COMPANY CULTURE

4 Reasons to Fire a Client

Sometimes walking away is worth millions of dollars in lost revenue.
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Firing a client will be one of the best things you will ever do for your business. Don't get me wrong; it's not something I like to do. And it's definitely not something I hope you ever have to do. After all, every time you fire a client, you're potentially taking away from your fiscal bottom line. But what it does for the rest of your business just may have you contemplating whether you really want (and need) that particular customer.

Here are four scenarios in which you may need to send a customer packing.

The Client Treats You Badly

Life is too short to be in business with people who treat you (and your employees) like second-class citizens. A customer that causes undue stress for you and your employees is setting you up to not only deliver sub-par service to them, but also to create collateral damage: how your employees view your leadership. We had a $2 million contract with a hospital system but our points of contact with it were not just bad people. They treated our staff like servants instead of like partners and I had two employees quit because the abuse was so bad. After visiting the client to investigate myself, I came back and asked our leadership if we should terminate the contract. After a 49 to 1 vote (the one vote in favor of keeping the client was the sales guy), we decided to end our relationship with them.  (Note: The client wound up refusing to let us out of the contract for its duration, but became a much better partner by the time the contract ran its course.) We still left them, but the willingness to put our people over this source of money got attention from my employees and generated an enormous amount of loyalty in our building. They knew that I put people before profit.

Doesn't Want to Pay Your Price

Your price is more than just the cost to your customer. It represents the value and quality of service you're promising as a provider, and hopefully, the dedication and investment you've put into your people. If you're marketing and conducting yourself as a premium provider (like we have) and your customer is constantly on the warpath about getting a lower price, then they're not respecting the value of what you're selling. If you're keeping your word on your product, there is no reason to back down from how you value it. If your customer wants it cheaper and faster, they just may want it from someone else. You can make that decision for them.

Disrupts Your Business and Culture

Sometimes a customer may not be bad, but will have another reason it needs to go. Unlike most generic call-handling facilities, in our healthcare business we respond to a pretty consistent volume of calls that allows us to maintain a stable workforce without high fluctuations in the number of employees we need. But in the past we used to take seasonal project work based around health plan enrollment that required us to train and onboard a relatively large amount of staff that we knew would only be with us for the short term. For a company built on culture, that constant ebb and flow was tough on our culture. But we didn't renew the project work (another million dollar revenue loss), and actually decided that we would no longer take any business that we didn't anticipate having long-term.  

Violates Your Core Values

You have a fundamental set of beliefs that drive your business. And if your clients don't share those values on some level, it will absolutely tear at the core of your company. We had another multi-million dollar client who at the beginning of our relationship was as dedicated to serving the customer as we were. But as they evolved, their priorities shifted from service to sales. And sales at all cost. They put us in an even more compromising position once they started providing a benefit to their customers (and charging for it) that the customer did not ask for. One of our core values is "always do the right thing," and supporting fraudulent practices just didn't fit the bill. We terminated the contract and gained a lot of credibility with our employees for not putting them into a morally ambiguous position (at best).  The letters I received from coworkers said it all when they thanked me for protecting them and doing the right thing for the business. 

What this all really boils down to is deciding who you are, what you value, and how you're going to conduct business. And sticking to it. While sending revenue down the river might seem like a decision that will slow your growth, it could be a much bigger expense to the company, and the people inside it to deviate from how you define yourself. You never know, a pink slip could just be the ticket to building a great company.

Last updated: Feb 1, 2012

PAUL SPIEGELMAN | Columnist | CEO of BerylHealth

Paul Spiegelman is the chief culture officer at Stericycle and founder and former CEO of BerylHealth. He also co-founded the Small Giants Community with Inc. editor-at-large Bo Burlingham. You can read more at PaulSpiegelman.com.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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