I Fired a Customer

There is no business that can exist without customers.  As a partner at DefinedLogic, I know that very well. My company bends over backwards to please our customers and that is no easy task in the world of IT consulting.  So why would I ever fire a customer?

To be successful, you need to believe in a method for completing a project.  Everyone has an idea of how to be successful and there are many ways to be successful. However when you know you won’t be successful, you have a choice to make – bill for your time and make excuses in the end or walk away. 

We had this choice.  We won an RFP to complete analysis and requirements gathering work for a large-scale enterprise implementation.  It was a seven-figure job.  Once we won the bid, the customer wanted to dictate the type of people we assigned to the project AND our approach to the project.  They did this through rate negotiations.

I have no problem negotiating rates; its part of finalizing every contract.  However, when those negotiations began to fundamentally alter the method for delivery, our team took a step back and had some difficult discussions.

The group agreed that we could not deliver a quality solution based on the new guidelines the customer had requested.  We walked away.  The second-place finisher (a company traded on the NYSE at the time) accepted the terms.  They failed.  That consulting firm is no longer in business while DefinedLogic continues to grow.

Since then we have won several contracts from the company I fired.  There has been a give and take on every contract; however, our concessions didn’t and never will alter our method to deliver.  We know what works.

What is the toughest business decision you ever made?

  • thomas michelli

    Alex, 

    A great story….clearly a really tough decision…and a great ending!

  • http://twitter.com/stoneberger Anissa

    Having owned a restaurant, I’ve experienced the same tough decision on a smaller scale.  There comes a point where keeping the customer will either cost you money or reputation.  Business owners cannot afford to lose either.

  • Andrew Russo

    Good article, Alex. I am about to walk away from a contract worth over $300k for many of the same reasons.  Also:

    - The customer will not be using our solution as it is intended – they want to simply automate poor processes that exist today.  As as result management will never realize their ROI.

    - They are not going to assign the proper resources from within their organization necessary to make the project successful.  

    - As a result of the two factors above, they will never make a good reference for my company.

    Even though it’s painful to walk away from revenues, if a company won’t let us partner in their success I’ve found it’s often best in the long haul to walk away. 

    • http://twitter.com/alexshanley Alex Shanley

      Rip the bandaid off.  It may be painful now, but it will be quick.  You can then move on to focus on long-term customers.

      Good luck!