Seven customer types to avoid

Running a successful company requires many ingredients. But when it comes to customer types, it helps to know which ones to avoid. Here we look at seven to be wary of

The Deadbeat

There are few things more detrimental to a business than a customer who doesn’t pay invoices on time, or who skips out on their debts entirely. The deadbeat customer has the potential to disrupt your cash flow, negatively impacting your ability to serve other customers. When a large customer leaves you hanging, it could even threaten the solvency of your business.

The good news is that, while a customer isn’t identified as a deadbeat until an invoice becomes past due, you can often minimise or eliminate the risks. Before you enter into a relationship with a new customer, conduct due diligence, such as checking Companies House to ensure that the customer’s business is in good standing. Sign a contract, set billing terms that are appropriate for the size and length of the relationship, and consider requiring a deposit to be paid before you start work or deliver product.

The One-Stop Shopper

Being all things to all people is tough, and many businesses thrive by doing a small number of things very well. If you run a highly specialised company, there is, however, a downside: you’ll inevitably run into a customer who wants your business to provide more. A one-stop shopper can be a great thing – expanding the range of products or services you offer to meet demand from existing customers is often better than expanding simply to create supply. But be careful: expansion always carries risk. If you expand to win more business from a customer short-term, and not because it makes sense strategically in the long-term, it can easily backfire on you, harming your company’s finances and reputation in the process.

The Stingy Customer

To be competitive, your business will at some point have to address customer concerns about pricing. But be wary of customers who are too focused on cost. Those who are penny wise but pound foolish may harm not only their own businesses but yours too. This customer type is more likely to ask you to alter your standard terms, change your processes and cut corners. At worst, they’ll try to alter deals after an agreement is signed, push you to deliver more than they’ve paid for and bad-mouth your company when their cost-cutting measures come back to haunt them.

The Freeloader

How far would you go to win business? The answer is often complicated. Unfortunately, some of your customers know this and will test your willingness to bend over backwards to make a sale. This customer type typically comes to you claiming to be interested in purchasing products or services with the caveat that they’re not quite ready to move forward. Instead, they will ask you to volunteer your company’s expertise and resources with the ‘promise’ that it will guarantee you business. Although such offers may be tempting, such promises are broken more often than they are kept. Even when they are kept, you may still lose money when you factor in everything you provided for free.

The Bad Fit

Not every customer who should be avoided fits neatly into a box. Your customers may be companies, but companies are run by people, and there may be people who you and your employees would rather not work with. The good news is that you can pick and choose your customers. It’s OK to say: “I don’t think this is a good fit.” Obviously, being too picky usually isn’t to be advised, but when a customer makes you feel as if you’re trying to fit a square peg into a round hole, you may find that it’s healthier for everyone involved to part ways.

The Needy Customer

There’s a good chance that your customers require some amount of attention. This is particularly true if your company provides services. Some needy customers, however, forget that you have other clients, and demand huge amounts of time. Depending on your staffing situation, just one or two needy customers can reduce your employees’ ability to provide quality service to other customers. There’s a fine line between a customer who needs a bit of extra hand-holding and a needy customer who seems to be looking for a soul mate more than a business partner. If you are unable to reign in a needy customer, it may be time for a break-up.

The Rude Customer

Running a business is often a thankless job. While some of your customers make sure you know how much they appreciate you, there will be plenty who don’t. A few of these customers will actually go out of their way to shower you and your employees with disrespect. From verbal abuse to sexual harassment, rude customers have no shame engaging in unprofessional conduct. Rude customers can be particularly problematic for service-oriented businesses whose employees must interact with the public. A rude customer can cause employee morale to plummet, especially if you take a hands-off approach and allow them to abuse your employees simply because they’re paying the bills. No matter how much revenue a customer is generating, permitting them to be abusive may cost you dearly in the long run.