The Telegraph – SME Masterclass: How to deal with difficult customers

16th July 2014

All customers are not created equal and sometimes they can be more trouble than they are worth. Here’s how to deal with the difficult ones:
1. Decide what the problem is.
Work out exactly why they are difficult. Is it because they take up so much of your time with endless demands? Is it because they don’t pay enough for the service you are offering them? Is it because they are rude or abusive to your staff, or continually want what you cannot provide? Once you have pinpointed the problem, the solution will become more obvious.Tony Walford, partner at Green Square business consultancy says: “Look at why they are driving you crazy. If it is because your business hasn’t delivered what you said they were going to do, then you need to address that and rectify it.”

2. Listen to them.
Treat any criticism as useful feedback. Unless they really are completely impossible, take note of what your difficult customers are saying. If you are fed up with customers asking for products or services that you don’t provide, ask yourself why you don’t stock them. It could be that you have missed a gap in the market. If they are asking for more than you think you have agreed to, it may be that the original contract was not sufficiently precise or well worded.

3. Work out what they are really worth to your firm.
This is not just about calculating how much money they spend, it is about how much of your firm’s time they take up. Then ask yourself, is the gain really worth the pain? Difficult customers can not only sap your energy as you spend all your time trying to please them and attend to their every need; they can actually do irreparable harm to your business by diverting your attention away from the good customers who might have been willing to spend a lot more money with you if only you hadn’t been so preoccupied elsewhere.

4. Bigger is not always better.
And don’t spare your biggest customers either. Indeed sometimes your biggest customers can be the worst culprits, because their size and negotiating ability means they are likely to have hammered out a tough deal with tight margins in the first place, and because there can be a tendency of firms to put the needs of bigger customers before those of smaller customers who might actually be making you more money. Yes it can be hard to lose a big revenue client, particularly if your industry is ranked by revenue, but ultimately it is profits not turnover that counts.

5. Decide if you could put up with their demands if they paid you more.
If the answer is yes, arrange a meeting and tell them you are sorry but you need to increase your prices in order to be able to service their needs. That way you either get them at a better margin, or they go elsewhere and the problem is solved. If the answer is still no, tell them and make it clear that your decision is final.
Walford says: “Sometimes you get tricky customers and no matter what you do for them it is not good enough, or they are just nasty. You really have to sit down and say this isn’t working for us, we are working to the best of our ability but we don’t think this is a great relationship so we should call it a day.”

6. Take positive action.
Don’t attempt to drive unprofitable customers away by simply ignoring them and giving them increasingly poor service. Customers talk to each other – if you give one customer the cold shoulder word will get around and your reputation will suffer and you may find yourself losing more customers than you had planned.

7. Support your staff.
Often it is your employees who bear the brunt of rude or horrid customers, so make sure they know you are on their side and are prepared to stick up for them, otherwise you will end up with a seriously disaffected workforce as well. Listen to their suggestions about how best to deal with the situation and offer them the option of handing over the client to a colleague to deal with instead.
Walford says: “Support your staff otherwise they will get demotivated because they are being forced to work with people they don’t want to work with. If one of your staff is being bullied by a client or being treated badly, ask them what they want to do and if you can, involve them in reaching a solution.”

8. Pass it on.
If the service your customer wants is no longer the kind of service you offer, recommend them to a competitor, and tell the competitor you are doing so. Don’t send them customers from hell though, as they may one day return the favour.