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Firing Customers an Ethical Issue? Really?!

 "It’s Time to Fire your Customers" — Based on the number of comments, that HBR Blog headline sure caught readers’ attention. However, the author makes a good case for parting ways with unprofitable customers who lack potential to grow or become profitable. My own comment suggested that this thinking could be around Three P’s — Payoff, Potential, and Partnership — to assess how some customers are more valuable than others.

But then an intriguing You're fired!ethical question ensued between commenters, posing challenges such as, "Aren’t companies obligated toward even their ‘low priority’ customers"? "Isn’t … "(any) company that consciously jettisons customers… (treating) the customer as just a statistic?"

My response was simply, no. Business relationships should be win/wins; of mutual value to buyer and seller. Otherwise, the decision maker on either side has to make a call on whether to continue. Sellers have to be more tactful than buyers when disengaging, but they have the right to disengage, and perhaps the obligation to do so for the sake of the business owners.

A counter point was that businesses firing customers using the service/goods provided are treating them as less than "real people (or companies) with real needs." My answer: Sellers are people too, but who ever questions customers when they "fire" their restaurant, retailer or supplier, taking their business elsewhere? In fact, I think we call this, "shopping" and "choice."

Finally the questioner-of-ethics said he "would have difficulty accepting that it’s ‘win-win’ to summarily turn away a customer who’s dependent on the company to meet his or her need." I agreed with him that a company turning away a customer isn’t a win/win — it’s a lose-lose. It’s a loss to the customer, especially one dependent on the company, but it’s a loss for the company, too — in fact the company had already lost money, which was the point of making the separation.

As always, there are exceptions to rules on letting customers move on. Utility services come to mind, which have grace periods and other policies that protect customers who can’t pay in the short run.

But commercial enterprise should be evaluating the relative value of customers, and there’s certainly no ethical argument about "targeted marketing", which tends to do just that. One could even say that companies make a profit one customer at a time…(or lose money or just break even.) there is definitely a time to consider firing a customer.

About the Author

Jeff Marr

Jeff Marr

Marr provides thought leadership to Walker and the customer strategy profession. In keeping with the newest proven approaches, Marr designs services used in client engagements. This includes facilitating customer-driven action by clients at the corporate, functional and account team levels, and creating new measurement solutions. Formal approaches Jeff helped create and launch include value mapping, account engagement, strategic assessment, won/lost bid assessment, and assessing lost/diminished customers.

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