Dear Customer, You're Fired - Management
Construction Equipment Distribution magazine is published by the Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada. AED membership also includes equipment manufacturers and industry-service firms. CED magazine has been published continuously since 1920. Associated Equipment Distributors
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SECTION: Management

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Dear Customer, You're Fired

CED Magazine, September 2006

Article Date: 09-01-2006
Copyright (C) 2006 Associated Equipment Distributors. All Rights Reserved.

Under what circumstances would you or should you "fire" a customer?

You’ve had it. His payment is late again and, to top things off, two days ago he was in your office complaining about the last job your service department completed for him and asking for free service — all in the same breath.

"If it weren’t for the money I made from that guy last year," you say, "I’d drop him in a minute."

But would you? More to the point, under what circumstances would you "fire" a customer?

Let’s face it: Your relationship with any customer is valuable only to the extent that your mutual needs are met. And the only way you can decide whether to keep a customer is to rigorously analyze what you’re getting out of the relationship.

If you’re working with a customer whose behavior, business practices or payment history is questionable, assess the relationship with this brief quiz.

Each statement in the quiz describes a negative behavior. If the customer exhibits the behavior frequently, rate him with a score in the left column. If he exhibits the behavior some of the time, give him the rating in the middle. Customers who exhibit the behavior occasionally rate the score on the right.

1. The customer makes payments late 963
2. The customer forces you to reconfigure staff schedules.321
3. The customer is discourteous to you or your employees. 321
4. The customer refuses to return telephone calls.321
5. Rumors abound over the customer's financial solvency.321
6. The customer has expected you to complete elaborate proposals that rarely result in a sale.321
7. The customer has made legal or financial threats against you.963
8. The customer has been involved in nasty scenes or tirades in front of other customers. 321
9. The customer reminds you, by word or deed, that the potential for long-term business growth with him is minimal.321
10. The customer makes repeated and unusal complaints about your work or products. 321
11. You spend time mollifying the customer. 321
12. The time and effort you offer the customer detracts from your ability to serve others. 321
13. The customer writes bad checks or post-dated checks. 963
14. The customer breaks promises and commitments. 321
15. The customer repeatedly plays your prices against those of your competitors. 321
16. The customer brings other negative customers your way. 321
17. The customer ignores the letter or spirit of contracts and agreements. 321
18. When you must deal with the customer, you get a gnawing feeling in the pit of your stomach.321

Now, total the scores.

If the customer scores between 49 and 72, your customer is a serious problem. Only you can determine whether you should keep him or fire him, of course. But if you continue to do business with this customer, be aware that you’re putting your time, profits and well-being at risk.

If your customer scores between 24 and 48, you have a problem. If business is good, and your instinct tells you that this customer isn’t contributing much to your bottom line, consider dropping this customer. Alternatively, you may want to adopt a more forceful posture with the customer.

If the customer scores below 24, try to salvage the customer. A forceful face-to-face meeting and tough, no-nonsense policies might turn this troublesome customer into one you can live — and work — with.

In all cases, your business judgment and experience must guide you in your decisions about customers. Only you can blend objective analysis with your gut feelings about a particularly troublesome customer, and only you can decide if - and when - your should tell the customer he's fired.

But never believe you have to work with a customer who puts your dealership's well-being at risk, and never be afraid to take action if the time is right. Don't worry, either, about losing the scant profit a troublesome customer offers you; once you shift time and resources from the problem account to other customers with long-term potential, you may well recoup the profit many times over.

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Article Categories:  Customers/Contractors  »  Management