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Awkward Customers? Well, Sack Them

by Helen Beckett, Mail on Sunday

 

They might be late making payments. It could be that they always complain. Or they may just be unprofitable. Whatever form they come in, bad customers can be a great burden on a business and while it goes against the grain, the argument for getting rid of them can be strong.

Last year Matt Somers, owner of Peak, a Sunderland-based company offering bespoke training in management skills began sacking customers who behaved badly. And the results have been impressive.

'In the last year turnover has risen by 25 per cent and profits have been boosted by up to 10 per cent,' he says.

Bad customers come in all shapes and sizes, but they do share common traits.

'They quibble about price and constantly squeeze you for more,' says Matt. He has also found that they make a relaxed style of negotiation almost impossible.

Robert Craven, associate fellow of Warwick Business School's centre for small and medium-sized enterprises, doesn't mince his words when describing poor customers.

'Pond life generally accounts for 20 per cent of a business's customer base, but can soak up 80 per cent of its time and resources,' he says. 'That's time that can be more profitably spent winning business from good customers.'

Matt identified the problem when he started talking to other business owners. 'I realised that many businesses shared the problem and it was OK to do something about it,' he admits.

Laura Brown, director of Leeds-based event management company Circle Events, also sees advantages in turning away bad business.

'I very politely told a customer that he could call back when he knew what his budget was for an event,' she says.

Brown believes the business has benefited from saving time on nurturing flaky customers. 'We've gained more credibility as a result,' she says.

 

publication details

The Mail on Sunday, August 19, 2007