When to Fire Your Biggest Customer

Your largest account generates 22% of revenue. They pay consistently. The volume helps cover overhead. On paper, this customer is your best relationship.

But your team dreads their calls. Their jobs always have problems. They negotiate every invoice. Managing their expectations consumes disproportionate time. Your best crew lead asked to never be assigned to their properties again.

Big customers can be big problems disguised as big opportunities. According to research from Harvard Business School, 20-30% of customers at most companies are actually unprofitable when true service costs are calculated (HBS, 2023). The revenue they generate masks the profit they destroy and the organizational damage they cause. Knowing when to fire your biggest customer is a leadership skill most roofing CEOs never develop.

The True Cost of Problem Customers

Revenue is visible. Costs are hidden. Problem customers cost you in ways that don’t appear on financial statements.

Margin erosion. Problem customers negotiate harder, demand extras, dispute invoices, and pay slower. Research from Bain & Company shows that high-maintenance customers often cost 5-10x more to serve than average customers (Bain, 2023). A 25% gross margin customer who requires 40% more management time isn’t actually profitable.

Opportunity cost. Time spent managing difficult relationships is time not spent growing easier ones. Every hour your salesperson spends on customer escalations is an hour not spent generating new business.

Team morale. Your people know which customers are problems. Being assigned to those accounts feels like punishment. According to SHRM research, high performers leave companies that don’t protect them from abusive relationships at rates 2.5x higher than those at companies with strong customer boundaries (SHRM, January 2023).

Reputation risk. Problem customers complain publicly when you finally set boundaries. They’ve likely been complaining all along. The relationship has reputation costs you can’t see.

Cultural infection. Tolerating bad customer behavior teaches your team that bad behavior gets results. Other customers learn they can push harder. Standards slip.

Add these costs to your revenue calculation. The customer generating 22% of revenue might be consuming 35% of resources and causing 50% of problems.

Warning Signs

Not every demanding customer deserves termination. Look for patterns, not incidents.

Chronic margin pressure. Every job ends in a negotiation. Scope creep is constant. “While you’re there” requests never stop. The final invoice is always contested.

Disrespect for your team. Yelling at crew members. Dismissive treatment of your office staff. Demands that require employees to work unsafely. These aren’t negotiable.

Payment games. Consistently slow payment. Manufactured disputes to delay payment. According to contractor financial research, customers who consistently pay 30+ days late cost an average of 3-5% of invoice value in carrying costs (CFMA, 2023). Using invoice timing to manage their cash flow at your expense is expensive.

Unreasonable expectations. Expecting immediate response regardless of circumstances. Demanding you prioritize their routine work over other customers’ emergencies. Acting as if they own your company.

Negative team impact. When you announce work for this customer, does your team sigh? Do good employees request reassignment? Research from Gallup shows that toxic customer relationships reduce employee engagement scores by 23% (Gallup, 2023). Has anyone cited this customer relationship as a reason for leaving?

One or two of these is manageable. Three or more is a pattern that demands action.

The Math of Firing a Customer

Fear of lost revenue prevents most firing decisions. Run the actual numbers.

Calculate true profitability. Take their revenue, subtract direct costs, subtract allocated overhead based on actual time consumption, subtract rework costs, subtract payment delay costs. According to customer profitability research, many “big” customers are barely profitable or actually lose money when fully costed (MIT Sloan, 2023).

Calculate replacement revenue. What would you need to replace this customer? Often the answer is fewer jobs at better margins. The volume isn’t as irreplaceable as it seems.

Calculate capacity liberation. Firing a problem customer frees capacity. What could you do with that crew time, that management attention, that emotional bandwidth?

Calculate team retention. If firing this customer prevents losing a key employee, what’s that worth? Industry research shows replacing a good crew lead costs $15K-$25K in recruiting, training, and lost productivity (Associated Builders and Contractors, 2023).

In my experience, the math usually favors firing the problem customer. Owners resist because the decision feels risky, not because the numbers don’t support it.

How to Fire a Customer

Terminating a major relationship requires professionalism and planning.

Complete current obligations. Finish active projects to proper standards. Don’t give ammunition for disputes or bad reviews.

Communicate clearly. “We’ve decided to move in a different direction and won’t be able to continue serving your account.” You don’t owe detailed explanations or the opportunity to argue.

Be firm but not hostile. This is a business decision, not revenge. Professional termination maintains your reputation. Angry termination creates an enemy.

Prepare for backlash. They may respond with threats, negative reviews, or payment delays on final invoices. Plan for these scenarios before initiating the conversation.

Document everything. If the customer has patterns of abusive behavior, document specific incidents before termination. This protects you if disputes arise.

After the Firing

The first month after firing a major customer feels uncomfortable. Revenue is down. The decision seems questionable.

Hold firm. Don’t second-guess the decision or reach out to repair the relationship. You made the call for good reasons.

Redirect capacity. Immediately deploy freed resources toward better opportunities. Fill the capacity gap with marketing push, referral requests, or competitive targeting.

Monitor team response. Your people are watching. Research on organizational psychology shows that firing a problem customer signals that you protect your team and maintain standards, which builds loyalty and morale (Journal of Organizational Behavior, January 2023).

Learn the lesson. Why did this customer become a problem? Often the signs were visible early and ignored. Adjust your customer acceptance criteria to prevent repeats.

Prevention Strategies

The best approach is avoiding problem customers in the first place.

Early boundary setting. The first time a customer violates norms, disputes an invoice unfairly, disrespects an employee, address it immediately. Early boundaries prevent escalation.

Customer acceptance criteria. Not every customer is a good fit. Develop explicit criteria for who you want to serve. Screen for fit before accepting work.

Revenue diversification. No customer should exceed 15% of revenue. Concentration creates dependency that enables bad behavior.

Pricing strategy. Sometimes the right answer is pricing the problem customer out of the relationship. They leave on their own. You don’t have to fire them.

Start Here:

1. Calculate true profitability for your top 5 customers including all hidden costs
2. List any customers showing 3 or more warning signs from this article
3. Develop explicit criteria for customer relationships you’ll accept going forward

Sources:

• Associated Builders and Contractors. (January 2023). Workforce Replacement Cost Analysis.
• Bain & Company. (January 2023). Customer Service Cost Variability Research.
• Construction Financial Management Association. (January 2023). Late Payment Cost Analysis.
• Gallup. (June 2023). Customer Relationships and Employee Engagement Study.
• Harvard Business School. (January 2023). Customer Profitability Analysis Research.
• Journal of Organizational Behavior. (January 2023). Leadership Decisions and Team Morale.
• MIT Sloan Management Review. (January 2023). True Cost of Customer Relationships.
• Society for Human Resource Management. (January 2023). Toxic Relationships and Employee Retention.

Firing your biggest customer might be the best business decision you make this year. The revenue loss is visible. The gains in margin, morale, and opportunity are less visible but often larger. Protect your company from customers who damage it.