How firing clients can positively impact your bottom line

In early 2006 I joined a business networking group in Chico, CA. Each week during our lunch meeting we had an opportunity to briefly speak about our business, share what type of leads we were looking for, or give professional tips and advice to the other members of the group. By networking and educating one another about our respective businesses we built a referral network that generated tens of thousands of dollars worth of revenue for the businesses in the group each month.

At the end of 2005, my microgym, NorCal Strength and Conditioning, transitioned to a purely private training business (we brought back group classes in late 2007 but still do a substantial amount of private training). This networking group proved invaluable at that early stage of our business when each new client represented a significant percentage of our monthly gross revenue. We had a handful of lunch group members sign up for private training, and as they lost weight and made gains in their fitness we quickly earned the business of their colleagues, friends, and associates.

At one of our meetings the accountant of the group shared something that has stuck with me ever since. It was his turn to stand up and give his one-minute pitch. Instead of his usual spiel about his accounting firm, he offered this: “At the end of each year you need to go through your client list and fire the clients that you aren’t excited to work with, even if you feel you can’t afford to lose the income.”

It was a fairly radical concept to me at the time. Here I was spending my Thursday lunches with a group of forty other business people trying to GAIN clients. Eliminating some of those I had wasn’t something I was planning on doing if I could help it.

He went on to explain that this is a practice that he employs each year and that it always results in greater revenue. The clients that you aren’t excited to work with are your “headache” clients. They require more of your time, you derive less enjoyment working with them, and ultimately by setting them free you open a spot for more of your “ideal” clients to benefit from your services.

At NorCal, coming up on 10 years in business, we’ve been fortunate to attract truly wonderful clients and have built a thriving, supportive membership. We’ve actually had to “fire” only a handful of people. It’s never pleasant, but each time it results in a happier, healthier community.

The folks we’ve let go have fallen into one of three categories:

Uncoachable

Most uncoachable clients will leave on their own prior to you needing to fire them. They don’t like feedback or even the most constructive of criticism. If they hear anything other than “great job,” their feathers get ruffled. At NorCal we pride ourselves on our coaching and if you have a technique flaw we will kindly correct you. Talking back to a coach, refusing to listen, or angrily arguing with a coach over a cue does not convey to us that you are here to learn and better yourself. An uncoachable client also poses a safety liability. Best let him go.

Non-compliant

If you do any amount of private training you’ll encounter the non-compliant client. Most do not need firing, they just need intensive hand holding. But a few will complain about lack of results despite the fact that they are not following your recommendations. At some point you might need to use the phrase “your needs exceed my capabilities” and let him go, opening a time slot for a more receptive client.

Disruptive or offensive behavior

We had a client who made several inappropriate comments to some of our female clients. Nothing more to say on this one. Totally not cool.

It’s part of your responsibility as a business owner to ensure a supportive environment for your community of clients. More often than not, your one or two “headache” clients are also causing headaches for the rest of your clientele. One or two bad apples can literally ruin the whole bunch. If you don’t let them go and protect your community you risk losing more than the revenue from the one or two that you fire, because your other clients will choose to leave if the environment is not meeting their needs.

Don’t get me wrong. Firing clients is never a comfortable task, but it can certainly pay dividends with respect to the energy of your staff and your community, not to mention your business finances.

What about you? Have you fired a client? What was the net impact on your community and your bottom line?