Repercussions of firing bad customers?

[WJS]

Hi guys,

I have always believed that customers are not always right and when bad customers reveal themselves we should be quick to show them the doors. However throughout my working years I've not been able to do that. The companies that I worked with (some are MNCs) believe strongly that as long as the customers pay, they are good customers. Nevermind all the precious time wasted dealing with their insane demands, verbal abuses and low ROI. We are told to suck it and put on the brightest smiles and serve them because "they're the ones paying our salaries". Argh!

From the perspective of an employee, the repercussions of firing bad customers are obvious - the management will come after you for losing customers. But what about as a business owner? Have you faced any repercussions for showing the doors to terrible customers (like they wreck havoc to your business and cost you major losses etc)? Please share your stories on this matter and how you deal with them. Thanks!

 

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[silentownage001]

My dad is a CPA and equity partner at his firm. They got rid of bad clients over time. They didn't outright fire them. They simply raised the price for those clients. If the clients paid up at least it's more worth it. Otherwise they leave and they are no longer a headache.

Outright firing a client is risky because it could harm your reputation. And as far as I know they haven't suffered from it due to how they handled it.

 

[WJS]

My dad is a CPA and equity partner at his firm. They got rid of bad clients over time. They didn't outright fire them. They simply raised the price for those clients. If the clients paid up at least it's more worth it. Otherwise they leave and they are no longer a headache.

Outright firing a client is risky because it could harm your reputation. And as far as I know they haven't suffered from it due to how they handled it.

that's a great way to get rid of bad customers. Thanks for sharing!

 

[Guest3722A]

Hi guys,

I have always believed that customers are not always right and when bad customers reveal themselves we should be quick to show them the doors. However throughout my working years I've not been able to do that. The companies that I worked with (some are MNCs) believe strongly that as long as the customers pay, they are good customers. Nevermind all the precious time wasted dealing with their insane demands, verbal abuses and low ROI. We are told to suck it and put on the brightest smiles and serve them because "they're the ones paying our salaries". Argh!

From the perspective of an employee, the repercussions of firing bad customers are obvious - the management will come after you for losing customers. But what about as a business owner? Have you faced any repercussions for showing the doors to terrible customers (like they wreck havoc to your business and cost you major losses etc)? Please share your stories on this matter and how you deal with them. Thanks!

Another thing to keep in mind with this is if the customer comes off as abrasive, but it's obvious they refer you to others, they may not necessarily be bad customers. Getting down to the root of why they seem to be bad might shift perception.

 

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[Andy Black]

Some advice I liked:

1) Price it so you’ll be delighted if they accept.

2) Get the *client* to say “No”.

3) There’s nothing worse than being busy for a bad client.


So, as @silentownage001 said, raise prices and let them fire themselves. If they don’t, then price it so you’re delighted to keep them on.

Someone I heard loves refunding with glee if the client is a pita. Even if they’ve done work, they just refund in full and say good luck. The ultimate see-ya.



On the flip-side, I will drop prices to work with people I like.

 

[minivanman]

Here is how I did it. Let's say we charged $120 to clean a house. In order to figure out a higher price I would figure out at what point would it make sense for us to continue cleaning if they say YES we will pay the higher price. If we tell them I was wrong when I bid their house and now we have to raise them to $180 and they take it..... it atleast makes it worth it to put up with them and I'd always pay the girl cleaning a bonus if that customer was a pita (pain in the a$$). Lots of them did pay the higher price because we had such a good system. That's how I learned that I must raise it enough so it would almost be worth it to deal with them because if I raised them to $140.... they would always take it because we were worth it.

By the way, all the girls got daily sheets and if a customer was a pain in the a$$, I had a special place on the sheet where I would always put.... pita.... that way they knew ahead of time.

I don't think I ever had repercussions for this. I probably did come right out and fire a few customers come to think of it but that was back in the day before social media and that makes all the difference nowadays.

 

[MJ DeMarco]

I remember one customer I had in CALI had a bill that amounted to $9/mo. And yet, she caused hours and hours of heartache with my customer service people. In the end, I figured out she was compensating us about 15 cents per hour worth of work.

