How To Fire a Customer

Reading Time: 2 minutes

Recently Kevin Price “Fired” a Customer, He Discussed it with a Leading Profitability Expert.

By: Ruth King

“We’re going to go out of business…but we don’t care if we do.”

This is what three partners said to each other when they went through their entire customer base and decided who to fire. It was the end of their fiscal year and they were really tired of doing business with some of their customers who were costing them money. These customers:

Always complained
Always wanted a discount
Didn’t pay their bills without collection calls or were notoriously 60 to 90 days or more late
Were rude to their employees
In one case, the building that their employees went to was unsafe.

Once they got through making the list, they were firing about 10% of their customers.

This made them a little nervous but they were resolved to do it.

They fired them with “ruthless compassion.”

What does this mean?
They met with each customer they were firing and explained that they were not going to do their projects the following year. They also gave these fired customers a list of potential companies who could do their projects.

What happened?
To their surprise, profits actually increased the following year. They realized that they weren’t spending time with unprofitable customers and they could spend time with profitable customers.

As a result, at the end of every year, they review their customer list and decide who, if anyone, they are going to fire. The list was never as long as it was the first year.

The thing that really surprised them was around the third year, several of the fired customers called asking if they could come back. The owners said yes as long as they didn’t complain, paid their bills on time, etc. These customers realized how well this company took care of them and didn’t find another one who performed as well as they did.

Never be afraid to fire unprofitable customers. It doesn’t make sense to keep a customer that you pay (their net profit on their projects or products is negative).

During this segment Kevin Price discussed his own experience of recently firing a customer and let Ruth King assess his approach.

Ruth King is known globally as the “Profitability Master,” and is a a thought leader in entrepreneurship and business. Her books have been recognized as among the greatest in numerous industries. Learn more about all her business activities here.

Follow Ruth: www.ruthking.info

Connect with her through social media:

Twitter/X: @ruthking

Facebook page: https://www.facebook.com/ruthking1650

LinkedIn: https://www.linkedin.com/in/ruthking1