As a B2B startup, there will come a time when you have to let go of a customer. It's an ironic role reversal when you finally are in a position to say no to someone who wants to pay you money, but firing a customer can be just as hard as winning a customer. Here's how to do it right.
A fellow Y Combinator startup recently had an issue with one of its earliest customers. This customer was once very valuable to the startup: They helped the startup generate revenues, gain some credibility, and validate some of its ideas.
However, this customer wasn't a good fit for the startup at its current stage. The customer made too many demands, distracting the startup from its core mission.
It was time to break up with this customer and focus on building their product more scalable.
Seeking B2B growth? Explore the insights of our B2B Sales Funnel breakdown.
2 Ways to Get Rid of Them
There are two ways to fire a customer.
1. Create a Situation Where They Fire You
The best way to create such a situation is by raising your prices to a ridiculous level that customers will surely cancel (or, if they don't cancel, make the number so high that you'd actually be happy to keep them at that price!).
Get together with the person with whom you have a personal relationship and tell them:
Learn how account-based sales can foster personal relationships with your prospects.
2. Be Upfront and Honest
Just pick up the phone and tell them about the situation. Tell them that this business relationship doesn't make sense for you anymore. Tell them your business model has changed, your focus as a business has changed, and you can't continue servicing them as customers anymore because it would prevent you from growing as a company.
Be proactive, honest, and transparent about it. Everybody understands that a business relationship needs to benefit both parties, and if things didn't work out (and you didn't build a strong customer relationship in this case), it's time to part ways.
Do it Like a Pro
You don't just want to make them feel like an unwanted customer. Even if it's "just" a business relationship, breaking up can be emotionally tense. Show them that you care. Do more than is expected of you, especially when things are difficult, and you'll discover that people talk highly of you.
Don't let this breakup turn into a dramatic conflict between the two of you. You don't want a disgruntled ex-customer to run around and badmouth you.
Do what's good for your reputation, suitable for your brand, and what's the right thing to do anyway.
Be Super Helpful
Offer them as much help and support as you can afford to transition to a new solution. Provide them with a stellar offboarding experience so that they have minimum pain moving out from your product into the next. Give them enough time to manage the transition. You can even drive to their office and work physically when they need it.
Consult Them on What's Next
Maybe they'll need help to figure out what to do next: Build an in-house solution? Change to one of your competitors? (If so, which one?)
You know their requirements and what the market offers, and thus, you are in an excellent position to give them great advice. Do it.
DIY
Who should tell the customer that they're being let go? Not an account manager, support staff, or low-level employee. It should be you or a person with real authority who has been involved in the deal.
Don't Break Up by Email
Ideally, meet them in person, look them in the eyes, and tell them what's happening. If you can't meet them in person, call them on the phone. But don't send them an email.
Do it Fast
Don't delay the breakup. Once you decide to fire a customer, communicate this with the customer as quickly as possible. Act fast. Don't wait for weeks, and don't postpone it because it's uncomfortable and you hope you'll find a better way to deal with this.
The more you postpone this decision, the more problems accrue—the more they depend on you, the more money you take from them, and the more promises you make to them.
Moreover, as soon as you decide this is not a good customer, you'll start deprioritizing them, and people on your team won't be motivated to serve them well. This will just create a lot more bad will, issues, conflicts, and challenges until you actually break up with them.
Just get it over with; both of you can move on as quickly as possible.
Do it with Friendly Strength.
A lot of people feel bad about breaking up. It's difficult and uncomfortable, and it'll probably upset the other side. It's natural to want to avoid that. And many people execute the breakup with weaksauce.
They go in and feel so apologetic, bad, and guilty about breaking up that they'll make a weak pitch: "Well, we're thinking about this, and I know this sucks, but we also don't know what to do about this ..."
That weakness will just outrage the other side even more. It can often lead to an abusive reaction from the customer, who'll vent at you more aggressively. They'll often request unreasonable concessions and try to strong-arm you into things you shouldn't agree to.
That kind of apologetic approach can create an environment where they push you to agree to change your mind. They'll coerce you until you give in and say, "Well, you know what? You made some really good points. I'll go back to my team, and we'll think about it again. Let's see. Maybe there is another way."
No, screw that. You made your decision; you stand by that. And when you tell them, tell them in no uncertain terms.
This is What's Going to Happen
You're not negotiating with them. You're telling them what's going to happen. Friendly but firm. It might create temporary discomfort, but they will respect you a lot more for it, saving both you and them the time you might otherwise be wasting on trying to negotiate the case.
They'll realize that this is real, there's no way around this, and they'll ask the right question: How do we move on from here?
That's exactly the kind of energy you want to have in this kind of conversation.
Implement These Steps to Professionally Part Ways with a Customer
Learning to win and close new customers is essential. But knowing how to actually fire customers can be just as important.
Bad, toxic customers, customers who derail you into a completely different direction that has no future for your business, can ultimately kill your business.
