Is the Customer Always Right?
Sometimes the customer isn't wrong. They're just not the right customer.
"The customer is always right" is one of the most repeated phrases in business. It can also be one of the most damaging. The basic truth is that no one is always right. Not you. Not me. Not the customer.
I've spent 20+ years working across industries witnessing this phrase cost businesses more than they realize. It's not because they have bad customers, but because of a narrow perspective on what they think "profitable" actually means.
Here's what happens more often than people want to admit:
A large account looks great on the top line. Their overall revenue number is impressive. Leadership falls in love with the account. But, when you factor in the true cost to serve for that account (resources, time, overhead, margin erosion, etc.) the picture changes completely. What initially looked like a win is actually quietly bleeding the business.
The real problem isn't the customer. The problem is treating revenue as profit without doing a full deep-dive analysis.
Every account, every client, every project deserves its own individual evaluation. GP%, cost to serve, resource allocation, opportunity cost, etc. aren't optional details that can be overlooked. They're the difference between true growth and slow decline over time. Or, if too many eggs are in one basket, an overnight decline is always on the table.
I've seen businesses replace one "priority" account with several smaller, higher-margin accounts and dramatically improve their bottom line, sometimes without increasing revenue at all. I've personally done this exact thing in my career with success.
The customer isn't always right. Or maybe I should rephrase that, sometimes they're not the right customer. The one thing that should be right is your analysis.
To be fair, some industries have variables and other factors where keeping large customers, even at a loss, can be a positive. Industries with a limited growth footprint, high backend rebates, or with future opportunities with that customer are some examples. This is also why a deep-dive analysis is so important.
What's your experience? Have you ever protected an account or a client relationship that was actually costing you more than it was worth?