Why It’s OK to Fire Your Bad Customers

How to deal with customers who cause you grief and cost you money.

Have you ever had “that” customer?

The one whose name popping up in your inbox (or on your phone) just makes you cringe?

They’ll usually make huge, unreasonable demands, pester you for discounts at every turn and threaten to “tell everyone” if you don’t give them what they want.

In short, they make your life hell.

It seems uncomfortable, on a blog about delivering great customer service, to talk about “the bad ones.”

But here’s why it’s so important:

In customer service, your biggest priority is to make your customers happy, successful and loyal. If you can do that, you’ll grow your business.

Your second biggest priority is to clear every roadblock standing between you and priority number one.

Clearing those roadblocks can mean hiring excellent customer service employees. It can mean improving your own customer service skills. It can mean choosing the right customer service software.

And it can mean getting rid of the bad customers who sap your time and energy from being able to make the good ones happy.

The overwhelming majority of customers are fantastic. They’re a pleasure to do business with, and when they succeed, so do you.

But among them are a very few bad apples.

In this post, I’ll show you how to deal with them.

There’s a Difference Between Challenging Customers and Bad Customers

First, a very important warning: once you learn how to deal with bad customers, it can be tempting to write off any challenging customer as a bad customer.

DO NOT DO THIS.

Here’s why: challenging customers are not necessarily bad customers. In fact, the ROI of delivering excellent customer service to challenging customers is often higher than the “easy” interactions.

Customers who are having trouble with your product — and tell you about it — are giving you one of the greatest business gifts imaginable. A survey by Lee Resources International found that for every customer who complains about an issue, 26 keep their mouth shut.

Simply by solving the problem of one “challenging” customer, you could improve your product for dozens of others.

Bad customers, on the other hand, offer little upside for giving in to their demands:

• Bad customers are rude and abusive to you or your staff.
• Bad customers make unreasonable demands (e.g., refunds long after the sale, free services far beyond the scope of your business, steep discounts for no good reason).
• Bad customers threaten to complain about you on social media, review sites and to their friends.

Bad customers are toxic to your business, and more than any other danger that they pose, bad customers roadblock your time and attention that should be spent on the 99% of customers who actually benefit your business in return for the value you deliver.

A Bad Customer Is NOT a Bad Person

Before we grab our pitchforks, let’s take a moment for an empathy check.

Being a bad customer is not necessarily a reflection on what kind of person someone is.

We all have bad days. And on those days, we’re far more likely to lash out at others; Roger Gil, MAMFT, a behavioral scientist, suggests that one of the most common ways that stress manifests itself is displaced anger.

On our bad days, we’ve probably all been that bad customer.

I know I have.

In any situation where you’re feeling attacked or offended, it’s helpful to take a step back and put yourself into your customer’s shoes; most of the time, their behavior has nothing to do with you.

Why You Should Fire Your Bad Customers

In customer service, your goal is to grow your business by making your customers successful, loyal and happy.

And if you do it right, the rewards can be massive.

Happy customers spend more money with your business.

Happy customers drive word-of-mouth marketing, telling an average of nine people about their experiences.

Happy customers reduce your costs, and the probability of selling to an existing happy customer is up to 14x higher than the probability of selling to a new customer.

Bad customers are nearly always either unhappy customers, or they cost many times more to keep happy than your other customers.

Every hour you and your team spend dealing with bad customers is an hour you can’t spend achieving the benefits above.

Even if fewer than 1% of your time is spent on bad customers, that can add up to big losses over time.

How to (Gracefully) Fire a Bad Customer

Firing a customer is, without question, a last resort.

Going through with this assumes that you’ve already tried your best techniques for dealing with difficult customer service situations.

It also assumes that the customer hasn’t done anything particularly offensive or abusive to your staff, in which case you’re perfectly justified in laying a smackdown.

Customer was rude to one of my support representatives. I refunded his $2,000 purchase and banned him for life. IWT sticks by our employees.
— Ramit Sethi (@ramit)
September 12, 2014

But if your customer is simply too difficult for you to work with, or costs you far more than their business is worth (and you don’t see this changing), then there is a way to part ways with grace and respect.

At this point, your biggest goal is to sever ties with a bad customer with the least amount of pain — for you and your business — possible.

Note: this isn’t 100% foolproof. Some people are just nasty, and there’s little you can do about that. For the overwhelming majority of “bad” customers, however, this approach will work wonders in cutting ties without burning bridges.

