Marketing Matters: When to Fire a Customer

For 14 years, I’ve told security companies: Never lose a customer. After working with more than 300 security companies, it turns out that I was wrong. Sometimes, firing a customer doesn’t just protect your sanity; it increases revenue.

Picture a small alarm company sitting on 380 customers, and the CEO is working 60-hour weeks, answering the phone at all hours to keep them happy. The numbers look solid: steady RMR, billable service calls, but the CEO is exhausted. The company’s best customers are waiting three days for service calls. A commercial prospect calls on Tuesday, doesn’t hear back until Thursday, and it turns out they already hired someone else.

The brutal truth: Some customers aren’t just low-profit; they are preventing high-profit opportunities from happening. Not all RMR is good RMR. Some revenue costs you better revenue.

Hidden Costs

Picture Mrs. Anderson. She pays $35/month for monitoring. She calls every six to eight weeks – the cat triggered a motion detector, or the HVAC false alarms – and she demands same-day service. You charge $125 per call, and she gladly pays.

The math looks profitable: $420 annual RMR plus $750 service revenue equals $1,170 total. The reality? Each service call consumes two hours of a lead technician’s time, drive time, plus on-site troubleshooting. Six annual calls equal 12 hours.

Those 12 hours could’ve been spent installing new systems. At $150/hour opportunity cost, that’s $1,800 in lost installation value – project margin you didn’t earn, plus new RMR you didn’t add; thus, Mrs. Anderson’s $1,170 actually costs you $630 annually – and that’s before calculating the stress and the commercial deal that went to your competitor.

The Counterintuitive Math

Here’s an exercise: Analyze which 20% of your customers consume 80% of your time for minimal profit. I know someone from a totally different industry who fired the full 20%, and their monthly income doubled in four weeks. “100% of my problems came from this unproductive [20%],” this executive said.

In my experience working with security companies, the top 20% of customers generate 150-180% of profits, while the bottom 20% destroy 50-80% of those gains. Even in another industry (as above), revenue increased because resources were redirected to better clients.

When service costs push your customer lifetime value below 2x acquisition cost, the relationship is unsustainable. It isn’t theory; it’s just math.

Your 24-Hour Action Plan

If you keep serving everyone, you serve no one well. You have permission to protect your best customers by eliminating the worst. You already know who they are; you’re thinking about them right now. Here’s what to do:

Tonight (five minutes): Identify your three most time-consuming customers. The ones you think about at night when you should be relaxing.

Tomorrow morning (10 minutes per customer): Calculate the RMR opportunity cost: How many service calls did they generate last year? How many tech hours were consumed total, including drive time? Multiply the hours by $150 and compare to their total annual value (RMR plus service revenue). If the opportunity cost exceeds customer value by 50% or more, consider firing them.

With the math complete, give them the news that afternoon via email: After careful review, I’ve determined we’re not the right fit for your needs. We’ll complete service through [date] and ensure a smooth transition. No guilt. No drama. Just math.