking work, thereby driving up their balance, and not mention that they cannot pay the bill. The problem with such customers is that many of them try to justify their position and explain that they don’t actually owe you the money. In other cases, they will ask for special treatment to get their bill reduced.

It is not in your best interests to do either. When you are out of pocket on a customer, and realize that you will have difficulty collecting, you need to stop. You need to stop working for the client, you need to stop arguing with them (and yes, such situations usually end up with grudge matches, often held through long sequences of e-mails) and you need to just issue a notice that payment is due.

Be polite. Tell the client that you will not be doing any more work for them until full payment is received. Give the client any outstanding material of theirs that they may not have (for example, if you’ve collected data as part of the project, send them the data – even if that’s not part of the contract). Tell them when you expect payment by.Tell them what’s going to happen if they don’t pay (for example, I’ll sue you for the shirt off your back!).

Here’s another example where it’s wise to get rid of a customer.

Sometimes the issue is not that the client can’t or won’t pay, but that the work being done does not match the work requested originally. In that case, if discussing with the client to resolve the differences doesn’t improve the situation, you may want to stop the project. If you do, then you can try referring them to someone else who can better serve their needs. As an example, if you run a business doing SEO and SEM work, but the project turns out to be website development, then you may want to refer them to a web development business.

Sure, you may lose the project as a result, even the parts that were your forte, but at the end of the day, you’ll have less aggravation as a result.