A firm may be better off without certain customers

01/12/03
Brigham Young University
By By Steve Gibson Printed in the Deseret News

Most business owners know what it is like to have to fire an employee. But do they know what it is like to have to fire a customer?

I do. In fact, I once "fired" six customers in a week. Let me tell you how it happened.

It was near closing time on a Friday afternoon in Littleton, Colo., when I received a telephone call that effectively changed the way I ran my fast-growing medical oxygen business. Mrs. Garcia was on the phone, screaming that my oxygen machine was going to kill her and that I had better get my . . . well, you know . . . my self over to her house to rescue her.

Calls like that are always worrisome. I had worked hard for nearly five years to take good care of our customers. They had a choice of 36 other oxygen dealers in the Denver area, so I constantly preached customer service to our employees. I was always telling them: "Do whatever you have to do to keep a patient."

Now it was my turn to "save" a patient. I hurried out the door, grabbing a full oxygen cylinder on the run.

All my employees knew Mrs. Garcia. Like most of my patients, she could usually get along for hours without supplemental oxygen even though her lungs were partially ruined as a result of years of excessive smoking.

Her greatest need was at night. But unlike most of our patients, she often would call with extreme demands, usually accompanied by screaming - and occasionally cursing - to add color to her ill-mannered temper. Her oxygen concentrator ran on electricity, which made her life a lot easier because it would never run out of oxygen and could even be hooked up to the car battery so she could get out of the house more. That afternoon, I got to her home in record time by weaving in and out of traffic and running several nearly red lights in the process. My nerves were frayed as I had actually endangered my own life to get there to meet her needs.

When I banged on her door, her husband answered and said everything was OK. Their grandson had pulled out the plug. Now that it was plugged in, everything worked fine. After I caught my own breath and calmed down a bit, I suggested to Mr. and Mrs. Garcia that if they had another emergency where Mrs. Garcia thought she was going to die, they should call 911.

As a result of that experience, I started looking at our customers differently. I categorized them into three different types: those who generated high revenues but low margins; those who generated low revenues but high margins; and those whose revenues and margins matched.

Within a month I "fired" Mrs. Garcia and five other patients after making sure that there would be an orderly transfer of service from us to a competitor. Before I made those changes, however, I discussed my thoughts with several of my employees. All had felt tremendous unnecessary pressure from the six patients; consequently, they agreed with my decision. That discussion gave me an opportunity to remind my employees that while every customer is important to us, as the owner, I could occasionally help a customer change companies.

You may want to do a similar analysis of your customer list. Are there clients there that you and your company would be better off without? If so, I suggest you carefully plan how to kindly but firmly refer them to another company. Believe me, your business, your employees and even your bottom line will be better for it.

author1 is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at Mr. Williams is associated with the BYU Center for Entrepreneurship. He can be reached via e-mail at cfe@byu.edu. .