Thursday, June 18, 2009

Don't Waste Time With Unprofitable Customers

That's right I said it, and you can quote me on it! But really I'm just regurgitating what was highly recommended in an article entitled "When, Why, and How to Fire That Customer" from the November 2007 issue of Business Week Magazine.

The article encourages entrepreneurs and business owners to "[get] rid of the unprofitable, the time wasters, and the crazy-makers in your midst."

Most of us can relate to having a customer who is loyal, but is such a nuisance that they are actually a distraction to our motivation - and thus, our profits.

For example, the client that pays for one service but keeps insisting on getting another service for free. Or the client who wants to tell you his life story every time he gets you on the phone. Or the client who nitpicks and is overly critical. Or even the client who acts like he's your only client - as if your entire company revolves around him.

Here are some snippets from the article:

Yes, breaking up may be hard to do, but when a client is costing you money or making you crazy, it can be a smart move. Severing unprofitable or exhausting relationships can, after the initial fallout, boost your company's revenues.

Of course, you don't want to let a profitable client go if losing that revenue could sink you. And no one is advocating firing clients just because they are demanding or you simply don't like them. This situation demands objectivity.

That means it's time for a cool-headed assessment of your clients - how much you're bringing in from each, as well as how much each really costs your company.

"Entrepreneurs have this horrifying sense of scarcity, that the customers they have are the only ones in the world," says G. Richard Shell, professor of legal studies and management at the University of Pennsylvania's Wharton School. "That is not true. But [firing clients] takes courage."

Yes, even in a bad economy - giving up a worrisome client make be a very good idea.

To read the full article, visit:

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