Don't Be Afraid To Give Problem Customers The Boot
Q: In a recent column you made the point that the customer is
always right, which I agree with. However, in the same column
you also said that it is sometimes necessary give problem
customers the boot. If the customer is always right, at what
point do you think they become so problematic that you should
stop doing business with them? -- Gary M.
A: That column brought a number of emails similar to yours,
Gary, requesting that I clarify the line between "the customer
is always right" and "sometimes you have to give a customer the
boot." Here's the bottom line: if you, as a business owner or
service provider, are willing to take a customer's money in
exchange for providing him with goods or services, then the
customer has what I call "the right of expectation." This means
that the customer has the right to expect you to deliver
everything promised in the transaction between you. For example,
if you own a restaurant the customer has the right to expect
that their meal will be prepared and served to their
satisfaction. If you are a dry cleaner the customer has the
right to expect that you will launder their clothes without
returning them in shreds. If are hired to perform a service the
customer has the right to expect that the service will be
provided to their satisfaction within the terms of the defined
task.
As the business owner, it is your responsibility to meet the
customer's expectations and provide good customer service. Even
if your business does not involve a formal contract that spells
out to the letter what should be expected, there is generally a
clear understanding of what the customer expects and what you
are willing to deliver. If you back peddle on your end of the
bargain, let's say by serving a bad meal or losing a customer's
laundry and refusing to make things right, then you are guilty
of not meeting the expectations of your customer and thereby are
guilty of providing bad customer service.
Unfortunately not every entrepreneur puts emphasis on delivering
good customer service. They are in it for the money and damn the
customer if they have a problem. Such entrepreneurs were the
topic of the column you mentioned, the point of which was, if
you make a habit of not meeting your customer's expectations,
you will not be in business for long.
Now let's look at the flipside. Just as the customer has the
right to expect that he will get his money's worth when doing
business with you, you have the right to expect that your
customer will not demand things that are beyond the scope of
realistic expectations (or the contract). If a customer orders
hamburger, he shouldn't expect it to taste like steak unless you
have advertised it as such. If a customer brings you a cotton
shirt to launder he should not expect a silk shirt in return.
It's when the customer's expectations get out of sync with what
should realistically be expected that you will have problems.
We have all had customers who expected far more than was their
due: customers who were unreasonable, overly-demanding,
condescending, hard to please and sometimes, even dishonest in
their dealings with you. When a customer's reasonable
expectations become unreasonable demands you must decide whether
or not that customer is doing more harm to your business than
good.
So here is the line in the sand between the "customer is always
right" and "sometimes you have to give the customer the boot" -
if a customer crosses the line from being an asset to being a
detriment to your business, you should consider giving that
customer the boot.
This is easier said than done if that customer constitutes a
large chunk of your revenue, but even then you have to consider
what your business might be like if that problem customer was
not in the picture. Would the time you spend dealing with the
problem customer be better spent on sales calls that might
expand your client base and grow your business (a business that
is dependent on one client is a house of cards)? Would your
employees be happier not having to deal with this customer?
Would you sleep better nights knowing that you don't have a
dozen phone messages from him on your desk every morning?
The easiest way to decide how much trouble a customer is worth
is to look at the amount of revenue this customer brings in
versus the time and expense of meeting his expectations. If this
customer pays you $1,000 a month, but costs you $2,000 in time
spent keeping them happy, this customer is actually costing you
money. Just a handful of these kinds of customers will put you
out of business fast..
For example, I once had a client whose business was worth
several thousand dollars a year to my software company's bottom
line. However, this client proved to be problematic from the
second the contract was signed. He and his employees called our
office ten times a day and dominated my tech support team's time
with IT problems that were not even related to the service we
were contracted to provide. It got so bad that my employees
cringed every time the phone rang because they were afraid it
was this client calling again.
When the time came to renew this client's contract it wasn't
hard for me to decide to give him the boot. I simply did the
math. This client had added thousands of dollars to my company's
bottom line, but had cost me at least that much in handholding
and support, not to mention the mental anguish he had caused my
employees. I opted not to renew the contract and politely
invited the client to take his business elsewhere.
The perfect customer relationship is win/win, meaning that your
customer benefits from your product or service and your company
prospers by delivering the product or service. The relationship
must be built on mutual respect and honest intention. It is when
the relationship becomes win/lose that you must be ready to take
action. If the customer thinks he can hold you over a barrel and
get more out of you than he has paid for, the relationship and
your business suffer for it.
Look, you don't need me to hit you in the head with a stupid
stick on this one. You know who your problem customers are and
you know that you will eventually have to deal with them. You
have to consider the value of every customer in the long run,
not just their value today.
Is the customer making demands that are beyond the scope of what
should be reasonably expected? If the customer constantly
demands more than they are entitled to and gets angry when you
refuse to comply, consider giving them the boot.
Is the customer taking advantage of your good graces? Some
customers may mistake your willingness to please for weakness
and try to wring more out of your relationship than they should.
If the customer has a record of trying to take advantage of you
and plays every angle to get more from you than they deserve,
consider giving them the boot.
Is this customer a threat to your reputation? Let's face it;
there is nothing more harmful to your reputation than a
dissatisfied customer with a big mouth. And it does not matter
who is at fault in the disagreement, a disgruntled customer is
going to bad mouth you in the end - especially if they were at
fault. If you suspect a customer might be the sort to one day
air dirty laundry in public, consider giving them the boot.
Does the customer pay in a timely manner? If you have a customer
that is consistently 90 to 120 days late in paying even when
your contract clearly outlines your payment terms to be
otherwise, it may be indicative of other problems to come. If
you feel the client is a payment risk, consider giving them the
boot.
What's the best way to avoid a customer booting? The best answer
is to have a contract that clearly spells out the specifics of
the relationship. The contracts I use in my various businesses
clearly define the services to be provided, the cost of those
services, and the timeline and terms under which those services
will be rendered. If there is a deviation from the contract, we
write an addendum that details any changes and their effect on
the contract. Do I still have to give some customers the boot?
You bet, but not very often. It's hard for a customer to cry
foul when everything is there in black and white right above his
signature.
What if your business doesn't use contracts? Then hang a poster
in your shop or have a hand-out that clearly defines what your
customer can expect from your business and then deliver what you
promise. If you have a poster or hand-out that clearly outlines
your services, your rates, scheduling, return policy, etc.,
there should be very little that the customer can complain
about.
I know, famous last words.
Here's to your success!