When you (don’t want to) fire a customer
This article was first published in Business Times on 23 November 2019
Management Unleashed – When you (don’t want to) fire a customer
John Bittleston, Terrific Mentors International
Customers can be a pain. I’m sure you know that already. They fall into several categories. At the top, the most desirable customer is the company (or individual) that has clear levels of command and authority, that thinks ahead and orders its needs in a timely way and that understands that you have to make a profit too. They will be integrated enough to join with you in product and service development. They will negotiate toughly and settle liberally – as you will do. They will pay their bills on time. If they are an exceptional customer, they will do what I do and pay ‘on sight of invoice’. When seller and buyer both do all this there is a highly efficient and workable relationship.
At the other end of the scale is the customer who has no real contact with the seller, who aims for nothing more than the lowest price and who is unresponsive. The company may be disorganized, leadership will be poor and interdepartmental warfare will cause delays, misinformation and chaos. In the end, they will blame the supplier. You may have to get rid of them if they are not worth the effort or despair they will cause. That’s easy to say, of course, not so easy to do. They may be the only buyer, or an important one of few, in a small, specialised market. Sales to them contribute to your overheads, if not to profits. You may have to suffer. In between are customers of all colours and hues.
Get to know your potential customer
Qualify customers when they approach you for a quote. Study your potential customer carefully. “Time spent in reconnaissance is never wasted”. Look for signs of repeated change of suppliers. Where you can speak to a non-competing provider without arousing suspicion, do so. Look at social media for comments on the company’s other suppliers – but beware, fake news by those wanting to put you off quoting can be effective. Lying has become so accepted as a part of life that damage is easily inflicted.
Look for signs that the business has already decided on its supplier to ensure that you are not there just to fulfil a ritual quote. There will be traditional ways of how contracts are quoted for and awarded in your industry. Learn them. Have someone keep an eye on publicly-awarded or media-announced contracts so that you can track and follow them. Check that they are not corrupt or bypassing the compliance required under the rules. Knowing the crooked customers is important.
Keep your Terms and Conditions of business up to date
Your business’ Terms and Conditions (T&C) should be reviewed yearly and also when a law is enacted that affects them. That may be rather frequent in your industry given the massive changes that are taking place. It can be wise to engage a lawyer to keep a watching brief on your T&C. Provide an intelligibly-written summary of the main points of your T&C as a preamble – and make sure it is legally an integral part of the T&C. Make every customer sign a copy of your T&C whenever a quote is accepted.
Should you make an exception to repeated signing of the T&C where you have a client who has been with you for a long time and where you are friends with the CEO? Very cautiously, yes. But watch for changes among all senior personnel at the company, not only your friend. ‘New brooms’ have a nasty habit of becoming legalistic even when their bosses aren’t. It is the age of compliance.
Don’t fire a customer unless you absolutely have to. When you do, you must first look to your own customer management. Some customers take more managing than others. Think beyond the occasional entertainment. That may be necessary and indeed useful but it is the most primitive form of customer management. Everyone likes a jolly and an occasional one is good. Real customer management involves working with the buyer on all aspects of how and why he uses your product. This is simple if you sell brushes and dustpans, more complicated if you sell aircraft engines. The relationship between Rolls Royce and Boeing must be an exceptionally close one. Aircraft design and protocol, as we have sadly recently seen, is extremely complicated.
Your sales will certainly be less integrated with your client than that. However, there is a benefit in seeing that they are close. Even brushes and dustpans can be misused, badly handled and easily trashed, A good working relationship with your customer could make them more effective – and your customer more dependent on you. This is particularly the case when research and development is involved. The client that works with you on new products and product modifications, stays with you.
Make every reasonable effort to keep, educate, develop and secure your customer long-term. You invest a lot to get a customer. Invest more than you currently do to keep them.
When to fire a customer
There will be times when you need to fire customers. For example, if they are flouting the human rights of those working for them or of those who, in turn, are their customers. Child labour, exploiting the poor, depriving workers of reasonable conditions in which to work and treating people as objects instead of humans are grounds that compel you to fire customers.
Clients who don’t contribute to solving the climate disaster, whose raw materials are positively damaging to the planet and whose impact on consumers is deleterious are clearly candidates for being fired. If you are supplying a service industry like advertising, or dealing with social and other media, you have particular responsibilities to see that your customers do not expose products or services that might damage them to the young, the vulnerable and the incapacitated. Ethical behaviour is not only desirable, it is good for sales. Customers are increasingly expecting companies to watch that they do not contribute to damage to planet and people.
When you have to fire a customer, do it politely, explain your reasons sensibly and use the occasion to help make the customer a better organisation. You want them back if they reform, so you need to have them thinking about you warmly.
The secret of good customer management is sensible working relationships, understanding what the others’ pressures are and sharing the job of making this world a better place for everyone.