Double Your Profit Day #8 Fire Your WORST Customers (and make more money)

Summary

Episode Summary: Double Your Profit Day #8 - Fire Your WORST Customers (and Make More Money)

Podcast: Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Hosts: John Wilson and Jack Carr
Episode Title: Double Your Profit Day #8 Fire Your WORST Customers (and Make More Money)
Release Date: August 8, 2025

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Introduction to the Concept

In this episode, host John Wilson delves into a powerful strategy for enhancing business profitability: eliminating your most problematic customers. The discussion begins with an imaginative exercise designed to help business owners visualize the benefits of parting ways with customers who drain resources and profits.

Quote:
"Imagine a customer that has driven you nuts, lost you a ton of money, and then imagine never having to deal with that person again."
— John Wilson [00:00]

Understanding the Impact of Bad Customers

John emphasizes that bad customers not only incur direct financial losses but also impose significant soft costs on a business. These soft costs, though intangible, can be more damaging by creating distractions and diverting valuable resources away from more profitable activities.

Key Points:

• Hard Costs: Direct financial losses from unprofitable engagements.
• Soft Costs: Indirect losses such as time spent managing complaints, handling excessive communications, and the overall distraction from core business operations.

Quote:
"The soft costs are the trickiest to pin down, but that doesn't make them any less real."
— John Wilson [00:00]

Real-World Example of a Problematic Customer

To illustrate the concept, John shares a hypothetical example of a bad customer:

• Behavior: Frequent calls, constant complaints, excessive texts, and emails.
• Impact: The business’s call center and management are overwhelmed with handling these interactions.
• Outcome: Valuable hours are wasted on resolving what John considers to be "probably just some bullshit."

Quote:
"We're just wasting hours dealing with, frankly, probably just some bullshit."
— John Wilson [00:00]

Balancing Large Accounts with Profitability

John acknowledges that some businesses rely heavily on a few large customers, which can make the decision to let go of problematic clients seem daunting. However, he advises that businesses should not avoid firing bad customers solely because they are a significant revenue source. Instead, businesses should:

• De-risk Large Customers: Diversify the customer base to reduce dependency on any single client.
• Track Profit at the Customer Level: Monitor the profitability of each customer to identify those that consume disproportionate resources.

Quote:
"Revenue is vanity and profit is sanity."
— John Wilson [00:00]

Strategies for De-Risking Your Business

To mitigate the risks associated with losing a major customer, John suggests:

1. Acquire Additional Customers: Focus on attracting more clients to balance the revenue stream.
2. Enhance Profit Tracking: Implement systems to accurately track the profitability of each customer.
3. Focus on Core Competencies: Concentrate efforts on areas where the business excels and can maintain strong margins.

Key Takeaway:
By shrinking the business to focus on what it does best and eliminating customers that hinder profitability, businesses can sustain and even increase their margins.

Encouragement to Act

John encourages listeners to evaluate their own customer base critically and consider whether any clients are detracting from overall business success. He invites listeners to share their experiences with firing difficult customers, fostering a community discussion around this challenging but potentially rewarding decision.

Quote:
"If you've ever had a customer you've had to fire, I'd love to hear about that below."
— John Wilson [00:00]

Conclusion

Firing the worst customers is presented not as a harsh move, but as a strategic decision to enhance profitability and ensure business sustainability. By focusing on profitable relationships and reducing the burden of unproductive clients, businesses can achieve greater financial health and operational efficiency.

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For more insights and actionable advice on growing your home service business, visit www.ownedandoperated.com.

Transcript

[A]

Welcome back to double your profit Today, we're going to start with an imagination exercise. Imagine a customer that has driven you nuts, lost you a ton of money, and then imagine never having to deal with that person again. So what we're going to do today is we're going to fire our very worst customers. We don't need them. They're going to suck profit out of our business and they're going to consume additional resources. Now, there are hard costs and soft costs to bad customers. The soft costs are the trickiest to pin down, but that doesn't make them any less real. Let me give you an example. I'm a bad customer and I'm going to call in often, I'm going to complain a lot. I'm going to send texts, I'm going to send emails, and that is going to create distraction. So my team is going to end up having to deal with that. My call center team will have to answer the phone, answer the emails, respond to the text. They're going to send it up to their manager, who might also escalate it to their manager, depending on the severity. And what's going to happen is we just wasted hours dealing with, frankly, probably just some bullshit. So what I would encourage you to do is stop working with them. Now, some of those customers might be your largest customer. That doesn't mean you shouldn't do it. It. You should figure out a way to de risk it first. I know a ton of companies that one single customer is 30 to 50% of their business, sometimes even more, and it consumes all of their time. That customers knows that they have this vendor by the balls and they price it accordingly. And their take is that they give so much volume that they don't have to give margin. Now, it's probably scary as you have large customers that are accounting for a large portion of your business. But what you want to do is de risk it by adding adjacent customers or customers that you can serve back better and ideally tracking their profit on a customer level. Now, I can't really do that very well because we have tens of thousands of customers and they are pretty much all homeowners. But if you're dealing with businesses, it is much easier. Are they giving us good work? Are our margins good for this one builder? Or should I kill this account and go find another one that is more productive with less resources? The main takeaway here is revenue is vanity and profit is sanity. So what that means is, look, that one account might be a really big dollar amount, the revenue might be huge. But if it's sucking all the profit and adding additional costs and burden to your team, it's not worth it. Let's shrink up the business. Let's tighten into the things that we are best in class at, that are driving all of our margin, and let's go as hard at those as we can. If you've ever had a customer you've had to fire, I'd love to hear about that below. Those can be a fun time and make sure you like and subs you don't miss the next one.