What? Fire a Customer?!

[noelward]

What? Fire a Customer?!

By Noel Ward, Editor@Large

Sooner or later the moment of reckoning arrives for every business-owner. There are always customers that cost you money, are too aggravating to work with or simply not worth the revenue they bring in. So what do you do?

If the customer were an employee you might provide more training or shift their responsibilities in lieu of letting them go. But customers are different, so you can be faced with a tactical or strategic business decision. Do you proactively suggest they go elsewhere, or would a more subtle approach be better? Either way, the result can improve the life of your business and that of your employees.

There are numerous reasons why a customer may become less than welcome. Printers tell me these include things like the customer is….

• not profitable (various reasons are in play here)
• not aligned with the strategic direction of your company
• abusive or contemptuous towards your employees or processes
• consistently understating scope of work required
• not learning from past errors they made that increase the cost of jobs
• continually changing the specs of jobs in process, adding work or increasing turnaround time
• arguing about agreed upon pricing when job is complete
• slow to pay invoices

No matter the reason, the decision to “fire” a customer cannot be made lightly. But if you are at or near the top of the food chain in your company it is a decision that sometimes needs to be made. Some of the reasons above can be negotiating points. Others may be the fault of the person(s) buying your services and be unknown to the leaders of your customer’s company—who may not care where jobs are printed, as long as they are done on time and on budget. Yet, as a leader or owner at your company you still have to make a decision in the best interest of your business, especially if any of the first three points above are among those that would make your world a better place if the customer were someone else’s problem.

Run the numbers
For example, you probably add up the costs of prepress, production, in-office work, shop floor, and shipping to measure customers’ total cost against how much you bill, to see the profit. You may find that the 80/20 rule applies in that about 20% of your customers account for around 80% of your gross revenue. You hopefully do this anyway and doing so for all customers on a regular basis shows which ones are profitable. Still, there are probably jobs and customers that you sometimes lose money on. Customers that regularly lose you money need to pay more or be shown the door.

Still, care must be taken when deciding which customers you might be better without. Where do you draw the line? It is not always obvious and drives other questions:

• Which are most and least demanding of customer service team?
• Which generate most and least revenue?
• Do any become a kind of cost center or are simply more trouble than they are worth?

If you are shaking your head, you’re right: as you think about your own book of business there may be no clear answers. But there is a clear question: what is best for your business?

Time to Say Goodbye
It’s always best to let a customer down easy and provide a soft landing because you never know if you will need them again, even if it is in a different relationship. In some cases it may be useful to explain the issues that concern you, such as if your strategic direction has become labels and packaging while a customer’s needs are brochures and marketing collateral. In this case, the fit is may no longer be there and customers usually understand this. This can work well if the focus of your work is indeed changing. If your strategic focus isn’t changing, you may be able to…

• offer a schedule, such as 30 to 60 days before new changes, policies and procedures take effect so both you and the customer can step away from each other more gracefully
• increase specification requirements for incoming jobs that help enforce your expectations
• insist that all jobs arrive electronically and go through an automated quoting process
• raise prices that may “push” an unprofitable customer away

All of these can be automated in job submission software. No matter what you do though, it’s a good idea to help a customer find another resource to for printed materials. This often makes the transition easier and less stressful for the customer and you come out as the “good guy” who has always had the customer’s back and is helping out even though your capability to do so may be limited.

There is usually no best time to “fire” a customer but making it easier makes the process less stressful for all involved.

 

[keith1]

I was going to retire a couple years ago. Then the pandemic, couldn't travel, so I decided to only semi retire. At that point any customer I had that was a consistent late payer or generally a pain for whatever reason was history.
However I was in the enviable position at that time that I had been prepared to fully retire. For most it doesn't work out so convenient.
In my semi retirement I only hung on to the good guys who were a pleasure to work with. I wouldn't have made enough to live on but didn't need to. The pocket money was nice and it wasn't like I was working hard. More like part time.
It was wonderful no longer having the stress of having to chase people for money or deal with petty issues.

 

[noelward]

Keith1...
Have done somewhat the same. Nowadays I only do business with people I like and who pay promptly. Less revenue but less stress and I don't have to chase anyone for money or kiss any butts. Have fired a couple clients over the years. Was always a relief. Semi-retired works well and I can be as busy as I want to be.

 

[keith1]

Have fired a couple clients over the years. Was always a relief.

The customer is not always right

 

[mulo_g]

What? Fire a Customer?!

By Noel Ward, Editor@Large

Sooner or later the moment of reckoning arrives for every business-owner. There are always customers that cost you money, are too aggravating to work with or simply not worth the revenue they bring in. So what do you do?

If the customer were an employee you might provide more training or shift their responsibilities in lieu of letting them go. But customers are different, so you can be faced with a tactical or strategic business decision. Do you proactively suggest they go elsewhere, or would a more subtle approach be better? Either way, the result can improve the life of your business and that of your employees.

There are numerous reasons why a customer may become less than welcome. Printers tell me these include things like the customer is….

