Should you fire your customers?

An accountant I spoke with yesterday told about a seminar he attended for owners of accounting firms. The leader suggested that firms periodically “fire” the bottom 20% of their client base. These are clients that produce little revenue, or clients that are just not pleasant to deal with.

This got me to thinking that the advice is good and may well apply to almost any business. The conventional wisdom is that 80% of sales comes from 20% of a firm’s customers. Why not, then, evaluate the lowest performing customers? So often these customers not only are producing marginal sales, but the business with them is also marginally profitable. Too often, these customers require an inordinate amount of support and “hand holding” further eroding any profits they might produce. Should you be spending time with these customers, or fostering even better relationships with large, or potentially large, customers?

Some business owners are afraid to let customers go for fear that sales will decrease. But, take a careful look at each poor performing customer. If customers are not profitable, “fire” them and let them be someone else’s problem.

Surprisingly, sometimes a fired customer will return begging to do business with you and will turn his/her attitude around and they will end up as good customers.

Will Limkemann
Limkemann Business Advisors
440-871-0976
www.neobizadvisor.com