Rules To Help You Decide When To Fire Your Customers To Increase Profit

In this episode, we challenge the conventional wisdom of customer-centricity and discuss why firing a customer is sometimes necessary. While it may seem counterintuitive, knowing when to let go of a customer can benefit your business in the long run. 

We outline five critical rules to help you determine when it's time to part ways with a customer:

Rule #1: Fire customers if they cost too much. Some customers drain more resources than they generate in revenue. It's crucial to track these costs accurately and address the imbalance. If you can't rectify the situation, it's time to let them go.

Rule #2: Fire customers if they don't align with your brand. Your brand's values should resonate with your customer base. If a customer's values conflict with yours, maintaining the relationship can harm your brand's integrity and alienate your core audience.

Rule #3: Fire customers if they don't fit with your future. As your business grows, some customers might no longer fit your strategic goals. Prioritize resources for future growth by letting go of customers who don't align with your long-term plans.

Rule #4: Fire customers if they are too risky. If a customer's business model or payment practices pose a significant risk, it's safer to part ways. Overcommitting to one client or taking the undue risk can jeopardize your business stability.

Rule #5: Fire customers if they abuse your employees. Support and protect your employees from abusive customers. Ensuring a respectful work environment is critical for employee morale and long-term success.

Understanding these rules will help you make informed decisions about maintaining customer relationships that align with your business goals and values. Sometimes, the best way to move forward is to let go.

In this episode, we also explore:

• The importance of knowing your customer cost metrics and tracking them accurately.

• How to handle awkward conversations with customers about cost imbalances.

• Examples of brand alignment, including the Colin Kaepernick and Nike story.

• Strategies for soft-firing customers without abrupt severance.

• Recognizing when your growth trajectory requires pruning your customer base.

• Identifying and mitigating business risks associated with certain customers.

• The impact of customer behavior on employee well-being and company policy.

• Insights on post-pandemic changes in customer behavior and their effect on businesses.

• The balance between customer-centricity and business sustainability.