Out of the Box

Firing Your Customer

By Menachem Lubinsky on July 13 2007

Customers who are a “pain”. Almost every business has them, but few would ever think of “firing” them. They would have loved to send them a letter that said: “Thank you for your past loyalty and business, but you no longer fit the profile of the customer we seek for the future”. It would certainly make a lot of business people happy.

Businesses sometimes “fire” customers for a variety of reasons that can legally stand up in a court of a law. Insurance companies are notorious for “firing” customers that they no longer consider profitable, particularly those that appear to be in the high risk category. Obviously, a company has the right to dismiss a customer for non-payment or even for consistent late payment.

Sprint Nextel made news recently when it decided to “fire” up to 1,200 of its customers, primarily because they complained too much or were simply “noodges”. What makes this story so remarkable is not simply that it might be considered bad PR, but that this is a company which already was loosing more customers than its competitors. Sprint argued that these thousand or so customers were straining their resources in serving the other 50 or so million customers.

An owner of a women’s wear store once wrote me about a problem he was having that while not being exactly like Sprint points out a common problem that businesses have. He bemoaned the fact that a handful of his customers tax his 3 workers to the point where they are forced to neglect the other customers in the store. He wrote: “Every time this one group of 3 come into the store, they stay for hours, make all of our salespeople crazy and leave without purchasing anything. I wish I could put a meter in my store”.

A Midwest clothing retailer made news when it decided to charge for using one of its “associates” beyond “routine and acceptable business practices”. I am not sure exactly how routine and acceptable were defined or if the retailer in fact put the policy into practice. The important element here is that it is a deep concern for businesses.

Southwest Airlines requires obese passengers to buy two tickets in advance. A Brooklyn health club put a limitation on the amount of time clients can “linger beyond their actual exercise time”. These appear to be tactics to deal with the less than desirable clients. While some business experts applaud these measures as a necessary evil in achieving a healthier bottom line, marketers almost universally view “firing” clients as counterproductive.

There is no question that the immediate impact of Sprint’s decision was a black eye in the eyes of both its customer base and cellphone users in general. A company that can’t stand the heat in today’s day and age is never viewed favorably. This is a company with almost 53 million customers. It should be able to deal with the “noodges”.

No, businesses do not have to play dead in the face of certain customer behavior that robs them of the opportunity to serve the majority of its customer base. Establishing policies that appear to limit a customer’s ability to “noodge” is far better than “firing” the customer.

If you listen carefully to the marketing experts, they are not unsympathetic to the Sprints of the world. It is just that developing and maintaining “goodwill” is such a centerpiece of marketing strategy that any effort that appears to compromise that objective is looked at with disfavor. Companies like Sprint and Southwest invariably loose goodwill when they resort to hard-nosed tactics to bring customers into line.

There is a great deal of evidence that potential customers make decisions based upon how they perceive customers are treated. Take this scene as an example: A diner at a restaurant is extremely agitated about the food he was just served. He summons the waiter and the conversation gets somewhat contentious. The manager quickly appears and begins a process of apologizing and soothing the diner. He probably would have liked nothing more than to “fire” the diner, but he knows that the other customers are watching and that’s what he is really concerned about. He quietly takes the dish, produces a menu, and brings another course.

Yes, customers do look over their shoulders. They are keenly aware that a fellow passenger on a flight has been mistreated. They know that a customer in a retail store was not handled correctly and so forth. You have to assume that Sprint customers are looking over their shoulders and perhaps when it is time to renew their contracts, they may just choose another carrier and it all reverts back to the day the other customers were “fired”.

Even if Sprint felt that they had no choice, perhaps they could have done the “firing” more tactfully, even offering a slight cash incentive. They did not have to go public with the fact that these customers are “noodges” and instead given some kind of excuse that “they are re-evaluating the needs of their customers” and so forth.

“Firing" customers is an extreme step that requires assessing the potential damages to a company’s image. This may be a perfect case where keeping the “noodges” outweighs the benefits of firing them. If you are ever in the position of absolutely having to fire a customer, make sure you step back and think of the consequences. Remember, Americans like to say that “the customer is always right”.

Out of the Box is a collection of strategic marketing articles that Lubicom has published on various topics, trends and ideas in the marketing world. The articles have been published in the Hamodia weekly newspaper circulated on three continents to a readership of well over 100,000.

The name, "Out of the Box" is a term used frequently in business nowadays to describe creative thinking that is not the norm. It is meant to help a business pull away from the pack or separate oneself from the competition. It is to some extent fraught with risk, simply because it is not the run of the mill thinking, but it is at the same time the key to reaching the next opportunity.

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