Few experiences in sales are worse than losing a customer.
It often takes dozens of unanswered cold calls and emails just to get a conversation started. The idea of letting a customer go can seem antithetical to the job itself. If the client wants to do business, why not try to bring in that revenue?
That’s what Jeff Bajorek thought early in his sales career. It wasn’t until he walked away from a bad customer that he realized how powerful it can feel.
While the customer had accounted for a large percentage of his revenue, they also swamped him with constant complaints and demands to the point that he dreaded any time they called. Losing their business terrified him, but it also felt freeing.
5 Reasons to Fire a Customer
- They fail to follow through.
- They have too many demands.
- Value misalignment.
- They don’t value your expertise.
- They aren’t using the product.
“They were one of my top seven customers, but I realized after a couple months that I didn’t miss them,” said Bajorek, who now runs his own sales leadership coaching firm. “I didn’t have them weighing on me. I didn’t have the customer maintenance and all the check-ins. … It freed me up to go find better business.”
It’s not an easy lesson to learn. It took Bajorek several years to develop the confidence to walk away from bad customer relationships. But knowing when and how to part ways with customers can end up having a significant impact on your revenue stream and mental health.
Why Firing a Bad Customer Is Good for Business
Today, Bajorek likes to say that there’s never a better day in sales than when you fire your worst customer. But to understand why, it’s important to underscore the cost of doing business with bad customers.
From a business perspective, trying to sign or maintain a bad customer drains a lot of resources. They often come with a lot of demands and are difficult to satisfy because they aren’t having a positive experience with the product. This typically ends up increasing the customer acquisition cost, said Scott Salkin, who works for the customer success software company Gainsight as its senior vice president and general manager for its early startup services.
The sales representative has to spend more time trying to fix this customer’s problems, which takes away from time they could be prospecting and selling to more valuable partners. And the customer success team has to work harder to try and renew them.
“Having a bad customer fit can be a massive time drain, and it’s draining to the morale of the team,” Salkin said. “Those are the intangible things that you can’t quite put a hard number on but you know are hugely impactful.”
For new businesses, the increase in customer acquisition cost and damage to retention rates from sticking with bad customers makes it more difficult to assess product-market fit, Salkin added. Those bad customers skew the numbers, making it difficult to get a clear indicator of what the market looks like for the product and what businesses to target.
And since those customers are unhappy, they’re more likely to leave a negative product review and pass their experience on to others in their professional network, damaging your product’s credibility.
“The business world is small. … Word resonates quickly when people aren’t seeing value out of a product,” Salkin said. “That’s the biggest risk for a company at an early stage is having that backchannel narrative around the product that it doesn’t provide value.”
It’s Good For Your Mental Health, Too
Working with a bad customer also takes a personal toll on the sales rep.
Knowing that every time a customer calls is going to bring a new argument or negative interaction can get exhausting. It takes away the emotional energy required to prospect, potentially draining your pipeline from better deals. It can also cause you to doubt your abilities, said Hannah Ajikawo, who leads the Europe, Middle East and Africa business for sales consulting firm Skaled Consulting.
“It’s hard to recognize how much you’re holding yourself back … until you’re driven crazy enough to say, ‘This just isn’t worth it anymore.’”
“You start to go a bit crazy, like ‘I’m pretty sure I’ve done this 100 times, why is this customer so difficult?,’” Ajikawo said. “You can get into a weird place where you have to prove to yourself that you’re going to get them over the line [by] pushing them over the line.”
Over time, that mentality can start to impact your pipeline forecast and conversion rates because those customers are difficult to close, Ajikawo said. And when they do, it often takes a lot longer to convert them than a customer who is a better fit.
Often the impact of a bad customer is subtle. It’s not until the relationship is over that you realize how much energy they’ve taken up, Bajorek said.
“It’s hard to recognize how much you’re holding yourself back … until you’re driven crazy enough to say, ‘This just isn’t worth it anymore,’” Bajorek said. “Every time I’ve gotten rid of a bad customer, there’s been a bigger, better customer right behind them.”
Signs That It Might Be Time to Part Ways
Knowing when to drop a customer is never easy.
There’s no playbook that spells out the exact instant a customer crosses that line from being challenging to a bad prospect, Bajorek said. It’s often up to each rep to figure out their own boundaries and to trust their gut.
