Some Customers ARE More Trouble Than They're Worth

Some customers cost your far more than any profit they provide, no matter what kind of business you're in. So why keep them?

The Society for Advancement of Consulting canvassed its international membership and found that organizations of all sizes tend to retain problem customers despite the financial penalty. "That means, of course, that smaller businesses suffer far more than larger businesses from these non-profitable customers and clients," says SAC CEO Alan Weiss, Ph.D. "But even large businesses often choose to take a hit on the bottom line rather than 'fire a client.' "

SAC member Dave Gardner, owner of Gardner & Associates Consulting in Reno, NV, recently encountered a client who perfectly demonstrated the difference between what a client "needs" and "wants." "The client asked me to be the project manager for implementing a large, complex electronic catalog," reports Gardner. "He rejected my fixed-price proposal to manage the entire project and requested I support him on an hourly basis so he could call me in 'when he deemed it necessary.' What he wanted was in clear conflict with what he needed. I ran for the exit."

Sometimes you can avert a disastrous relationship but preserve a new, positive one. Roberta Guise, who heads Guise Marketing and PR in San Francisco, reports:

"I contracted with a research firm to develop a promotional flier and publicity campaign. The flier project proceeded just fine, but when the publicity activities started, my client changed personality - overnight, it seemed - and tried to micro-manage me as if I were her employee. She also demanded I guarantee results, which in publicity is impossible and also unethical. Upon notifying the client that I was canceling the publicity campaign, she accepted my 'resignation' and promptly handed me a major marketing piece to produce, which I determined was of equal value to the publicity contract. As with the flier development, I had full client cooperation on this new promotional brochure. Lessons learned: Avert a disaster, don't burn bridges, and retain a positive relationship with the client into the future."

"Every day," notes Weiss, "we see our consulting clients accept returns that they shouldn't accept, spend time with customers beyond the scope of service contracts, and provide help with products and services that are not their own. While that may seem like good customer relations, multiply that times 100 or 1,000 and it seems more like a leak in the profit tank."

John Carroll, owner of Unlimited Performance in Mt. Pleasant, SC, has provided these guidelines for dealing with problem customers:

1. Recognize the telltale signs: Quick to complain, slow to pay. and sure to push the envelope by consistently asking for far more than what is understood to be the deliverable promised. Catch this lethal combination of customer traits and practices early to save yourself and others needless expense and aggravation.

2. Do the math: Put a dollar value on your peace of mind, such as $10 or $100 per hour. Multiply that by the number of hours this customer has you distracted from other, more profitable considerations and add it to available financial measurements of how badly you're bleeding by continuing the current relationship.

3. Take responsibility for the separation: Offer to sever ties with a statement such as, "I'm very sorry that we're unable to serve you at a level that meets or exceeds your expectations and our standards. We thank you for the opportunity to serve you and certainly wish you the very best."

4. Move on: While it may make sense post-mortem to reflect and find the lessons contained so as to prevent recurrence of a similar scenario, such thinking becomes dysfunctional when one endlessly dwells on what went wrong. Get on with your business and allow the customer or client to do the same.

"The key," concludes Weiss, "is not to let an annoying customer become a permanent profit drain. The only thing worse than no business is bad business."

SAC is an association of solo practitioners in various consulting disciplines with members in six countries. For more information contact info@consultingsociety.com, http://www.consultingsociety.com, or 800/825-6153.