Years ago, there was a popular trend to implement these “rules” of customer service: The customer is always right. If the customer is wrong, see Rule #1. Frankly, both of these rules are wrong. Not only is the customer not always right, the customer is not always right for you and your business. In fact, they may be a toxic customer.
Here are some key points to consider when you’re in a situation with a toxic customer:
All of your thoughts are focused on how you need to serve this customer – and the thoughts are consistently not positive.
There’s nothing wrong to be focused on customer service and to be committed to serving your customers. If you’re totally focusing on one customer to avoid problems or conflicts, however, that’s a wrong situation. You need to manage your sales efforts and to balance your situation – which focusing on one customer is not a balanced situation. Trying to avoid contact or working on how to eliminate conflicts with the customer is a distraction from what you need to be doing.
It is more expensive to serve this customer than it is to let them go.
When you are spending a lot of time taking care of the customer, you are ultimately spending potential profits on the customer who is demanding your time. Think about the labor spent on your customer. Are your transactions profitable enough to offset the payroll and time costs you are paying to serve them?
You’re tolerating abuse from the customer.
There are some customers who are simply abusive. They may be yelling at you incessantly about every little matter. The customer may be constantly calling you to do more than what you know you should be doing for them. It is possible that the customer is choosing to play games with your payment. Review the treatment you are receiving from the customer to determine what is happening.
Knowing it’s a bad situation you will change, here are some key steps:
Set parameters with your toxic customer – and enforce them.
Just like dealing with children, you need to determine what rules you need for your customer to follow – and then enforce them.
Limit your time which you will spend on your toxic customer, starting on profitability.
Figure out how much time you can profitably spend working with your customer. Calculate your profitability within the sales you generate from this specific customer – are you at least “breaking even” and making it worth the time and effort?
Unpaid invoices represent unearned income.
Many business owners think that an invoice represents revenue. If the invoice is unpaid, it represents no money in your bank account. Regardless of the customer’s promises, excuses, or even insults, you have earned no money for the transaction. It is a high priority for every customer to pay in full on every transaction.
If all else fails, cut ties with the toxic customer.
If you can’t gain parameters that can be agreed and maintained, it’s time to make the decision to stop doing business with the customer. Bad business relationships can be expensive in many ways. Making the healthy decision to move forward without dealing with the difficult challenges can be profitable.
A closing point of emphasis: cutting ties with a customer is not an acknowledgement of guilt for either party. We’re not talking about a situation where someone has to be “wrong”. Instead, it’s a situation where doing business with other customers is a better environment that is much more beneficial for everyone concerned.