Don't Wait to Fire That Toxic Client — It's Vital For Your Business Health

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I’m someone who either goes all in or not at all, whether in business or in my personal life. I once had a close friend and former colleague with whom I bonded over our shared passion for entrepreneurship. At first, our friendship was great, but over time, it became one-sided and toxic. My efforts to keep the friendship alive were often ignored or dismissed.

Eventually, I realized it was time to let go and move on. In my lengthy career as an entrepreneur, I’ve noticed similar dynamics play out in business relationships. Do business long enough and you’re bound to encounter your share of toxic customers and clients. What I’m surprised by is how many entrepreneurs waver and delay rather than take prompt, decisive action.

In both personal and business situations, there’s a powerful sense of freedom that comes from the ability to say “no.” Whether it’s deciding “No, I don’t have room for this person in my life,” or “No, I don’t want to do business with this customer anymore,” the word “no” can be liberating.

For a growth-minded entrepreneur, the idea of cutting ties with a customer, even a difficult one, may feel counterintuitive. After all, aren’t you supposed to cater to their needs, keep them happy and convert them into a raving fan? In the long run, though, letting go of a toxic relationship might be the most strategic decision you can make for the health and growth of your business.

Why bad clients are bad for business

A bad client can do more than give you a hard time; they can also deplete your business’s resources and morale, both in the short and long term. You’ll undoubtedly feel the drain on your firm’s energy and the opportunity cost slipping through your fingers as you cater to outlandish and often escalating demands. Even if you stick it out and conclude the business with the client on good terms, your employees may resent what you put them through. Furthermore, the time and energy that could have been spent servicing other clients or working on other core aspects of the business is not worth the satisfaction of one ultra-high-maintenance client.

The following is from an actual correspondence chain that circulated amongst my staff during a squabble with one such problematic client:

[This customer] … is upset that we will not customize our marketing for him. He has spoken to [four members of our staff] and is still not happy.

…

He has been extremely insulting since I started the conversation with him. He was the same with [two other staff members]. The names he has used to describe our company and our sales team are [highly offensive].

…

I don’t think we should continue working with this person at all.

For me, this wasn’t a difficult decision. To the extent I trust my staff, I trust their consensus that this customer is not someone we want to work with. I ended the relationship and accepted the fallout. In my experience, a negative review of your business is a small price to pay when the alternative is to compromise your business’s integrity and risk the well-being of your team.

Making the most of a bad situation: Regroup and grow

Whenever your business encounters a setback, it’s essential not to overlook any potential advantages. When severing ties with a difficult customer, take the opportunity to demonstrate to your team that you fully support them. Listen to their feedback and acknowledge their hard work and the challenges they faced in dealing with this customer.

Just as individuals reflect on what they truly want in a partner after a romantic breakup, as a business owner, you should do the same after ending a troublesome customer relationship. Use this moment to consider what types of customers are best aligned with your business goals.

This exercise is sometimes referred to as creating your “customer avatar.” Based on real data and market research, customer avatars help you gain deeper insights into your target audience, enabling you to craft more effective marketing strategies. Developing these avatars can be an engaging and collaborative exercise for your team.

When to stop chasing ghosts

Bad customers come in several forms. In contrast to the needy, obnoxious and abusive variety is the customer who quietly fades into the background, going radio silent. They might frequently miss deadlines or fail to provide the necessary information or resources to move projects forward effectively.

Initially, it’s important to give them the benefit of the doubt. Life happens, and they may be dealing with unforeseen circumstances — maybe they have an emergency or are overwhelmed with something unrelated to your project (like a sick pet or a family issue).

See if you can get them back in the groove. Send a friendly message about the progress you’re making, express how much you value their collaboration and inquire about how they’re doing. Your passion might remind them of the value of the work you’re doing together and encourage them to reengage.

However, if repeated efforts to reconnect fall flat, it might be time to recognize that this client isn’t a good fit for your business. Not every partnership works out, and that’s okay. Sometimes, the best course of action is to gracefully let them go, freeing up your time and energy for clients who are more aligned with your vision and values.

Turning the page

Entrepreneurs are not naturally inclined to push business away. When it comes to toxic clients, however, we must tap into our deeper instincts. We know that cutting them loose will benefit ourselves, our team and our business. Nevertheless, taking decisive action can be challenging.

Soon after I ended that lopsided friendship, I began to appreciate the extra time and energy I had available for my family, my business and other friends. For the cost of a brief uncomfortable conversation, I’d obtained weeks, months and years of relief. Keep this cost-benefit calculation in mind the next time you have to fire a toxic client. Your efforts aren’t in vain but are, in fact, purchasing something of great value.

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