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When to Fire a Client

Sometimes, a difficult customer just isn’t worth keeping. How do you know when it’s time to show him the door?

By Kent Oswald

“There are some people who you cannot make happy,” says retailer Mark Mason. “If you are going to divorce a client or a customer, it must be really bad, [because] if you lose somebody, you not only lose them, but their friends.”

Mason, owner of Mason’s Tennis Mart in New York City, says that in his 30 years of retailing, that kind of loss “may have happened five times.” He often finds himself reasoning with and sympathizing with a customer while also expressing the principles upon which he bases his business.

Almost always, the “difficult” customers “ease up a bit” and agreeable territory can be reached. But what if you can’t find common ground with the customer?

Mason tells of a wealthy woman who would buy a lot in his store, but she would constantly push for a bigger and better deal. “Every time I would say ‘yes’ to something, she would ask for a larger discount, as if she [would not] be satisfied until I was not making anything,” says Mason. Additionally, she was abusive to staff and was causing so much in-store commotion that her trade threatened to drive away other customers. “I had to eventually say to her, ‘I think you would be happier elsewhere. I just can’t satisfy you.’”

Douglas Cash, former COO of Tennis Corporation of America, says the organization probably “fired” one customer a year from the entire membership at the 40 clubs he oversaw. Cash refers to these customers as “the lunatic fringe — the percentage of people who cause more problems than they are worth.”

Cash, now a consultant after more than 20 years at TCA, estimated that each year a member continued in a TCA club was worth between $2,500 and $3,000, so to ask a customer not to come back meant he or she was causing big problems.

For customers who have trouble conforming to the rules of the club, Cash might use “the scissors trick.” After various letters and a review of the situation by at least two management levels, Cash would call the member into his office and ask for their membership card. He offered to slice it in two, refund fees, and end the contract. It was a bluff he was prepared to follow through on, but almost always the customer backed off. If the customer went through everything else and entered the office, they likely valued club membership highly and it was only a matter of having everybody work together to find an acceptable solution.

“Most of the time you can settle legitimate gripes,” says Cash. Sometimes this could be as simple as changing who delivered the services — although that may become a management issue with an employee whose ego may be bruised.

For Jason Havelka, the former head pro at a country club in California, whoever is paying the bills has to be satisfied. In some cases, the bad seeds may not be his students, but their parents. “The customer is always right … and we have to deal with it,” he says.

But dealing with it doesn’t always mean caving in. “We put policies in place to protect ourselves and our businesses. A lot of people are just fine with that; some people aren’t,” admits Havelka.

His primary strategy to avoid having to fire a customer is to match the customer with the person who can deliver the services they want — which may not be the same as what the customer may say they want. He cites a pro who “never loses students.” He picks his clientele well, and, “He only teaches them what they really want to know and makes everything as simple as possible.”

The Stress Factor

“Even though you try to stand back and not take [problem customers] personally, you still do,” says coach, author, and psychologist Allen Fox. “They get to you emotionally. You come away stressed out, but if you keep at it you can help them.”

Knowing that, however, doesn’t mean there aren’t times it is best to cut someone off. Fox offers an example from his days as Pepperdine University tennis coach.

“I was willing to handle it personally, but [my No. 1 player’s attitude problems] got to the rest of the team,” says Fox. “It was hurting team motivation.” Fox suspended his top player for a month and half and the player returned with a better, although still not perfect, attitude. But it was enough, and the team was strengthened both through the disciplining and the return.

The easiest way to avoid having to fire problem customers is by knowing what you can deliver, and then making sure you and the client are clear on expectations. Dean of tennis instruction Vic Braden says the way to avoid creating an unpleasant situation is to be honest from the get-go. “I have no problem saying, ‘It doesn’t sound like our Tennis College is the right program for you,’” he says. According to Braden, “problem customers” are usually recognized during a phone call prior to enrolling.

Isolate the Problem

When customers have issues that can’t be dealt with, the goal should be to isolate them as soon as possible. “It has always amazed me how many people one negative person can influence,” Braden says. “We simply can’t afford to allow one negative person to wreck others’ vacation time.”

Braden’s solution for dealing with the biggest problems is to provide them one-on-one sessions with a private coach and on a separate court. And to politely discourage their return.

Martha Rogers, whose Peppers & Rogers Group specializes in customer relationships, tells the story of a computer company who felt it necessary to go a step beyond to discourage a customer who wasn’t a good fit. The computer company had a customer in his 90s who was new to the world of technology. He called the customer support group at every step (when the box was opened, when things had to be plugged in, when the computer was turned on, etc.). The customer wasn’t bad, he just wasn’t right for their business.

The company’s solution was an expensive one, but cheaper than continuing to be true to their business and still service him. They purchased and sent him a brand new competitor’s computer, along with a nice note of thanks for his patronage.

What’s the Lifetime Value?

Rogers insists that businesses recognize and try to measure the lifetime value of their customers. She believes that most businesses will find that 20 percent of their customers will account for about 80 percent of the profit, and 20 percent will cost the businesses about 80 percent of its wasted time, cost overruns, and other problems.

Consider the lifetime benefit of the customer and then deduct the costs. For example, consider the gross income plus referrals, and then subtract what you lose in extra administrative time, discounts to keep them happy, tracking down payments, effect on staff and other customers, what their complaining can do to your current customers, or what happens when they bring you more customers like them.

If you need a rationale for firing those in the bottom 20 percent, you will often find it there. “It isn’t O.K. for customers who are keeping you in business to have to pay extra [for you] to keep bad customers,” says Rogers.

She suggests that you don’t have to charge everybody for the same thing, but apply this carefully by building rules for your business that encourage what you want and discourage what you don’t want. For example, if you want people to pay promptly and in advance, give a discount for those who prepay for multiple lessons. If you don’t want people taking advantage of your returns policy, put in a “re-stocking” fee, and consider waiving it when the situation warrants.

Rogers admits there is a great deal of judgment that goes into deciding who and what to encourage. She is also clear on the benefits of firing bad customers. First, there is the obvious mental health benefit: “Your state of mind and mood are going to improve.”

Beyond that, “If you are able to get rid of 20 customers [out of 100] on whom you lose money, you can actually charge the remaining 80 less and give them more [of your] time.”

See all articles by Kent Oswald

About the Author

Kent Oswald  is a contributor to TennisNow.com, producer at the JockBookReview.com and a former editor of Tennis Week magazine.

From the April 2009 issue
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