This is the client who literally makes you sick.
Companies often accommodate their most annoying clients because they think it’s the right thing to do. In fact, keeping them around does more damage than losing them would. Living out the Donald Trump fantasy of screaming, “You’re fired!” could actually improve things. (Not that I condone yelling at your clients.)
How bad customers hurt your business
Most businesses have a limited amount of bandwidth for serving customers. Annoying customers eat up company resources, from customer support to handling special demands, and this results in less time for your more engaged clients. In an effort to enhance your ability to serve difficult customers, you’re hurting your ability to serve all of your customers.
What’s more, those annoying customers demotivate your team. Dealing with negative clientele creates a drag, and it drains any excitement and energy the team is building. This energy drain damages the long-term prospects of your company.
As employee engagement goes down, so do quality and innovation.
How to identify bad customers
As with most things in business, the 80/20 Rule can help you identify your bad customers. If you analyze your clients, you’ll see which 20 percent of your customers are responsible for 80 percent of your profits. Conversely, you’ll note which 20 percent are to blame for 80 percent of your headaches — and you’ll be shocked when you realize how strongly that 20 percent of your customer base has been poorly impacting business.
You can also identify these frustrating clients by reviewing their order histories.
●How often are they ordering?
●What’s their order volume? (They usually order the least and are the most price-sensitive.)
●Do they refer other clients?
●Are they pains in the you-know-what from a customer-support perspective?
Dropping the bad customers without hurting your business
The fear of firing a customer comes from thinking that there won’t be another customer to replace him. This is scarcity thinking, and it’s dangerous to indulge in.
If you’re generating more than enough new leads and new customers, it becomes easier to say no from a position of strength. (And if you are not creating enough leads, this is a function of poor marketing.)
You don’t need to think of it as “firing” your customers — you can reframe it as serving your top-quality customers and prospects better. That requires that you sometimes narrow your focus; the best companies don’t try to be everything to everybody. (If you are, that’s probably one reason you’re attracting annoying customers.)
You have to set the criteria determining the ideal customer for your company. You have to create a powerful position in the marketplace; don’t simply default to competing on price.
You can occasionally turn a bad customer into a good one, but it’s as rare as a news week without the Kardashians.
Once you decide who you’re serving — and who you’re not — you need to stick to your guns. Trust me, you get to set the rules and determine how customers will do business with you.
Contrary to popular belief, getting rid of your most annoying customers won’t make you weaker as a company — it will make you stronger.
Yanik Silver is CEO at Bethesda-based Maverick Business and founder of Maverick 1000, both of which focus on providing entrepreneurs with access to exclusive networking and business-building outlets.