When Do You Fire a Customer?

Sometimes the customer simply isn't right.

By Fred Reichheld

April 26, 2019
min read

This article originally appeared on LinkedIn.com.

The maxim “the customer is always right” dates back to turn of the 20th century, when retailer Marshall Field and hotelier César Ritz built pioneering enterprises around the then-novel concept. In Field’s and Ritz’s day, the motto challenged a far too prevalent and damaging “let the buyer beware” ethos.

But today’s Internet-armed customer has much more power, and while I am a firm believer in feedback, these days the idea of satisfying the customer no matter what is patently wrong. This is especially so when customers abuse employees, other customers, or the core principles of your business community.

Banning white supremacists from Facebook and other social media platforms seems an easy choice, but of course, companies must apply their standards consistently. In an interview with The Wall Street Journal, PayPal CEO Dan Schulman explained his decision to stop doing business with InfoWars and Gab.com as a function of his company’s core belief in diversity and inclusion. PayPal created a cross-functional team from the company’s regulatory department, compliance, legal and corporate affairs that meets on a regular basis to review accounts that have been flagged either by the company’s algorithm or by outside groups as potentially promoting hate, violence or radical intolerance. Not every account flagged ends up terminated, but the payment processor removes 10 to 100 accounts per month on this basis. If a situation is particularly high-profile, Schulman himself makes the final call himself.

The reality is, some customers are bad customers. They should be fired, not just for the sake of profits, but for the sake of the business, which is a community after all.

Commenting on my recent post on loyalty, JetBlue Airways Chairman Joel Peterson noted that loyalty is rooted in trust, calling the two “first cousins.” It seems to me that in order to earn the trust of customers and employees, leaders must keep them safe from abuse.

Facebook and PayPal aren’t the only companies defending their communities by firing bad customers. Uber shuts down customers who threaten or commit physical harm to a driver or their property, or behave inappropriately. Airlines fire disruptive passengers. Cruise lines do the same. Schools expel disruptive students. It isn’t hard to imagine hotels, retailers, even insurance companies collecting feedback about customer behavior from their employees. Enough complaints from enough people might land a customer on the company’s “no-serve” list.

At the very least, those customers should never receive a feedback survey. The Net Promoter System® is built on customer feedback. But if the feedback comes from the wrong customers, or is being gamed in an abusive manner, then what is the point? Taking their feedback seriously simply diminishes the credibility of the system and alienates frontline employees. Recently, I heard the story of a retail employee threatened by a customer. “Fix my damaged item for free,” he was told, or the customer would score the clerk a zero on the next Net Promoter^_® survey. That customer should be fired.

It’s time to empower frontline employees. Algorithms and complaint reviews like PayPal’s help, but frontline employees know which customers deserve a voice—and which ones don’t. Maybe the first warning preceding the firing of a customer should be an employee vote to suspend their feedback rights. If that customer continues to misbehave, then show him or her the exit. A customer who feels unfairly treated should have the right to appeal, though. After all, sometimes employees or algorithms make mistakes.

What’s important to keep in mind is that no amount of marginal profit is worth sacrificing the values upon which your business is founded, which almost certainly must include protecting the safety and dignity of your employees.

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