• not profitable (various reasons are in play here)
• not aligned with the strategic direction of your company
• abusive or contemptuous towards your employees or processes
• consistently understating scope of work required
• not learning from past errors they made that increase the cost of jobs
• continually changing the specs of jobs in process, adding work or increasing turnaround time
• arguing about agreed upon pricing when job is complete
• slow to pay invoices

No matter the reason, the decision to “fire” a customer cannot be made lightly. But if you are at or near the top of the food chain in your company it is a decision that sometimes needs to be made. Some of the reasons above can be negotiating points. Others may be the fault of the person(s) buying your services and be unknown to the leaders of your customer’s company—who may not care where jobs are printed, as long as they are done on time and on budget. Yet, as a leader or owner at your company you still have to make a decision in the best interest of your business, especially if any of the first three points above are among those that would make your world a better place if the customer were someone else’s problem.

Run the numbers
For example, you probably add up the costs of prepress, production, in-office work, shop floor, and shipping to measure customers’ total cost against how much you bill, to see the profit. You may find that the 80/20 rule applies in that about 20% of your customers account for around 80% of your gross revenue. You hopefully do this anyway and doing so for all customers on a regular basis shows which ones are profitable. Still, there are probably jobs and customers that you sometimes lose money on. Customers that regularly lose you money need to pay more or be shown the door.

Still, care must be taken when deciding which customers you might be better without. Where do you draw the line? It is not always obvious and drives other questions:

• Which are most and least demanding of customer service team?
• Which generate most and least revenue?
• Do any become a kind of cost center or are simply more trouble than they are worth?

If you are shaking your head, you’re right: as you think about your own book of business there may be no clear answers. But there is a clear question: what is best for your business?

Time to Say Goodbye
It’s always best to let a customer down easy and provide a soft landing because you never know if you will need them again, even if it is in a different relationship. In some cases it may be useful to explain the issues that concern you, such as if your strategic direction has become labels and packaging while a customer’s needs are brochures and marketing collateral. In this case, the fit is may no longer be there and customers usually understand this. This can work well if the focus of your work is indeed changing. If your strategic focus isn’t changing, you may be able to…

• offer a schedule, such as 30 to 60 days before new changes, policies and procedures take effect so both you and the customer can step away from each other more gracefully
• increase specification requirements for incoming jobs that help enforce your expectations
• insist that all jobs arrive electronically and go through an automated quoting process
• raise prices that may “push” an unprofitable customer away

All of these can be automated in job submission software. No matter what you do though, it’s a good idea to help a customer find another resource to for printed materials. This often makes the transition easier and less stressful for the customer and you come out as the “good guy” who has always had the customer’s back and is helping out even though your capability to do so may be limited.

There is usually no best time to “fire” a customer but making it easier makes the process less stressful for all involved.

All the reasons you mentioned about customer not becoming welcome are true. Considering present circumstances a soft lending would be prudent for me. It's all a demand and supply game, in my opinion. Time is not on our side

 

[tngcas]

We've fired customers. Specifically ones that reject jobs that were printed within our shop's tolerance and the customer makes it clear that they're going to expect free reprints every time some minor tiny thing isn't perfect. Those customers cost us more money than they're worth and we don't need to invest time with customers who can't be reasoned with. They need a print shop that charges 3xs what we do and are willing to hold their hand and babysit every aspect of their job. Our business model is "keep it simple" so that we can process 98% of our jobs quickly.

We also turn away business that we don't enjoy doing upfront. There is a point at which no amount of money is going to make us happy to deal with their job especially when we can make the same amount of money processing 5 other jobs that are much easier to deal with and with less headache. I know there are other print shops that will do anything for any customer. If we hear about a project and it sounds unenjoyable to work on, we just say upfront that we are the wrong place to handle that kind of order. There's a ton of print shops in town that do the exact thing the customer wants and enjoy doing it and we'd rather send the customer there.

For example: We don't stock colored paper at all so when we get requests for that we direct customers to a shop that does. Our shop doesn't want a bunch of unused reams of color paper sitting around waiting for the "right" next customer to want that shade. Besides, It makes me grumpy to see money sitting on the shelf. We made that mistake the first year in business and had 4 reams of leftover lilac cardstock sitting on the shelf for 5 years because nobody else ever wanted it. Finally donated it to a local preschool

 

[Craig]

I fired a customer that was just under 230,000 year account. He thought he could dictate how I should run my shop. I talked it over with the employees, told them it was going to suck for a while. Actually it was like parting water. No sooner after we stopped his work other orders filled right back in.

 

[signsny]

That's a tough decision to make that we don't love to do. However, we have to do this sometimes.

 

[TJPrinter]

When I started my business almost 30 years ago a wise printer told me to remember a few simple things.

You’re not a bank, no payments no more work completed
Explain to your customer that this is out of your control and only they control whether new work is completed or not (no check, no work)

You’re not a warehouse, when the job is done it either gets delivered or picked up and either billed or paid for but the clock is ticking once the job is completed

Don’t allow customers to bring you into their universe of chaos.

Put these all together for one customer and they need to be fired.

 

[Possumgal]

I worked for a printer for over two decades. The last few years under a new owner it was do whatever the customer wanted. The last manager would take on jobs we weren't equipped to do at all, such as five copies of a small paperback book. We wasted so much money trying to do work we absolutely couldn't do, but the owner and manager wouldn't listen to the employees. You talk about frustration.