I finally just cancelled her account and said, "Sorry, but I don't think our service is for you."

Likewise, when I ban people from the forum, I'm firing customers. "Sorry, but I don't think our forum is for you."

 

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[becks22]

This thread came at the perfect time. I have a client that has been giving me so many problems lately. Every day, I get an 'overdue' notice on things that are not overdue and have been sent. Sometimes 5 or 6 times. The other day I got an email asking on the status of a request. I told her it was updated on the 1st and I sent her an attachment (2 pages) with the results from the 1st. Next morning, I got a phone call from a manger saying that my email was incorrect and the results she wanted were not on the PDF I sent. I told her the results she wanted were on the 2nd page-- apparently they were to stupid to scroll to page 2!

I bill them for less than 2500 per year. I have customers I bill for 10K a month that cause less problems. Since this happens all the time, I think I might fire them. Not worth the headache.

 

[MidwestLandlord]

A lot of times these policies aren't to keep bad customers around but to protect the company against bad employees that can't make good judgement calls.

My definition of a bad customer and my employees definition of a bad customer are entirely different...usually.

The larger the company the more likely they are to have blankets policies that don't allow for judgement calls.

 

[CareCPA]

A lot of times these policies aren't to keep bad customers around but to protect the company against bad employees that can't make good judgement calls.

My definition of a bad customer and my employees definition of a bad customer are entirely different...usually.

The larger the company the more likely they are to have blankets policies that don't allow for judgement calls.

This is the benefit of being a one-man (actually one-family) show. I can make the decisions on who my bad clients are.
My mentality is the same as mentioned above - bill them more. Either I'll finally get enough to make it worth dealing with them, or they'll leave. Win-win.

 

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[Andy Black]

This is the benefit of being a one-man (actually one-family) show. I can make the decisions on who my bad clients are.
My mentality is the same as mentioned above - bill them more. Either I'll finally get enough to make it worth dealing with them, or they'll leave. Win-win.

I was going to say this too. One of the benefits of running my own business is I get to choose the type of clients I want, as well as build the type of business I want.


I did hear of one large business that would get their employees to nominate which clients to fire, and they'd cull the bottom 10% of clients. I hope it's not just an urban myth...

 

[Duane]

I just started dealing with these kinds of clients. I just raise my prices. If they are a headache, I charge them for every little thing they do to waste my time.

20% of your clients causes 80% of your headaches.

If clients are constantly calling me everyday for free advice, I kindly let them know we charge consultation fees. This usually only happens with clients that we did 1 job for them, then from there they call us to give over the phone help with all the small everyday issues they have. I will tell them the last few calls I have waived the consultation fees out of generosity, but next call will be $X/minute or they can sign up on our program for $X/month and we will handle all those issues for them.

If they want us to come out and check this or that, every time we come out it's a call-out fee or X dollars for the work we performed.

I will increase rates for current services on PITA clients as well. Profit off the extra work, or they will go and annoy somebody else. Don't ever work for free, your time is valuable.



I used to just collect checks/cash in the mail from people for my companies services, but some people would wait months to pay me. So I took the client making payments out of the equation unless they are an old client that I trust.

All new clients, we collect their credit card information before we do any work for them and let them know after they give us approval for the work, we will charge their credit card 3-4 days after the work has been completed. That way we don't need to wait for them to approve us to charge the card and it also gives enough time for them to receive the work and are happy with it before we charge.

 

[WJK]

...But what about as a business owner? Have you faced any repercussions for showing the doors to terrible customers (like they wreck havoc to your business and cost you major losses etc)? Please share your stories on this matter and how you deal with them. Thanks!

I have fired many clients. For many years, I was an expert witness and I did litigation support in real estate matters -- and a commercial real estate appraising in S. California. It enhanced my reputation rather than hurting it.

Here's my thought on the matter -- bad clients take up 80% of your time in exchange for a tiny percentage of one's income. I believe in skimming the cream. I made a list of my best clients, and I systematically fired the rest. That way, I gave my best service, and all of my time, to those top clients. My income soared and my stress level went down.

