When Should You Fire a Customer? 

By Chuck Marzahn 

We’ve all seen the circumstance in which a customer crosses the line.  In the current market we are understandably hesitant to turn away a paying customer.  What are the long-term effects of maintaining a toxic relationship?  And all this applies to more than customers.  It applies to employees and to vendors, too.

Don’t you just know it in your gut while you are dealing with some folks?  The person who is beating you up for the last dime of gross during the sales transaction will certainly become a handful at the service counter later.  Some folks are as demanding as we allow them to be.  This thought also touches on the ability of the salesperson to control the deal.  But that’s a different topic. 

The 80/20 rule can be easily applied.  80% of your problems come from 20% of your customers.  In this discussion, we refer to the smallest slice of your customers.  That is, much smaller than the 20%.  Likely, it’s something less than1%.  If you find yourself wanting to fire more customers than that, it may be time to consider another line of work.  (Or to hire a good consulting company to review your processes.)

How do you recognize a toxic customer?  What are the signs? Customers who are in the top echelon of being demanding suck time and energy from your business.  We talk about them when they leave.  We scramble to go above and beyond when we see them coming.  We dread their phone calls.  No matter what we do, it is never enough to satisfy them.  They have the expressed opinion that your dealership and everyone in it exist to serve their every whim and nothing short of perfection will suffice. 

What do you risk by ‘firing’ these people?  You may lose a skinny deal. If you remember the schoolyard bully’s reaction, you might expect to see a different result.  In some cases, when you stand up to a customer who is acting like a bully, he not only backs down, he becomes your instant best friend.  It seems they only respect strength.  Realizing you are not a pushover causes them to treat you with that respect.  Ask yourself if it’s really the worst thing to lose the gross from a skinny deal if you know it will only get worse.  Those customers will continue to upset and aggravate staff, processes, and working systems for months and years to come.

It’s hard, given the current market, to see that turning a deal down may be the best thing.  My mentor, Bill Gorman, used to say, “Some of the best deals you make are ones you walk away from.” 

There is a body of work to support the fact that you can identify the customers who will actually promote your business.  Time and energy is better spent keeping them happy.  Call me and we’ll chat about where to find that information. 

Trying to please a customer who, in spite of your best efforts, will never be happy is a colossal waste of time and energy.  One of the metrics that doesn’t show in our Virtual Dealer Group composites is the quality of life.  You could call it the stress-to-fun ratio. 

Here’s a kicker…  all this also applies to vendors, manufacturers and employees.  Why do business with a vendor who keeps your business in a tailspin?  Why buy from an OEM that puts out a product that doesn’t drive loyalty to your store?  Why keep an employee around when it’s clear they constantly stir things up?

Take these tips:

1. Document the customer's negative impact on your business systems, profitability, or morale, and define what changes could resolve the problem.

2. Present the unsustainable operational, staffing or bottom-line impact of the customer's demands on your business. Don't get defensive or try to prove that you're right and the customer is wrong. This will only inspire bad word-of-mouth--in person and online. Instead, politely present facts accompanied, wherever possible, with solutions for how to improve the situation.

3. Listen carefully (out of earshot of others) if the customer wants to tell his or her side of the story. Don't interrupt, argue or blame others. You may learn that the client isn't aware of the impact of his demands, or that he's willing to accept revised procedures or fees to overcome the problem.

4. If you can't reach an accord, make parting ways feel like a mutual decision by using a term like "not a good fit." Then redirect the customer to another business. "Firing" the customer might be tempting, but not when the word hits the online grapevine. Likewise, taking blame for the bad relationship may feel gracious, but it'll fuel the customer's sense of being wronged.