Reseller News

How To... sack a customer

It’s a cliché, but breaking up a personal relationship is never easy, and the same is true in business.

Client relationships can be worth a lot on paper, but they can also be a drain on resources and time. Like any relationships, professional agreements can turn sour. So when should service providers, whether in IT, public relations or other fields of expertise, decide to sack a customer? Reseller News canvassed a range of professionals to find out.

A key issue in finding the answer to these questions is determining customer value.

Packet Technologies co-director Frank Ollie says vendor relationships are more important to his company than revenues.

“We value the relationships most of all. Some companies we do anything for and don’t sell that much of their product. We just like the people and the company itself.”

A change of personnel in one of the organisations can prompt the end of a business relationship, he says. “That’s when you might look at the revenues and say, we don’t do very much.”

However, he says the timing of ending an agreement is more important than how you go about it.

“Most contracts or agreements easily allow anybody out and either side can demand it. When is very important, because you might have a big deal pending.”

Public relations veteran and senior counsel at Botica, Butler Raudon, Allan Botica, says there are many reasons a relationship can enter what he describes as the “red zone”.

He agrees with Ollie that these include a change in personnel, but can also be attributed to restricted information flows and advice going unheard.

A new person may simply do things differently, or may not be aware of a person’s strengths and weaknesses the way those in extended business relationships are.

“The quality of the information you get may weaken, and it may be all mediated through a formal brief, which is never as good.

“When you give advice and aren’t being listened to by the right people, that’s also a sign something is amiss and is a difficult thing to rectify.”

Botica also says revenue doesn’t always determine customer value, and often shouldn’t.

“Sometimes customers represent the greatest revenue stream, but it costs you more to service them than any other client. Also, if the client knows they represent too large a part of your business it’s potentially a bad relationship. They’ve got you over a barrel, it has to be a relationship of mutual respect.”

Chris Maclean, sales and marketing director of Maclean Computing, says prevention is the better option when it comes to incompatible customers. “To avoid getting into a difficult situation, the best option is to be clear about your target market and pass on misfits up-front. For example, we know we’re not going to add the right level of value for a one-man band, and it would only end up being frustrating for everyone if we took them on.”

Also, Maclean says it is important to differentiate between a customer who is difficult for no good reason, and those who have a genuine reason to complain. “Look after the latter and take pride in sorting their issue out.”

Maclean suggests three approaches to take when a customer has to be moved on.

The first is to have the courage to be up-front and honest. “There’s nothing wrong with saying to a customer, ‘this isn’t working, and it’s probably nobody’s fault. How about we part ways and move on?’. Quite often it’s just what they need to hear and things rapidly improve whether you move them on or not.”

The second is to increase your charges, as a high-maintenance account costs more to manage. “Put your prices up and it will either make it worth dealing with them or they’ll choose to go elsewhere, both of which are good results.”

Maclean’s third suggestion is to assign the customer to a different level of account management. “If you have tiered account management, demote them to a lower cost of sale, which will either make them profitable or they will seek more attention and go elsewhere.”