I vetted new clients. I only took on new clients that I thought would fit into my cozy little group. I had a waiting list. Existing clients would call and ask if I had time to take on their projects.
So, I retired at 49 years old...

Now, most of my income is Passive Income from real estate. I do my own management and I use the same type of system. When a tenant gives me problems that I can't solve, I simply give them a notice to move. If they don't comply, I evict them. I generally turn down several applicants before I fill a vacancy. I'd rather have that vacancy rather than an unqualified or a bad tenant. Yes, it's rare, but I do make mistakes at times -- those "mistakes" get evicted quickly.

Since I have that history, a lot of the bad guys in our little town don't bother to apply for one of my rentals. They take great pains to not even come on my property. My tenants tell me that I'm tough, but fair. I like that reputation.

 

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[silentownage001]

I did hear of one large business that would get their employees to nominate which clients to fire, and they'd cull the bottom 10% of clients. I hope it's not just an urban myth...

Reminds me of what Welch did at GE with firing I think the bottom 20% of employees each year. Something along those lines. Anyway, it might work in the beginning if there's a lot of waste, but eventually you're getting rid of good people. Someone's going to be in the bottom. That doesn't necessarily mean they're bad.

 

[Flybye]

Im going to use the one word that is the biggest problem with clients/customers.

Sheep

A customer will not get what they want, leave a bad review, the sheep will read the review, and now we have an uncertainty of how this review(s) will affect future business. Some dont even read the reviews. They look at the star rating and move on. I have a mountain of patience and always keep my composure. Even if it means going against policy, sometimes you really need to bend just a bit to comfort them on their way out. Even if they couldnt get their way, they could never say I mistreated them in anyway.

 

[fishingpromoter]

Read the 80/20 principal and apply the thinking to your business.

I had 23 clients in my last business and was billing a total of about $80k per month.

We had 3 clients that accounted for 60-70% of profits.

We had 4 clients that took up about 70-80% of our customer service time. There was no cross over.

The 4 "bad" clients brought in less than 10% of our net profit, and this is without accounting for the extra time to service them and the trouble they caused.

I wrote each one and told them we were focusing on different business goals and we're no longer the best option for their needs. I gave them all recommendations to my top competitor.

Three of them took it great, one of them called me and begged me to keep him on, I declined.

Our profit, team morale, and productivity soared!

I fire "bad" clients quickly now.

Sent from my ONEPLUS A5000 using Tapatalk

 

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[Real Deal Denver]

I have fired many clients. For many years, I was an expert witness and I did litigation support in real estate matters -- and a commercial real estate appraising in S. California. It enhanced my reputation rather than hurting it.

As an appraiser, I have also fired many clients. If you were in the business today WJK, you would be appalled. I didn't think things could get worse, and I'm very sorry to say that I was wrong. They just removed the college degree credit that was required to be an appraiser, so they hope to now attract more people to do this work. They (the AQB in Washington) found out that there are lots of alternatives out there to college grads that are much more desireable than appraising is. Of course, appraisers know this, but who would ever think of asking them? I fire the PITA clients on a regular basis. Life is too short to play time wasting games.

We had 4 clients that took up about 70-80% of our customer service time. There was no cross over.

The 4 "bad" clients brought in less than 10% of our net profit, and this is without accounting for the extra time to service them and the trouble they caused.

THIS is the key to running a successful business. Throwing the dead weight overboard and skipping across the waves! Or, tow every self-entitled slob that expects red carpet service and abuses your staff because they spend a buck fifty. The new rule of business is, no, the customer is not always right.

Our profit, team morale, and productivity soared!

I've never heard anyone regret firing their PITA customers, and I've know a lot of people that have done this - myself included.

Read the 80/20 principal and apply the thinking to your business.

 

[MJ DeMarco]

I've never heard anyone regret firing their PITA customers, and I've know a lot of people that have done this - myself included.

No regrets, but many times the customers don't take it well and will create an automatic "hater" for you and/or your company. I remember said company above causing us problems after we fired her, bad mouthing us. Likewise, In the case of this forum, banning people for various reasons (trolling, self-promotion) creates an automatic hater that will disparage anything you do when given the chance.