How to Break Off a Relationship with a Toxic Customer

by / Tuesday, 02 September 2014 / Published in Small Business Financing

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Would you ever turn away a customer? While conventional business wisdom holds that the customer is always right, like so many things in business there are clear exceptions to this rule. Customer relationships that turn sour can create major sources of stress for small business owners, but apart from that, can also place major drains on finite time and capital that can be tough to recover from if allowed to get out of hand.

Identify if your customer relationship makes sense, or if you are stretching to accommodate for a poor fit. Common problems that can arise because of a toxic customer relationship including scrambling to accommodate for a customer that simply isn’t asking for services or products within the realm of what your business is able to offer. While you may have some strongly performing products and others that don’t perform as well in terms of sales, you offer what you offer and constantly stretching outside the bounds of what you typically produce for a single customer can seriously eat into your time to the detriment of further business development.

If you recognize a potentially dangerous relationship, be honest with your client about what you are able to do for them. Customer service is an essential part of any small business, especially since having strong client onboarding processes means that you are also able to screen your new customers to see if they are really getting what they are looking for from your business or if they might have made an incorrect choice. That said, if it is only after the fact that you realize a client is a bad fit for your business, being honest and professional with them is the best way to mitigate damage to your business, both in terms of lost time and in terms of damage to your reputation. Explain what it is that you are able to offer, the difference between what that is and what it is your client is looking for, and if you have a complementary business to refer them to, then so much the better. Being upfront is almost always better that making breaking up with a customer into a drawn out process.

If you are doing extra, custom or contracted work, either create a framework that allows it to be profitable or don’t do it. Often the reason that a business continues to deal with a toxic customer is because they are under the perception that if they lose their one client they might not be able to replace the lost business. However it may very well be the case that the reason that a difficult client makes up a large part of your client base is because dealing with them has taken the wind out of the sails of your customer outreach. If their difficult nature is eating away at the profitability of your time, then either work out a pricing plan with them that allows you to create necessary revenue for your business, or be honest with them about the deleterious nature of your relationship.

Photo Credit to Simon Strandgaard on Flickr

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