Hint: Use 'ruthless compassion' when firing customers
A contractor came up to me after my presentation at the ACCA meeting in Albuquerque NM. During my session I mentioned that sometimes you have to fire customers. He said he was working for a large mechanical contractor and he participated in the procedure where each year that contractor decides which customers to fire.
At the end of every fiscal year, all of this company’s managers get together to decide whether they are going to keep each customer for the next year. They look at each customer’s:
- Payment record;
- Whether they were easy to work with or created unreasonable demands on the contractor’s employees;
- How they treated technicians; and
- How much time the contractor spent resolving complaints which, in their opinion, were not their fault.
This company fired about 5% of its customers each year. As you would guess, they initially thought that by firing the customers, they would lose business.
Guess againActually, business increased because the contractor had the time to spend with good customers who, from the contractor’s perspective, deserved the time. The good customers then gave them more work, which increased sales.
There were times when the technicians volunteered to fire the customers. However, it was the responsibility of managers to fire the customers “with ruthless compassion.”
About two weeks ago, the Wall Street Journal finally had an article about firing customers. It was the first time I have ever publicly seen a major business publication openly admit that firing customers is sometimes necessary.
The idea that “The customer is always right” is still important. However, how your employees are treated is also a consideration when choosing to work for a customer or fire them.
Obviously if a customer doesn’t pay you, you will fire that customer. However, there are other reasons to fire them.
Tech safety is paramountIf safety is an issue, you don’t want your technicians in a customer’s home or office.
Getting OSHA involved might be overkill. However, if there is a real safety issue, you’ve made the customer aware of it, and s/he still refuses to do something about it, this might be the time that a little government intervention is good. After all, you don’t want your employees getting hurt; nor do you want the employees of your competition or of that company getting hurt.
For those of you who think that there aren’t safety concerns with residential customers, read this:
A contractor I worked with in Missouri had a technician go to a customer’s home. She obviously had many dogs and cats since when the technician went to the basement to check out the furnace, he was bitten by hundreds, if not thousands, of fleas. The tech went to the emergency room — and this contractor didn’t go back to that customer’s home.
Another time to fire a customer with ruthless compassion is if that customer turns out to use your company to keep other companies honest. For example, if a potential customer asks you to bid on a job, and you spend the time to put together a price for that customer, make a note of who got the job if you lost it.
The second time the same potential customer asks you to bid and you don’t get the job, you should get suspicious if the same company won that bid too.
The third time you are asked, just decline to bid.
As a vendor to a customer, you deserve to be treated with respect. Obviously, your employees need to treat the customer with the same respect.
It’s likely that techs and installers treat customers with more respect than the customers treat them.
If more than one of your techs constantly complains about going to a specific customer’s location, find out why. If it is only one employee, there may be a personality conflict. However, if your most easy-going tech is having problems dealing with this customer, this might be a clue to fire the customer with ruthless compassion.
The overwhelming majority of the time, you want to keep your customers happy and work hard to do it. But there are those few times that you can’t please the customer, he won’t pay his bill, there is a safety issue, or he wants to use your bid to keep someone else honest.
In these cases, your best bet is to fire that customer — with ruthless compassion.
Sidebar: And the definition is ...So what is the definition of ruthless compassion?
- Ruthless: No matter what the customer does (cry, scream, yell, or complain), they are fired. Of course, most of them will tell you they are your best customer.
- Compassion: They are to be fired in the nicest possible manner with an explanation that in no way points to them as a problem.
For example, you can say, “We are re-focusing on the large industrial business. We will no longer service (whatever their business, etc.).” Note: This is done at renewal time if at all possible, or when they do not owe you money.
The bottom line? It’s okay, and sometimes necessary, to fire a customer. Just do it with ruthless compassion.