Firing Clients

Sprint Nextel seems to be taking some flack for cancelling the contracts of about 1,000 of its wireless subscribers. Now while this would be no big deal if the contracts were cancelled due to non-payment, in this case Sprint decided they simply weren't customers they wanted anymore.

Their crime? They called customer service too frequently. Well, not just a little more frequently, but a lot more frequently - an average of 25 times per month, or 40 times more than the average Sprint customer. So Sprint elected to ask them to use a different phone service.

Although deciding to fire customers is a controversial move, it is also a smart one. Every customer is not necessarily going to be one you want to do business with, for a variety of reasons. They may demand too much of your time or attention, request discounts or special pricing, bad mouth you to others, or simply not appreciate all that you offer.

Savvy business owners regularly review their customer base and rate or grade their clientele based on factors that are key to the company's growth and success. Some entrepreneurs may put a premium on profitability while others may appreciate customers who refer others their way. You can create your own set of grading criteria to help you assess each customer's fit with your business and where it is headed - an A, B, C, and D scale works fairly well.

Once you've identified your lowest grade customers, the D group, the hard part comes next - firing them. Of course, you can simply make it less attractive for them to do business with you, by raising your prices, for example, or changing policies so that you don't have to spend as much time on them. Or you can send them a letter, as Sprint did, thanking them for their business and letting them know you will no longer be able to sell to them.

While you may be nervous about taking this step, no business owners - none! - I've spoken with have ever regretted jettisoning a bad customer. Your stress level with go down and your profitability up. So follow Sprint's lead and give your worst customers to your competition.