“The first question I ask people is, ‘Are you excited to hear from them?,’” Bajorek said. “If you’re not excited to hear from them, then they’re probably not worth the effort you’re putting into them.”
That said, here are some of the common warning signs that a customer may not be worth the trouble.
They Fail to Follow Through
One of the biggest red flags for Ajikawo is when a customer doesn’t follow through on their end of responsibilities.
Every sales engagement should be a partnership. While the rep bears the brunt of responsibility to create an action plan and prove their value to the buyer, the buyer also has to execute their own tasks — be it attending meetings, bringing in the proper stakeholders or sending timely communication to the rep.
If they miss a meeting here or fail to bring a stakeholder there, it isn’t a big deal, Ajikawo said. People are busy and mistakes happen. But when it happens multiple times, it often spells trouble.
Those actions not only slow down a deal and show a disrespect for your time, but they can portend future issues for other revenue team members.
Once you sign the customer, Ajikawo said, who’s to say they won’t flake on their partnership with the onboarding manager or in partnering with the customer success manager? And if they’re not responding to your emails now, will they respond when it comes time to pay?
If a customer is difficult to trust now, they may not be worth the potential revenue down the line.
Too Many Demands
A demanding customer can indicate a partner who knows what they want in the product and is invested in making the deal work. But it can also signal a client with unrealistic expectations or a bad fit.
Distinguishing between the two can be challenging, but there are instances when they can cross a line.
Bajorek recalled one customer who always had a list of new complaints and demands every time they called. Those requests often included threats to leave for another competitor and stretched the limits of the product. It’s difficult to ever satisfy those customers. Eventually, he started to dread whenever that client called.
“There’s a point where you [draw a line] in the sand and say, ‘Does this make any sense for us?.’”
Other warning signs include when a client keeps moving the goalposts for the project or makes unrealistic demands, like trying to get a premium version of the product while still paying the base price.
It’s not always about the product, either. Be on the lookout for customers who have expectations that push your personal boundaries.
Ajikawo once had a client who called her late in the workday asking for a detailed report. She told the customer she could either send them a rough draft of the report right away or give them a more detailed edition later in the week. They requested a copy that night, so Ajikawo sent them the rough draft. The next day, the client sent an angry email to Ajikawo’s boss complaining about the quality.
Every sales interaction will include some unique requests, but when those demands exceed the value the client brings or start to invade your boundaries, it might be time to let the customer go.
“There’s a point where you [draw a line] in the sand and say, ‘Does this make any sense for us?,’” Ajikawo said.
Another warning sign that it’s time to part ways with a customer is when their values don’t align with yours or the company’s.
You don’t always want to let personal feelings get in the way of a deal, but that doesn’t mean putting up with a customer disrespecting you. Those situations can be obvious — like when a customer makes a sexist, racist, homophobic or xenophobic remark — or subtle, like continually deferring to a man sales rep in a meeting over the woman rep, Ajikawo said.
Either way, dealing with those customers shouldn’t be a part of the job.
Issues can also arise if a customer’s values don’t align with your company’s core values.
For example, Ajikawo recalled a customer who wasn’t transparent about how much they were willing to pay sales reps. They used that as a tactic to underpay reps who didn’t negotiate a better salary, but it also flew in direct opposition to Skaled Consulting’s values around transparency and how sales reps should be treated.
“We chose to step back from that [relationship] because we can’t encourage people to work for a company that’s going to underpay them,” Ajikawo said.
Sure, the checks may clear and your company can solve their problems, but when it interferes with your mental health or the reputation your company has built, it’s not worth continuing the relationship.
They Don’t Value Your Expertise
One of the first lessons any sales rep learns is how to provide value to the customer. It’s one of the main tenets of modern selling. The more you can use your industry knowledge and expertise to solve a customer’s issues, the more they’ll want to work with you.
But its impact extends beyond closing a deal. It’s also crucial for establishing a successful customer experience.
The rep or customer success manager has the ability to provide recommendations for how best to apply the product to meet the customer’s targets. If a customer constantly dismisses or ignores your opinion, it could be a sign that the partnership isn’t going to work out, Bajorek said.
“When I’m constantly being argued with and when it feels like they don’t respect what I bring to the table, that’s when I start to feel like they’re buying from me for the wrong reasons,” Bajorek said. “They’re trying to get something out of me that I didn’t sign up for.”
