Many businesses have had to deal with a bad customer or two. But if you have toxic customers who cost more to service than the profit they contribute to your bottom line, you may want to consider letting them go.
Potentially Toxic Customer Warning Signs
But what does a toxic customer look like? There are a few warning signs to consider:
1. The customer no longer needs your services. Does it seem as though the customer is wasting their money on your service? If they're not getting any value for what they spend, they may eventually end the relationship.
2. The customer is disregarding advice. These type of toxic customers may end up hurting your company's reputation if they decide to blame you for their lack of success. This can lead to a dissatisfied customer, and maybe even a bad review on social media.
3. The customer is not willing to pay a price that is profitable. In addition, they may not be paying their bills on time. This is probably not the type of customer who can build positive cash flow at any company.
4. The customer has asked your team to do something illegal or unethical. Regardless of what they promise to pay, if a customer has behaved unethically or illegally, consider seeking legal or human resources advice. You may also want to consider the possibility of terminating the relationship immediately if necessary.
5. The customer has behaved inappropriately toward one of your employees. This is another case where human resources advice may be needed. Accepting this type of behavior is not a benefit to any business culture and may reflect poorly on you as a business owner.
Letting Go of Toxic Customers
When determining the cost of toxic customers, you may want to include discount pricing, the additional time used to address their complaints or any other special favors. These toxic customers may be the same companies that show disrespect to your employees or disrupt your team's morale because of their constant complaints. They may even be preventing your business from getting the profitable revenue it needs to grow.
If toxic customers are a large part of your company's revenue, you may want to handle the situation with care. It's not a bad idea to end the relationship based on a predetermined timetable. You can create a termination plan that does not severely impact your company's profit. This may take many months.
The first step is to identify a series of potential prospects that can replace the problem customer. Then you can begin to phase out the toxic customers from your business when these additional clients are added.
As you phase them out, it may be helpful to direct the toxic customer to other options for their needs. You could then set an internal date at which your company will no longer be doing business with them.
After the toxic customer is gone, I would recommend not permitting your employees to speak negatively about those past customers. This is just gossip and serves no business purpose. In a social media world, there is always a danger of this information getting back to past customers through current or former employees.
Have you ever had to fire a toxic customer? How did it affect your business?
Read more articles on customer engagement.