How To Fire A Customer

The peaceful ambiance of the lobby of the J.W. Marriott hotel in Washington, DC, was rudely punctuated by the crude confrontation of a guest who shot profanities point blank at the front desk clerk. Over my right shoulder swiftly came a man on a mission. He walked straight up to the guest and demanded he immediately leave the hotel.

"And who the hell are you?" the guest responded, continuing his "take no prisoners" demeanor. He was shocked when the man replied, "My name is on the front door!" It was CEO Bill Marriott, Jr. And he was convincingly making the critical point that his associates were to be firmly protected against a customer who had earned the right to be fired.

At what point do the pluses outweigh the minuses for bidding farewell to a customer? The price of saying "adios" generally includes the immediate loss of revenue and the potential of negative word of mouth. In most cases, the rewards from customer firings won't be financial — at least not in the short run. The payoff comes when you replace a fired customer with one easier to do business with, that is, one who does not rob your organization of monetary resources and your employees’ time and passion.

Why Fire a Customer

Customers should be encouraged to go elsewhere for one of three reasons: they're costing you too much economically, too much emotionally, or they are violating a key value of your organization. Let’s examine each reason in detail.

Economic costs mean profit —ensuring your revenues adequately exceed expenses over time. There is always an investment in acquiring customers through advertising, marketing, sales, and solicitation expenses. If there is insufficient return on that initial outlay, you will want to rethink whether a continued relationship makes financial sense. Where you draw the line depends on your tolerance for red ink.

Emotional costs involve the wear on your frontline. Some customers are so abusive they damage your employees' self-esteem or everyday resilience depriving you of enthusiastic people eager to effectively serve more valuable customers. If your employees perpetually complain about dealing with a particularly abrasive or time-stealing customer, it should be a wake-up call and a problem worthy of your attention?

The final reason to fire a customer is the clear and obvious violation of a key organizational value. This goes beyond morality or ethics infractions. Most ethical infractions are cut and dried. It is the more nebulous values-based scenarios that are tougher to call. For example, if your reputation is built on responsiveness, and you have a particular supplier whose chronic lateness, despite warnings and second chances, is causing severe slowdowns to your operation, it might warrant parting ways.

Whatever the conditions, ensure you have exhausted other options before cutting the customer cord. Do your homework, including talking with frontline associates who have firsthand experience with the customer. Their perspectives not only will ensure your due diligence is through, they may provide input that helps shape your firing strategy. In some cases, extra effort can still "save" profitable but challenging customers on the verge of being fired.

How to Fire a Customer

Firing a customer is somewhat like disarming a bomb—"very carefully." The goal is subduing animosity without scattering the aftermath. Sometimes, customers are so incensed at losing their favorite punching bag, they can quickly move from anger to vindictiveness, seeking opportunities to punish. You can limit your chances of backlash by handling firings in cool-headed but sensitive ways.

When firing for economic reasons

Firing for economic or bottom-line causes should always be rational and never emotional. Firings with solid reasoning include up-front motives and clearly spoken purposes. Emphasize how a continued relationship will negatively impact your business, not how parting ways will make your long-suffering staff feel they just won the sweepstakes. It might sound like: "Mr. Jones, we are appreciative of your business for the last year. However, we have chosen to put our scarce resources in a different direction and will not be soliciting your business in the near future. If you want to continue our relationship, it will need to be at a (higher price, lower cost, greater volume, etc.)."

The objective is to cordially communicate you are unable to pursue a lose-win relationship, particularly when the financial health of your business is at risk and you see little likelihood of it changing. You'll want to be crystal clear on your intent and speak with unshakable conviction.

When firing for emotional or values-related reasons

As defensive and protective as you may feel in these emotionally charged firing situations, your rage will only fuel the customer's anger. Again, focus on providing a logical explanation for the reasons a continued relationship will harm your business. Your modus operandi should include an explanation of how harsh treatment of your associates diminishes their productivity and/or how a difficult relationship steals time from other deserving customers.

If a customer firing includes defending your associates or values, it should also firmly communicate, "Stop…we do not tolerate your actions here." The goal is to signal the customer they are unwelcome if their unwanted behavior persists. "Mrs. Smith, the morale of our associates is very important to their well-being and our organization's success. And, while we are by no means perfect, our employees do not need to be subjected to actions that demean them as people. I must ask you to leave." Keep in mind, the objective is not to send a troublesome customer on a guilt trip. It is to clearly give the facts and rationale for why continuing the relationship is not in the best interests of your organization.

Firing any customer might seem like heresy in today's highly-competitive markets, where many companies fight tooth and nail—and often drain marketing or advertising budgets—just to acquire a new customer. Yet bravely ending relationships with customers who continually trash your frontline people, or who over time siphon more funds from your bottom line than they return sends a message about what you stand for as an organization.

There is sometimes good in goodbye. The customers you will want back after exit are those who come to respect your decision, even if they momentarily disagree with it. Customers generally admire organizations that stand up for what they believe. Ultimate respect, however, is only probable if the parting is done with character, compassion, and clarity.