Firing customers - bad move...

I have quite a bit to cover today. First, a follow-up on my Dave and Buster's experience. To their credit, corporate management has handled the situation very well so far. After a very apologetic call from the district manager, I was invited to have lunch with the vice president who is overseeing the turnaround of the Philly location. At our lunch, he made an extraordinary offer to set things right. He offered to "redo" our entire party, at our convenience, for free. Not only was I impressed by the magnitude of the offer, but his sincerity demonstrated real customer focus. The general manager who threw me out was confrontational and condescending, but the VP I had lunch with was the complete opposite. On top of that, the CEO has called me twice to apologize, and I owe him a return call today. Stay tuned for the results. Thus far I have to say that D&B has made a truly impressive effort to set things straight.

Next, the CEO of another hosting company posted to his blog recently extolling the virtues of "firing" difficult customers. This is a controversial topic that comes up pretty often in our industry. I'm actually surprised at how much negative press he is getting, because most people I talk to seem to think that firing difficult customers is perfectly acceptable. Of course, I wholeheartedly disagree and I think that "firing" customers is a terrible practice. I'll start by being honest and saying that there have been times over the last 9 years where I have either directly terminated a customer relationship, or have given my approval for a member of our management team to do so. However, those few times have been serious, gut-wrenching business decisions that carry a fair amount of doubt, sometimes remorse, and that's the way it should be. Parting ways with a customer is something that a serious business person cannot afford to take lightly. Not if the customer initiates it, not if you initiate it, and not even if it is a mutually agreed upon split. We work hard for our customers and our reputation which are two inseparable components of our success. Firing a difficult or abusive customer solves a short term problem (the drain on support resources), but creates long-term unhealthiness in your business. It puts former customers on the street with a never ending stream of terrible things to say about your company, and trust me, when you leave them out in the cold they're not going to forget. They were probably unhappy to begin with, and now you have validated all of their negative sentiment. If you make a business practice of terminating difficult customers, and we all have difficult customers, how long does it really need to go on before you have critical mass of scorned ex-customers generating adverse financial impact?

Even worse, your employees will start down the "slippery slope." Once you start drawing the line and firing customers who cross it, that line has a funny way of taking on a life of its own. It won't be long before your employees begin encouraging managers to get trigger happy and cut ties with every customer who gets a little huffy, even those with legitimate gripes. Think about the manager who gave me the boot from Dave and Busters. He essentially "fired" me as a customer. As a newly promoted manager in a restaurant that clearly has issues with its guest service culture, he was already in attack mode when he came out to talk to me. It didn't take much for him to determine that I "crossed the line" and should be ejected. That underscores the importance of building a strong service culture and preparing your employees to handle difficult situations constructively.

Still, I regularly hear quite a few arguments for "firing" difficult customers. I'll list the top 5 of them here:

1. Abusive customers demoralize employees and increase turnover.
2. Difficult customers are unprofitable and use more support resources than they pay for.
3. "Problem customers" distract management focus from the strategic goals of the company.
4. There are some customers who will never be happy no matter what you do.
5. If I fire problem customers, I will have more time to devote to good customers.

Some of these sound great in theory, some are obviously absurd, and in my opinion, they're all wrong. In my next post I'll talk about why, and provide some of my own battle-tested strategies for working with high maintenance customers effectively.