Firing Customers: Think Before You Shoot

Original Post: 11/18/2002
Difficult times have seen many companies searching for ways to increase their profitability quickly without making any investments in their customers first. Sadly, many are adopting poorly thought through approaches that look attractive in the short-term, but that may well destroy value in the longer-term.

The increasing emphasis on simply “firing unprofitable customers” is one of those approaches. It may make perfect sense to the management accountants, but it is often a symptom of a deeper malaise within the company. Customers themselves aren’t unprofitable, it is the company that has let its business fundamentals get out of control that is. And the knee jerk response of firing customers won’t help the company put the fundamentals right, it just hides the problem until the next phase of even more competition comes along.

There are many things the company should look at doing before it adopts this rather drastic, no-return solution. The first of these is to und…