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By BusinessCollective
March 20, 2015

Question: When (and how) should you fire a customer?

If They Cause 80 Percent of Your Headaches

“The 80/20 rule states that 20 percent of your customers are accounting for 80 percent of your headaches. Fire those customers who are zapping your time and energy, and re-invest it in the 20 percent of customers who create 80 percent of your revenue. There’s an abundance of great customers out there, and no reason to cling onto the ones who make you miserable!” — Patrick Conley, Automation Heroes

When Expectations Are Not Aligned

“If it becomes clear that your product or service is not going to be a good fit, it’s time to let go. Continuing on risks building ill will. Often, your product isn’t the right fit for a given customer, but he or she can still refer you to contacts who would be a good fit.” — John Rood, Next Step Test Preparation

After Disrespecting Employees

“If a customer repeatedly disrespects your employees, if employees are afraid to pick up when the customer calls or if the customer sucks up a disproportionate amount of your time by being indecisive or making constant (and unwarranted) requests for changes, it’s time to move on.” — Matt Mickiewicz, Hired

If They Violate Your Contract

“For coaches or consultants, a good client contract will detail how both parties can end the relationship. Follow the guidelines you set out at the beginning of the contract, and give clear notice that you are ending a contract. If your contracts don’t have this clause, get a lawyer to edit your agreement right away!” — Kelly Azevedo, She’s Got Systems

After You Know Your Worth

“You have to be aware of how much your time and effort is really worth. Once you know your value, you can better evaluate what business to pursue and which customers to seek or avoid. When you figure out your worth, it helps you zoom out of a difficult situation and look at the larger picture, so the conflict doesn’t dominate your decision process.” — Seth Talbott, CEO and Startup Advisor

When They’re More Trouble Than They’re Worth

“The customer is not always right, and all customers certainly aren’t always right for your business. The moment one of your customers becomes more trouble to manage than their business is worth, cut them loose and look for a better partner. You should also refuse to work with customers who are disrespectful to your employees. Having bad customers is the quickest way to poison office morale.” — Brittany Hodak, ZinePak

Six Months Ago

“By the time you decide to fire your customer, you probably should have done so six months ago. Are there certain customers who are taking up a disproportionate amount of your time for the amount of profit that they generate? Then it’s time to let go. However, don’t just fire the unprofitable ones. If they cause a lot of stress, get rid of them gently but firmly and find replacements.” — Emerson Spartz, Spartz

When It’s Not a Good Fit

“When a client and provider aren’t a fit, neither one wins. Let them down easy by grounding in what’s true about the situation — it doesn’t feel like the best fit, but you want to ensure they get the top-notch service they deserve. Their time and money are precious and would be better served by someone who (fill in the details). Try to recommend at least two other providers they can contact. ” — Jenny Blake, Jenny Blake

At the End of Every Year

“Identify the value of each customer and how much time you are spending on them versus what you are bringing in. At the end of every year, try to get rid of the bottom 10 percent of customers who take all your resources and provide the least ROI. As for firing them, just be honest that it is not working out, and give them the resources to easily make a transition.” — Kevin McGann, GraduationSource

When They Violate Your Client Standards

“One of my best friends fires clients for being abusive to his coworkers or employees or demanding unreasonable expectations of the company. This friend has been firing clients for a decade and has found that staying with that decision — no matter what the immediate financial consequences are — has earned him more respect within his industry than if he took on a lot of problematic accounts.” — Robby Hill, HillSouth

When the Value Is Diminished

“A client-vendor relationship is a valuable thing. If one of you no longer sees the other as valuable to the business, the relationship will disintegrate on its own. It’s tempting to keep relationships going past their “sell-by” date, but don’t. By stepping back when it was right for my customers, I’ve gotten repeat business and referrals instead of frustration and stress.” — Maren Hogan, Red Branch Media

Before Things Go Sour

“If your customer is costing you more in time, energy and stress than they are providing you in compensation, it’s time to end the relationship before things go sour. Make it as friendly as possible, with the “it’s not you; it’s me” and “lets be friends” route. You never want to burn bridges if you can avoid it.” — Benish Shah, Before the Label

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

This article was originally published on StartupCollective.

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