When Firing Your Customers Turns Profitable
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And here’s your host, Matt Hardy.
Today I want to talk about firing your customers.
Yup – you heard me. Firing your customers.
The better title is: “When Firing Your Customers Turns Profitable.”
From my days working in a small business, I can say that you meet all sorts of people.
The vast majority of them are great, but there always seem to be a few bad ones that really stand out.
I remember in one case, there was a guy who felt that no matter how busy we were, we needed to drop everything and do his job.
He didn’t ask us to do this – he demanded it and felt that we owed it to him.
The entitlement mentality was strong with this one.
And when he didn’t get his way, he morphed into a 2 year old child throwing a gross temper tantrum.
He’d yell, swear, whine and complain – all in a desperate attempt to get his way at any cost.
Then after he finished his tirade, he’d go on to say how his outburst really wasn’t his fault.
Depending on the day, it would be his customer’s fault, his ex-wife’s fault, his current girlfriend’s fault, his employee’s fault, the industry’s fault or our fault for how he was acting.
It was INSANE.
Sometimes it felt like he thought I was his shrink with all of the things he’d tell me.
At first, I was shocked at his level of total and complete unprofessionalism and wondered, “If he was like this at work, what would it be like to be around him during the rest of the day?”
Then I became desensitized to it and realized: it was just who he was. He was probably like this ALL DAY.
On top of all of this, he would – without fail – complain about the cost of the work.
And then he wouldn’t pay for about 4 months.
He would only pay for the last job when we refused to do any more work for him until he paid for the previous rush job we had done for him.
His excuse for not paying?
He said it wasn’t worth his time to write cheques for anything less than $20,000.
I might have given him the benefit of the doubt, except he drove a rusted out 1989 Nissan Pathfinder.
So, he wanted the job done fast, cheap and perfect.
“And yet, you can only have two.”
The guy was sooo wound up – with his eyes bulging out of his skill and veins popping out of his face like a roadmap – that it seemed like his heart was going to explode through his chest at any moment.
And I didn’t want to have to clean that up, so I always tried to hustle him out the door as soon as possible.
As his antics affected every different department of the business from accounting to project management and production, everyone dreaded the day he would come in with his next project.
You might think that in return for all of this he gave us a lot of business?
Well, if you thought that, unfortunately you’d be wrong.
His antics only contributed about $10,000 annually to our sales numbers – and the profit margin was only a fraction of that.
Soooooo, we fired him.
Yup, we simply had to let him go.
When you sat back and looked at all the wasted mental energy and time that was spent with him in comparison with the money it generated, it simply wasn’t worth it.
At some point, you’ve got to run a cost benefit analysis on your customers to determine the opportunity cost associated with doing business with them.
In this case, the time and energy spent trying to appease this high-maintenance customer would have been better spent prospecting for new customers or increasing the time and attention other customers received.
As a nice added benefit, when we parted ways with this customer, morale throughout the business improved.
A spontaneous celebration almost burst out among the employees when they heard that we were not going to be working with this client.
Sure, it may be a controversial approach, but if you spend your life “suffering fools”, your quality of life will decline rapidly.
It’s the 80/20 rule where 20% of your bad customers can take up to 80% of your time and mental energy.
And the more you give them the more they continue to demand and feel that they are entitled to it.
I know some people feel that it’s criminal or ungrateful to turn away work, but let’s cut to the chase.
If you aren’t happy dealing with them and they aren’t happy dealing with you, then they need to find someone that is happy working with them.
Now, if they account for a huge portion of your bottom line, you need to weigh the costs of cutting them loose.
But even if you were to make all the money in the world and lose your sanity & happiness in the process…would it be worth it?
Remember – part of the reason why we started our own business was to IMPROVE our quality of life, not just make more money.
And a big part of it is working with those you ENJOY working with – not trying to run yourself ragged working with all the idiots you can find just to fill your schedule faster.
Here’s to improving the bottom line of your business by firing bad customers so you can make room for INCREDIBLE customers!
If you would like to learn how to get an online paycheck doing something you love, we can help you get started for free.
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I hope you got something out of this podcast.
An idea you can use.
A different thought or viewpoint.
Or maybe you found it mildly amusing.
At any rate, can you refer this podcast to one other person you think might find it entertaining or useful?
Because I want to help as many people as I can, in as short a time as possible.
Here’s something to listen to while you think about it…
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