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When it’s Time to Cut the Cord

2/28/2014 1:01:00 PM
Article by Mary-Carel Verden

We’ve all had it happen. A customer calls and says “While I have been happy with the service that we’ve gotten from you…” and suddenly, all you hear is the “BUT” that’s coming! You don’t have to wait long. He goes on to tell you that he has found a new vendor, a closer vendor, or a cheaper vendor. It’s been nice doing business with you. What’s the bottom line? You’ve been fired. But, there IS a flip side to that coin. Sometimes it’s your turn to do the firing. So, how do you know when its time to fire a customer?

Telling a customer you no longer want his business may seem like a crazy thing to do in the current economy, but sometimes it needs to be done. It may be that he is too high maintenance, taking up more of your time with questions and product suggestions than his purchases warrant. In essence he is not cost-efficient. Maybe she is constantly late to pay, negatively affecting your cash flow. Maybe he is never satisfied, constantly complaining and verbally abusing your employees. It’s time for them to go but how do you go about it?

First, you need to figure out if there is some way to keep a problem customer. Could you change their net due period? Maybe they have cash flow issues as well. Could you move them to net 30 or 45 days? The solution could be to increase their prices to cover the additional cost of serving. You’ll either restore the loss to your bottom line, or they will object, and leave. Either way your problem is solved. Giving the customer to a more patient service rep might be all you need to do.

If you can’t find an alternative, it’s time to consider plan #2: Telling the customer that you no longer want his business. The first thing you need to determine is if the financial loss is something your company can absorb. If so, it’s time to proceed without delay. If not, you may want to wait until you have new business that will make up for the loss.

Next, get your ducks in a row. Consult your lawyer as to any legal complications you anticipate. Think carefully about what you are going to say and how you’re going to say it. You may even want to practice with somebody else which could help uncover any problems beforehand. Establish a paper trail. Document late payments, instances of abusive language, or any other information that backs up your decision.

When the time comes don’t beat around the bush. Explain that your company can no longer provide service to them. Explain concisely what your disagreements are and why they are no longer acceptable. Listen to what they have to say. It may be that together you can come to a consensus that will keep them your customer. However, don’t be afraid to admit that there is no solution.

Offer alternatives such as another supplier that could better suit their needs. It could save some bad blood if they feel you still have their interests at heart.

Above all, be professional. This is not a time to vent your frustrations. Present your point without editorializing. You want to have a business meeting, not a shouting match.

No one ever wants to lose a customer; it’s just not good for business. Sometimes, however, the advantages simply outweigh the disadvantages. A little professionalism and preparedness will go a long way to making the job easier. In the end, the result will be better for you and the customer.

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