According to Bulletpoint Marketing some organisations are resorting to firing (or de-selecting) their unprofitable customers.
A Swedish bank was recently criticised for redesigning the entrances to their branches in order to make them less assessable to the elderly after analysis showed that its older customers were a financial burden. Meanwhile, a US bank wrote to a section of it's customer base informing them they were no longer welcome as they were not using their credit cards enough.
A powerful school of thought suggests that this is a potential mistake. In the present economic downturn is there a right time to fire a customer? Or is this a passing trend?
It should be a standard commercial practise for any business to review its entire customer base on a regular basis.
The review interval will vary from company to company according to the length of the business cycle, but it should still be a standard part of the business routine regardless of external economic conditions. The reasons for 'de-slecting' customers should not be restricted to matters financial - the wider 'value' of the relationship should be considered as well.
One final thought. If you do decide to say goodbye to an establsihed customer, choose carefully who you say it to. If, for example, you say it to the procurement department, the reasons why you are saying goodbye will never see the light of day outside that department. Say your goodbye to the MD, as your reasons should be seen as valuable feedback and they might have the effect of changing the behaviour of your ex-customer. On most occassions that I have decided to say goodbye, the result has been a change in behaviour enabling me to continue to supply, but under improved terms. But be warned, do not bluff, if you decide to say goodbye, you must be prepared to mean it.
Just to add to what Phil says - it is important to review one's client base regularly with a number of factors in mind. Without wanting to sound too esoteric, there is no doubt that an overdemanding client who does not appear to respect the professionalism of its account handlers creates bad karma! The negative impact they have spreads more broadly within the consultancy in terms of people's motivation and the all important feel good factor that all businesses need - especially in a difficult economic climate.
This obviously depends on the industry you are in, but you have to bear in mind how this could affect your reputation and weigh-up whether you wait to see if there is any improvements for your client before you burn your bridges completely.