Fire Your Worst Customers

March 8, 2010

There’s a new concept I’ve been hearing lately: firing your worst customers. Maybe the concept isn’t so new, but it’s certainly new to me. I’ve heard Seth Godin discuss the concept multiple times and recently read Timothy Ferriss’s ideas on the matter in The 4-Hour Workweek.

Initially, the idea sounds crazy.

Fire your worst customers? Are you serious? How can you say which customers are your worst? They’re all bad, right? But the customer’s always right, you know…

Except they’re not. You know this to be true, and in reality, they know it to be true as well. Customers always have a way of expecting the impossible. Customers try to get the most value at the lowest possible price while yelling at you and embarrassing you and expecting you to take it and smile and say, “Thank you, sir! May I have another!”

We’ve all been taught that when faced with a customer like this, there is only one option: kiss ass and make everything okay. The only problem is that when you take this approach, you will forever be kissing ass. And you’ll be kissing the asses of the most ungrateful people, because you gave them something for nothing, all the while taking time and effort away from the customers who deserve it.

Ferriss explains his logic for firing customers with a variation of the 80/20 rule. In many cases, 80% of your revenue comes from 20% of your customers. Yet 95% of your time and effort is wasted on the majority of your customers who provide a very small portion of your revenue. When you think about it like this, this is not the best customer service practice.

When you deal with customers who haggle and beat you down, it’s hard to be at your best for those customers who are truly a delight to do business with. You suffer. And your best customers suffer.

Your bad customers suffer as well. If you can’t make them happy without bending over backwards, then you’re obviously not the right provider for them. Perhaps there’s someone out there they can better mesh with and develop great business relations with. And if there’s no one like that for them, then maybe the customer needs to take a good look in the mirror and think about changing his business practices.

What are your thoughts on firing customers? Do you have experience doing this? I would love to hear from you.