Mr. Customer, You’re Fired!

Management guru, Peter Drucker said, “The purpose of a business is to create a keep a customer.” That’s absolutely true, except for those customers who should be discarded. Face it. Some customers should be fired.

You cannot serve everyone and serve them well. A customer craving beef might be seduced by the marketing of a Ruth’s Chris Steakhouse. But, if the customer is expecting McDonald’s pricing, he won’t be happy. Similarly, someone looking for a tenderloin, cooked medium-rare, and crowned with blue cheese is unlikely to be happy with a Big Mac.

Too often, contractors try to serve everyone they can, even though they can’t. Some customers should simply be rejected, even though it’s hard. It’s hard because people who are willing to give your business money are so darn precious.

When I was a marketing consultant, I fired a six-figure client. It killed me. Six-figure clients were rare. I worried about how I was going to replace the revenue, but the truth was, I couldn’t serve the client the way he wanted. It was killing my team trying to satisfy him. Despite my trepidations, I fired him.

The next morning, the sun was shining. The birds were singing. It felt like a weight had been lifted off me. My step was lighter, and my team was happier. And, a funny thing happened. Over the coming months, we more than made up the lost revenue. I realized that my client cost us far more than the six figures he provided.

This is the truth about customers you cannot serve well. Trying and straining to serve them costs you more than they deliver. They are distracting to your focus and detrimental to your morale. There are three broad groups of customers that HVAC contractors should fire.

1. Customers Who Can’t Pay

You cannot serve people unwilling or unable to pay your prices. This seems obvious, but contractors continually complain and worry about price shoppers. Don’t.

Thanks to the latest government interventions in efficiency standards and refrigerants, prices in the HVAC industry have outstripped inflation. People have sticker shock on repairs and especially, replacements. They are not necessarily too cheap or unreasonable to pay. They may not be able to afford you. Do not argue with them, send them to a competitor you dislike.

2. Customers Who Want Too Much

You cannot serve people who want a level of service or a specialization you cannot provide. If your whole focus is forced air and someone calls you with a boiler problem, it’s better to refer the call to a hydronic specialist.

Some people will demand more special treatment than you are organized to provide. They complain about you and give you bad reviews. Burnt once, don’t do business with them again. Flag them in your software, tell them you’re booked solid for 30 days, and refer them to the disliked competitor.

While you cannot serve these people at your current price level and organization, they might represent an opportunity for a concierge-level of service, if there are enough of them and they are willing to pay for it. Figure out what you would have to do to cater to their demands and what you would need to charge to make it worthwhile. Just remember, this is probably a limited, boutique service.

3. Customers Located Too Far Away

You cannot serve people located outside of your profitable service area. Most contractors operate with vast service areas, if they define them at all. If you operate in a metro area, you have more business located within five miles of your shop than you could possibly handle. Not only does a tight service area reduce expensive windshield time, it maximizes the brand building that occurs from your truck wraps.

You may choose to travel when call volume is light. In fact, few contractors have the discipline to turn down a call, no matter how far away and how busy they find themselves. When they truly analyze the cost in fuel, wear and tear on their vehicles, and unapplied labor cost, the gross profit is probably too low to make many, if not most or all, of these distant calls worth the effort. Refer them to a friendly competitor who largely operates out of your area, and hope he or she returns the favor.

Business strategist Michael Porter wrote: “The essence of strategy is choosing what not to do.” A corollary of that is choosing who not to serve. Go ahead. Fire a customer you cannot serve. You’ll feel better in the morning.