Showing Bad Customers the Door
"You're fired!" Through his show The Apprentice, Donald Trump has turned this phrase into an instantly recognizable reminder of the perils of not measuring up. In 60 short minutes, we see the lessons of business in their most brutal form: Play nice with the team, add value, pull your own weight, be honest--or be thrown out. But what happens when it's not your employees who aren't following the rules, but your customers?
Conventional wisdom says "the customer is always right"; entrepreneurial need often compels you to take any client that pays. Living by these beliefs can cause you to overlook or excuse a customer's bad behavior, but when your business begins to suffer, it's time to take a page from Trump's playbook.
Just as The Apprentice shows us that there are certain personalities that are born to cause trouble (example: Omarosa, from season one), there are also specific types of clients that will inevitably create problems for your company. And though "the Donald" has the luxury of being blunt when letting an apprentice go, a customer must be handled with more finesse.
Following is a guide to firing those who pay you, including the types of clients to watch out for and some subtle (or not-so-subtle) tactics for letting them go:
The Bad Seed
This is the client that sucks up the resources of your company and spreads negative energy like a cancer. They are the ones that refuse to follow your company's procedures despite repeated requests; the people who buy regularly from you but just aren't satisfied with the product or service you offer. Despite repeated attempts to please them and rectify their unhappiness, the bad seed customer constantly complains that you're not meeting their expectations.
Karen Northrup, founder of Corefino, a Sunnyvale, CA-based firm that provides outsourced accounting and finance for emerging companies, recently found herself with a bad-seed client. Karen recognized that her client's refusal to follow her firm's internal procedures was not only killing employee morale but also delaying growth, since valuable resources were being diverted to manage the situation.
Advice for firing a bad seed? Don't renew their contracts.
These are the customers that through inexperience or outright naiveté have unrealistic expectations about your business. It is usually the first time the toddler client has ever worked with a company in your field, and its lack of knowledge about your line of work means that you bear the brunt of its growing pains.
A number of years ago Nina Truglio, head of Manhasset, NY-based NF Architectural Designs, found herself with a couple of toddler clients. Inexperienced when it came to working with architects, they demanded unrealistic turnaround times, constant project updates or were unable to make decisions, throwing construction deadlines into disarray. These behaviors caused the toddler clients to abuse the time of Nina's office staff, thereby straining her company's resources.
Advice for firing a toddler? Raise your prices.
The narcissist takes the motto "the customer comes first" to new levels. Narcissists are the bottomless pit clients who have no idea how their behavior affects others, and frankly don't care. The narcissist client operates out of the belief system that its requirements are the only ones that matter, and it gets ugly when you don't immediately satisfy its needs.
Helene Stone, founder of the computer supply company DataLink, found herself dealing with a narcissist. This customer threatened to sue her company if she didn't replace $200,000 worth of equipment it had ordered six months earlier, ignoring the fact that an independent consultant had said that the equipment wasn't defective. Dealing with the demands of this client cost Helene's organization thousands of dollars in out-of-pocket costs and man-hours before the situation was finally resolved.
Advice for firing a narcissist? Be blunt that it's better for you to part ways.
This is the client that asks you to lie, cheat, or otherwise do something illegal to get what it wants. The customer may want you to recognize inflated revenues, invoice a supplier a higher amount and "rebate" the difference back to it, or waive sales tax on a purchase by shipping an empty box out-of-state. This customer doesn't care what the law says--it wants you to find a way around the rules.Sharon Emek of CBS Insurance found herself in this situation when a customer asked her to lie on his insurance application and give him a kickback. Unwilling to enter the ranks of felons herself to fulfill his demand, she refused his request and immediately dropped his business.
Advice for firing a felon? Let the client go immediately, in writing when necessary. Make sure you document the reason in your files.
To run a successful business, it is important to be able to fire even your biggest customer if its demands pose a threat to your business. But the most essential take-away from The Apprentice on this topic is this: By cleaning house upfront and keeping only the best candidates, Trump shows us that the best strategy of all is to avoid letting problem customers become clients in the first place. In other words, fire before you hire!