No entrepreneur or small business owner starts a company with the intention of turning away customers. If anything, small businesses are more likely to take on any and all customers, even if they are difficult or simply not a good fit. No matter what type of industry you’re in — hospitality, real estate, retail, tech, or marketing — at some point you’ll likely have at least one customer who makes your life miserable. The good news is, it doesn’t have to be that way. Here are some ways to cut loose especially demanding customers without losing your sanity or your cool.
First: Determine if the customer relationship can be saved (or is worth saving)
Difficult customers are a fact of life in any business. It’s important to first identify why they are dissatisfied and what went wrong on your end that needs to be addressed. For example, is there a breakdown in customer service or did you fail to fully meet the terms of a contract? Is there something lacking in your product or service? (If you consistently hear negative feedback about some aspect of your business, it’s probably time to take an honest look at these complaints.)
Also — and this may be the hardest for small business owners — can you clearly distinguish between customers who are merely annoying and those who are abusive or require more time and energy than they’re worth?
Here are a few ways to objectively identify a toxic customer:
- They use abusive or aggressive language when communicating with you or your team.
- They disregard codes of conduct, such as refusing to wear a mask or leaving offensive comments on your social media pages.
- They constantly threaten to leave bad reviews unless you provide something extra for their “trouble,” such as free products or additional labor that wasn’t part of your original agreement.
- They find nitpicky ways to criticize your product or service as a way to get you to lower the price (or to not pay at all).
- They constantly question the ability or expertise of you and your employees.
If a client exhibits any of this behavior, then it’s probably time to let that customer go. In this situation, even high-paying customers will cost your business more than they are worth in terms of lost energy, time, morale, and possibly good employees who don’t want to deal with terrible customers.
Second: Make the decision to “fire” the customer and stick to it
Deciding to sever ties with a customer can be one of the hardest and most unpleasant business decisions you’ll ever make. It can be tempting to procrastinate or make excuses (e.g. “I’ll just finish this last project for them,” or “I know that person’s struggling financially so I’ll overlook that rude comment.”). Business owners may wait until they’re so angry that they inappropriately lash out at the customer — which can easily come back to haunt the company later in the form of retaliatory social media posts, bad reviews, and possibly even legal action.
Don’t let yourself get to that point. Take control, make the decision in a calm moment, and then move through the process in a professional manner.
Third: Decide the best way to proceed based on the nature of the relationship
First, understand the terms of your relationship with the customer. Do you have a legal contract that specifies which products or services you’ll provide, such as home remodeling or wedding planning? If so, you need to review the terms carefully to avoid legal consequences for breach of contract.
Next, what is the nature of your relationship? Have you maintained in-person communications for several months or years, or do you primarily run an eCommerce retail store where all of your transactions are online?
In the case of personal client relationships, it may be best to break up in person. However, in the pandemic era you may be forgiven for handling it in a socially distanced way, such as over the phone. With more personal client relationships, it’s best to avoid breaking up over text or email, which can seem cowardly and unprofessional. However, in the case of online-only customers, email communication is acceptable.
Fourth: Write down what you want to say
Even if it’s better to have the initial “breakup” meeting in person, prepare your remarks ahead of time. You’ll likely be nervous, and the client may react angrily, so you want to have your talking points clearly laid out. Avoid long-winded explanations or statements that assign blame such as “you violated our agreement” or “you’re rude and my team hates working with you.” Instead, explain that the terms of your agreement were exceeded and include expectations not previously agreed to (or whatever the issue is). Then — and most importantly — explain what steps you will take to help the client smoothly transition to another business or service provider. Be sure to follow up immediately in writing with a recap of the meeting. This ensures you have a record of what was discussed while it’s still fresh in your mind.
For customers who are primarily online, it may make more sense to handle the breakup over email. For instance, if you have a customer who constantly complains about your product or service, or who consistently tries to low-ball your price with a competitor’s rates, it may actually be quite easy to call their bluff and invite them to move on to the other company. While you may lose a paying customer, you can now refocus your valuable energy (and that of your employees) to serve your other customers.
It’s also possible that the customer’s needs have simply outgrown your business, or perhaps the relationship was never a good fit in the first place. In this case, provide these customers with a list of legitimate companies who may be better equipped to serve them. This not only helps to end the relationship on a positive note, it also keeps the door open in case their needs change down the road. That customer may also remember you in a good way and refer other customers to you down the road.
Fifth: Don’t think of the breakup as a loss, but as a reinvestment in your business
Many of us have experienced the messiness of a breakup and the benefits that eventually come from removing a toxic relationship from your life. No company wants to lose customers, but if you’ve been spending immense time, effort, and emotional energy to hold onto a customer, you might be surprised by how much you get back once that customer is gone. You and your employees will likely be happier and more productive — assets you can then reinvest into your company and other customer relationships.
By focusing on the customer journey you will be able to quickly identify and reward your most loyal customers while weeding out the toxic ones. Download our customer journey guide to learn how!