This document discusses when and how a company should fire a problematic customer. It provides signs that a customer needs to be let go, such as if they engage in illegal activity, unethical behavior, mistreat employees, only value price over quality, or don't pay. It recommends a 4-step process to try repairing the relationship first by having an open discussion, determining if employees want to keep the customer and how, defining steps to improve the relationship, and planning for termination if needed. The goal is to thoughtfully address issues and terminate respectfully if repair is not possible.

1. Firing a
Customer
Is a Good Idea
Tom Walker
Sometimes

2. How do you know when you have
a customer you need to let go?
Look for these signs.

3. 1 The company or its employees
are engaged in Illegal activity.
This one is black and white.
Don’t do business with a customer
you know is breaking a law. You may
even have a legal responsibility.
Consult your attorney.

4. The company
behaves
unethically
or against
the intent of
the law.
Even if there is no legal
responsibility, do you really
want to build a business that
“looks the other way?”
That’s not the type of startup that
attracts investors, customers, or
outstanding employees.
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5. The customer has a
pattern of treating your
employees disrespectfully.
Harassment, bullying, even perpetual rudeness is not
something your employees should have to endure.
Everyone has bad days, and we can all be short or ill-
tempered with others. But if this happens repeatedly,
it’s your job to address the situation appropriately.
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6. The customer demands
price over value.
Unless your vision for your company is to be a
low-margin commodity business, be wary of
purchasing-agent driven customers.
It’s hard to create a successful new business
where price is the only “value-add”.
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7. The customer doesn’t pay.
Who needs accounts receivable headaches
every month, especially when cash flow is such
a challenge for new companies.
If the issue is law breaking, talk to
your attorney immediately. For other
situations, the goal is to repair the
relationship if at all possible.
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8. Follow these 4 steps
to attempt to repair
your relationship
with your customer.

9. Call a roundtable meeting
with all employees who have
anything to do with the customer.
Discuss what you can do to improve the relationship. Talk to the
customer openly and honestly. Assign the customer to different
employees. Change service terms. Lower expectations.

10. Determine if the customer is one
that the employees want to keep
If so for how long—from a month to forever,
until replacement revenues can be found, for
as long as they can stand it, only if the
customer will change behavior?

11. If yes,
define a path to
improving the
relationship,
with specific
actions and owners.
Set a 60-day review.
If no,
what has to
happen before
your company
can terminate the
relationship?
Fulfill contractual terms
Find a replacement customer
Reduce expenses to offset revenue loss
Notify the Board
Nothing[ ]

12. the process of talking through
the situation with sales,
engineering and the
administrative team identifies
ways to keep the customer.
Mostofthetime,
if the customer has to go, put
a plan in place to disengage as
efficiently and respectfully as
possible.
However,