Shaun Rein's  Instablog

Companies need to exceed the expectations of customers to create brand loyalty, as I wrote in "United Airlines Shows How Not to Run Your Business." After all, it costs less to sell new products and services to current customers than to acquire new ones. But the old adage that the customer is always right is just plain wrong. Customers are not always right, and you should not always let them run all over you.

That might sound counterintuitive if your company is struggling just to scrape by in this difficult economic time, but you have to get rid of bad clients. Jackass clients, just like difficult employees, can destroy a business by destroying morale and diverting attention from growing the business. Cutting clients isn't easy, especially if they're big ones, but companies need to do it more often.

How do you know if you should fire a client? Look for these three signals:

First, too often executives, especially small business owners, spend so much time and energy servicing difficult clients that they're unable to canvass for new business. Relying on just a few clients is a killer. Basing your whole business on one or two income sources is simply too risky. If you find yourself spending so much time and effort on one difficult client that you're neglecting your other clients, or if you're not able to search for new ones, then you know you have a problem.

Keep in mind the 80-20 rule. At most companies, about 80% of the revenue comes from 20% of the clients. If you find you're spending too much time on an unproductive client, fire them. Analyze where you spend most of your time and effort. You're likely to learn that you spend the most time on the least important clients. That's because more important clients already trust you and are therefore easier to please.

Second, remember that if your company is like most, your employees are your greatest asset. A good management team can squeeze profits out of bad products, and a bad management team can kill even the best ideas. The key is to retain your best people. In the long run they will help you make far more profits than the one difficult client who may drive them away.

If your employees look haggard and even the go-getters among them hesitate to take on a new project with a particular client, it's time to investigate. Sometimes an employee will leave a company because of unhappiness with day-to-day client work, rather than because of bosses or colleagues. This is especially true in service industries like law, medicine and accounting, where one spends more time with clients than with co-workers. It is terrible to work in an environment where the client makes your life miserable and your boss fails to back you up. Everybody wants to work in a humane environment where they feel valued and supported.

Bad morale also exhausts employees and makes them unable to think clearly and plot the best courses for future success.

Finally, life is short. While we all have to put up with difficult situations and people sometimes, you can't let chronically difficult clients affect the health and well-being of your family. If your kids or significant other tell you you're especially grumpy, then think about whether a client is causing your stress, and whether that stress is worth it. Most of the time it isn't.

High-paying jobs and the resulting benefits like vacation homes, jewelry and gadgets are great, but at the end of the day, always remember why you work so hard.

Shaun Rein is the founder and managing director of the China Market Research Group, a strategic market intelligence firm. He writes for Forbes on leadership, marketing and China. For more from Shaun Rein, click here.

I received this not from United Airlines today in response to my Forbes commentary. 

Dear Mr. Rein:

We read with interest your column in forbes.com. You point out two examples of where we could have – and should have – performed better for our customers.

You also make some assertions that are just plain wrong about our company and about the great work that our employees do every day for thousands and thousands of customers, and our employees deserve better.

We are committed to serving our customers, having them feel cared for and respected throughout their experience with us. It is one of our core values. Our service metrics are improving, and we are investing in training for our people, including sending groups of employees to the Disney Institute for service skills training.

Further, in terms of customer satisfaction, being dependable and on-time is the number one priority for airline customers.  In this important measure (arrival within 14 minutes as reported by the DOT) United is first among the major carriers for the first five months this year – and so far our frontline employees have shared in $18M in incentive payouts in recognition of their work in delivering this result for our customers.

Satisfying customers is indeed important, as is repeat business, and we value our customers’ loyalty. It’s one of the reasons we have the industry’s leading frequent flyer program. Contrary to your assertions, we are making Mileage Plus even better for our customers. This week we announced we are eliminating close-in booking fees so that our customers can book last-minute trips and use their miles for no additional fee, and we are the only network carrier to do so. We have improved our reception areas for our most frequent flyers and we are expanding the number of carriers in the Star Alliance, the world’s leading airline alliance.

Further, we are upgrading the interiors of our airplanes with leather seats and new first and business class cabins for our international flights, and our customer satisfaction scores have shown steady increases the last four quarters. 

There is no doubt that this economy is challenging for all, including our employees. Like many companies and virtually all airlines, we have had to reduce our staff as we reduced capacity. We have taken significant cuts in our salaried and management staff, and have worked cooperatively with our labor groups to mitigate job loss. In fact, through partnership with our flight attendant union, all of our flight attendant furloughs are voluntary, and those taking leave are eligible for healthcare and flight benefits.

People make mistakes, Mr. Rein. They are inevitable. How you respond to mistakes and correct them through process change and training is critical. In a business as large as ours, with 48,000 employees serving hundreds of thousands of customers every day, mistakes happen. And, in the world where communication is global and constant, often missteps become very public, in spite of their anecdotal nature.  They are also a bit more difficult to correct than simply changing a mistake online – such as correcting the fact that Axe is a Unilever product, rather than one from Procter & Gamble.

We have great employees who are committed to United, to our customers and to delivering great service. To suggest otherwise simply ignores the facts.  We invite you to come in to United and learn the facts, meet our people and see their commitment to our company and our customers firsthand.

Sincerely,

Tony (I have not included his last name for his privacy reasons)

SVP and Chief Communications Officer

United Airlines