Bajorek recalled a customer who sought his sales consulting services. They’d ask for his advice, but they never put it into action and then complained that Bajorek wasn’t helping them. After putting up with that, Bajorek realized he needed to let them go.
“I felt 20 pounds lighter as soon as I let him go,” Bajorek said.
Some disagreement is natural, but constant dismissal of your advice often indicates a friction between how they want to solve a problem and how your company solves it. As a result, they may not see the right value from the product.
“We have this idea that the customer is always right, but I think that’s false,” Bajorek said. “The customer thinks they’re always right, but that’s because they don’t know what they don’t know.”
They Aren’t Using the Product
A customer doesn’t always have to be difficult to be a bad fit. If the customer isn’t meeting your product usage or adoption benchmarks, it’s usually a clear sign that the relationship isn’t going to work out, Salkin said.
Those metrics often indicate whether or not the customer is getting the full value out of your product. When they aren’t meeting the benchmarks after repeated business review sessions and training, then there’s likely a misalignment.
“If you are honest and transparent, there is a great chance that that customer will eventually come back when they’re in the right place.”
In some cases, it might indicate that the customer was sold a fix to a problem that the product doesn’t currently solve. In others, it could suggest that the customer doesn’t have the proper infrastructure to make full use out of your product, Salkin said.
Either way, if the customer isn’t using the product as intended, they’ll eventually become frustrated that they’re not seeing the proper value out of it. The sooner you can surface those issues, the better chances you have of ending the relationship on good terms and re-signing them in the future.
“If you are honest and transparent, there is a great chance that that customer will eventually come back when they’re in the right place,” Salkin said. “If you try to put the spin on and convince them why it’s great to stay, … chances are the relationship will continue to deteriorate.”
How to Break Up With a Bad Customer
Breaking up with a customer is never easy. It not only means letting go of a potential or recurring revenue stream, but it can also make for an uncomfortable confrontation.
Before you dive into the meeting, Bajorek suggests first having a plan in place for how you’re going to replace that revenue. The best way to do that is to first make sure your pipeline is full, and if it isn’t, rededicate yourself to prospecting and scheduling meetings.
6 Steps to Fire a Bad Customer
- Have a plan to replace the lost revenue.
- Document specific examples that support your reason for ending the relationship.
- Meet with your manager.
- Schedule a meeting with the customer and come with the goal of getting the relationship back on track.
- Provide solutions to remedy the situation.
- Suggest potential companies that they’d be a better fit with if the situation is irredeemable.
A full pipeline not only helps you replace that lost revenue, but it can also be a powerful confidence boost. It allows you to give yourself permission to fire the customer, which can help you reestablish boundaries and sometimes improve the relationship, Bajorek said.
“The first thing is believing that there’s something better out there,” Bajorek said. “If you don’t believe there’s something better, you’re going to feel stuck. And that’s no place to be.”
From there, you should check in with your manager. Bring specific examples of the issue and a plan for how you intend to replace the revenue. They can help you evaluate whether the relationship is salvageable or not and lend authority when you meet with the customer, Ajikawo said.
The next step is to schedule a brief meeting with the customer. As much as you might want to end it with an email or voicemail, taking the time to have a conversation is crucial for clearing the air.
During that meeting, it’s important to come prepared with your key talking points and specific examples that support your reason for ending a relationship. Being able to cite moments when the customer relationship isn’t working out allows you to have a fact-based conversation rather than an emotional one. In doing so, you can give the client an opportunity to remedy the situation or acknowledge that the partnership isn’t valuable anymore, Ajikawo said.
“What you’re hoping to do is put the sales engagement back on track,” Ajikawo said. “We are here to have this conversation that may get a little difficult or feel a little uncomfortable because we want to work together. But based on how it’s working right now, we cannot, and it’s for these reasons.”
No matter how contentious the customer relationship has been, you never want to leave a relationship on a sour note.
Remember, the business world is small. Customers can easily leave negative reviews or share their experience with other potential clients. For that reason, Salkin suggests coming prepared with a few solutions to remedy the situation or potential companies they’d be a better fit with.
Ultimately, there are two sides to every sales partnership. Odds are, if you sense that a deal isn’t working out, then the customer does, too. Sometimes it’s best for both parties to walk away, even at the risk of losing revenue.