The concept of firing a customer for the right reasons is not new.  Fred Reichheld, Bain fellow and  creator of the Net Promoter System, suggested that firing customers would be the big CX idea of 2015.   Companies have little trouble firing customers who engage in criminal activity against the company.  However, the waters become murky when the offending behaviour is the mistreatment of employees.  The concept is no longer foreign but not yet a common part of strategic thinking at most businesses.  Nevertheless, several ideas have come to life that help business leaders understand the importance of firing customers under the right circumstances. Chief among these are:

The understanding of good vs. bad profit.

There is a growing understanding that not all profit is good.  Bad profit is unsustainable and is based on extracting value from customers.  Good profit is sustainable because it is based on creating value that attracts and keeps customers.  Bad profit stems from practices that creates detractors.  Sometimes these detractors voluntarily leave but often times they are what I call “functioning detractors”.  Functioning detractors are more costly to serve and stay only because 1) the pain of switching is too high in their eyes or 2) they see the competition as having no better experience. Functioning detractors are a nightmare for employees to deal with.

As far back as 2011, Anthony Tjan (then CEO of a venture capital from wrote in his HBR article, “It’s Time to Fire Some of Your Customers”, that “At our venture firm, when we evaluate a business model we think very differently about a dollar of revenue with a high probability of recurrence (i.e. a customer who will buy again, making it high quality revenue) versus dollars of revenue that need to be constantly be replaced with new customers. We believe the threshold for a high-quality-of-revenue business is a revenue recurrence rate of over 85%, meaning losing no more than 15% of a customer base each year.”

The rising importance of employee experience.

This is perhaps best encapsulated in the Richard Branson quote, “Customers do not come first. Employees come first. If you take care of your employees, they will take care of the customers”. Employee experience is considered less as the first cousin of customer experience, but rather as its mother.

Employee experience is taken seriously now.  The short story is that having customers who are overly abusive toward your people or policy cost the business in terms of degraded colleague morale (and eventually culture) and increased cost to serve.

Interestingly, the idea of a “Karen” has been popularised in the USA.  A “Karen” is a now colloquial term used to describe an unreasonable person who feels and acts entitled and demanding beyond the scope of what an average person would consider normal, even in mundane situations.  Employees now have a term to describe the unreasonable customer that is immediately understood, even if the business has not grasped the idea.

All businesses should be better understand what are the red lines that customers should not cross with their employees.  Airlines seem to be getting clearer about their red lines for customer behaviour.  Customers are being removed from flights and barred from flying with that carrier for certain behaviours.  Companies like Airbnb allow its network associates to rate customers.  This then allows the company to block customers with poor ratings.  Uber does this.

Firing Customers

In the 2021 Forbes article “Some Customers Aren’t Worth Doing Business With: When To Fire Your Customers”, Shep Hyken outlines three good reasons to fire a customer, when: 1) you aren’t able to meet the customer’s expectations and don’t think you can,  2) the customer is unacceptably rude to a team member and  3) the customer has not paid for the product or service you provide.  In reality it is difficult for most businesses to think of firing customers except for the most extreme situations.  There are a few reasons for this and these reason outline what’s required fire customers appropriate becomes a strategic action.

1. The company has not defined its red lines. The field of employee experience helps here.  Employees need to feel the company has their back and also understand that they are not simple backdrops for the company to use.
2. The company has difficulty monitoring interactions to determine when a red line has been breached. AI will help here.  AI will enable all interactions to be monitored and analysed in real time with flags indicating when a red line has been breached.  This will be helpful and valued by employees who will have immediate back up and suggested courses of actions for functioning detractors.
3. The company has not developed a customer firing experience in those instances where it is appropriate. Offboarding experiences should be designed just as on boarding experiences are.

What are your thoughts on the need to sometimes fire customers?