1) Be Positive and Appreciative

As research has shown us, positive language in customer service can make your customers come away feeling more positive about the interaction, even if you’re delivering bad news.

And in the same vein, Dale Carnegie reminds us of a vital truth: people crave appreciation.

In our interpersonal relations we should never forget that all our associates are human beings and hunger for appreciation. It is the legal tender that all souls enjoy.
Dale Carnegie, How to Win Friends and Influence People

To start the interaction off on the right foot, thank the customer for their business.

“I really appreciate you giving [business/product] a try.”

2) Re-frame the Situation

The worst thing you can say when firing a customer is insult them. Never use general statements that can taken as personal attacks like “our team finds you difficult to work with,” or “you’ve been asking for too much.”

Instead, share the facts and re-frame the conversation to make the customer feel as though they were part of the decision-making process.

• “Request X is outside the scope of our services, and it sounds like that’s a dealbreaker.”
• “It seems like we haven’t been able to do our job to keep you as a happy customer.”

Framing is a valuable tool used in negotiations and sales, and by framing the situation not as the customer’s failure, but as your company’s inability to meet their needs, you can avoid making the customer feel as though your actions are a personal attack.

3) Make the Customer Whole

Within reason, making the customer whole — via full or partial refund — can help you wash your hands of the situation far more quickly.

In our experience, refunding the customer’s last month’s fees works well.

Yes, it can be tough to “suck it up” and give a refund that you feel is undeserved, but consider it a gesture of goodwill and an investment in preserving your company’s reputation.

Fog Creek Software, makers of Trello, FogBugz and Kiln, offers a great perspective on refunds on their pricing pages:

You can apply the same sentiment to your own interactions:

“You shouldn’t have to pay for an experience that doesn’t live up to our standards. I’ve gone ahead and issued a refund for this month’s fees.”

A refund is a small price to pay for the long-term benefits of getting to re-focus on the customers that actually grow your business.

4) Apologize, and Suggest an Alternative

Beverly Engel, author of The Power of Apology, explains why apologies can be so powerful in our interactions:

• A person who has been harmed feels emotional healing when he is acknowledged by the wrongdoer.
• When we receive an apology, we no longer perceive the wrongdoer as a personal threat.
• Apology helps us to move past our anger and prevents us from being stuck in the past.
• Apology opens the door to forgiveness by allowing us to have empathy for the wrongdoer.

Even though your company isn’t a “wrongdoer” in this situation, the customer probably still feels like you are. Ending with an apology can help to patch that wound.

On top of that, try to recommend an alternative solution that might fit the customer better, even if it’s a competitor.

“I’d love to say that [business/product] is a great fit for everyone, but clearly we weren’t able to live up to that here. I’m really sorry about that. You may want to give [business/product] a try, it might be more useful to you. Best of luck!”

By going above and beyond, even when you’re firing a customer, you can still save the relationship, and your company’s reputation for excellent customer service.

At Groove, we’ve been lucky that in three years, we’ve only had to part ways with a tiny handful of customers. Still, it’s gratifying to get email responses like this one:

5) Focus on Mutual Respect and Understanding

Even in the face of adversity—when conversations turn difficult or when emotions run high—it’s crucial that we do not lose our composure.

Maintaining mutual respect means actively listening and responding with empathy, even when the customer’s feedback is harsh or their demands are beyond what you can offer.

It’s about seeking to understand the underlying frustrations or needs that might be driving their heated responses.

This doesn’t imply capitulating to unreasonable demands but rather recognizing the emotional state of the customer and addressing it with compassion.

Understanding, on the other hand, requires us to step into our clients’ shoes.

It’s easy to dismiss complaints or heated remarks as simply difficult behavior, but often these are expressions of unmet expectations or needs.

By striving to understand the client’s perspective, we can often find a path to de-escalation, offering solutions that acknowledge their concerns, even if we cannot fulfill their original request.

Keeping Bad Customers Is Unfair to You and the Rest of Your Customers

Bad customers sap your resources and energy, and keeping them around is not a good idea.

As small business expert Ken Gaebler says, “a single bad customer can practically destroy a business.” Gaebler goes on to note that a bad customer can lead to everything from employee resignations to declining profits.

If you have any customers like that, fire them. It’ll be better for everyone involved.

Have you ever had to fire a customer? How did you do it? Let me know in the comments below!