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REAL ISSUES. REAL ANSWERS: Firing Customers

Question 2
What does it take for your company to decide to “fire” a customer, and how does your company handle the “firing” process?

Comments
“Almost always non-payment. We close the account for new purchases (cash only) and rarely reopen after we are paid.”


“The decision to ‘fire’ is made if a customer becomes unreasonably demanding, is impossible to satisfy, and costs my company money on a consistent basis to do business with them. The easiest way to ‘fire’ the
customer is to start quoting them higher prices. Usually that does the trick. If not, we will tell the customer directly that we will not sell them a particular product(s) because of the problems historically. We also tell them, no refunds, no returns. If customer starts to withhold payment (or has in the past), we put them on COD terms.”

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“While there is no easily definable metric for the ‘fire the customer’ decision-making process, perhaps a simple Return-on-Investment calculation would work: is the net profit worth the hassle and distraction of dealing with a difficult customer?”


“With a candid conversation. It can be done professionally and respectfully so that you are not necessarily creating an enemy at the same time. You may just bring to light the reason for firing your customer that they did not realize. They may choose to correct the issue and come back as a better customer.”


“I’m a believer in not ‘burning a bridge.’ I just raise the prices until they decide to leave. That way there is no arguing or bad blood. You never know when they may change their ways or when you’ll need them in the future.”

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“Too many returns, too many defect issues, low margin, high maintenance.”


“Always do it gracefully. This is something that happens once every few years.”


“If the customer is so demanding that there is no making them happy and they beat us to death on price. Another deciding factor is if the customer is a poor payer—if they consistently are out 120 days.”

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“At the top of the list is lying. You need a customer to be trustworthy with respect to contracts, special orders, product damage, etc. If they lie to you once, you never know when they will do it again.”


“Before we fire a customer, we attempt to negotiate a remedy for any problems. If we cannot come to an equitable solution then we cease to sell to our now former customer. Criteria for firing usually include a combination of the following: Poor accounts receivable performance, excessive returns, overly demanding customer service mandates, and an unwillingness to work towards a solution.”


“We price ourselves out of the game.”

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