When Is it Okay to Reject Customers?

Companies are not exempt from autonomy. Every business deserves the right to say “no” out of respect for its personal ethics.

But rejecting customers isn’t always easy. We’ve definitely struggled with this at Userlike . Sometimes we’re confronted with customers who have a business model that make us feel uneasy. Should we cancel their accounts or not?

The customer wants your product, you want their payment. Why think twice about it? Because suspect industries and practices fall under a moral gray area. Without clearly defined principles, customer service teams will inevitably make inconsistent decisions.

As a first step toward consistent and right decisions, here are five scenarios for when you should consider rejecting the customer.

The customer is breaking the law

This is perhaps the easiest situation to respond to because the lines have already been drawn for you. Refusing a customer who owns an illegal business is mostly a no-brainer.

We’re not strangers to this issue at Userlike; we once learned that a customer was selling suspicious drugs online. After confirming that the drugs were indeed illegal in several countries including our own, and discovering his questionable payment and delivery methods, we blocked his account. We didn’t want to support such a business.

We faced this reality check again when we found a customer using our chat solution as part of their online scam. Again, we blocked the account as soon as possible.

Law-breaking customers put your company at risk and should be severed immediately. However, it’s important to remember that laws and business ethics vary worldwide , so what you perceive as a threat could be appropriate in the country the customer resides. This could lead to some backlash from the customer.

For example, Twitter is censored in China because they don’t have the same freedom of speech values. Twitter is not breaking any laws in the U.S., but it is in China. Would you reject Twitter as a customer?

In the end, whether you should or should not reject such customers is largely dependent on your customer service ethics .

The customer harms your team

If your service rep is doing their utmost to help a customer, but they’re receiving unnecessary vitriol, it may be time to pull the plug.

Your team is your lifeblood. I don't care what a customer is going to spend. If they are being rude to anyone in the team, we'll happily say goodbye. It's tough when things have gone wrong and customers are irate, but there is always a reasonable level of etiquette.

Mark Patchett, Founder at The Ecom Academy

We’ve outlined methods for dealing with rude customers , but customers who resort to disgusting language and unfair bargaining are mostly not worth the effort and pain. It’s too exhausting.

cartoon of angry bird

If ending the relationship is costly for your company, it can make for a difficult decision. You have to determine if you would rather keep the customer and put your team under stress, or quit the customer and potentially put your company under stress. It’s a sticky situation, and also a tricky question.

Ideally, your team should come first because they are the actual engine of your company. If your employees feel secure and valued , it will attract new customers in no time.

The customer's business is ethically questionable

If you were asked to name an unethical industry, something like sweatshops may first come to mind. But “ethically questionable” doesn’t necessarily mean the company pollutes oceans and has disturbing working conditions.

Unethical business wears many masks. Some are harmful, some curb the rules and some just conflict with what your company specifically values. That’s why rejection is just one of a few solutions to this problem.

Utpal Dholakia, professor of marketing at Rice University, conducted a study based on customer data from a Swiss online retailer on lawful but unethical customer behavior. Customers were violating the retailer’s “one account per customer” policy by opening multiple accounts with various email addresses to receive free discount cards. However, these customers were the most active and engaged and accounted for 27.6% of the company’s sales.

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Dholakia asked managers from 136 U.S.-based companies how they would respond to this situation, and a staggering 80.1% said they would keep these unethical customers.

What would you do? The right answer depends on your worldview and financial standing. As Dholakia mentions in his study, your action may boil down to your perspective; it’s perfectly reasonable to distance yourself from customers who cheat. It’s also okay to weigh the positive and negative effects of a customer’s actions if rejecting them could put your company in turmoil.

The customer requires you to betray your values

Etsy’s former CEO Chad Dickerson said the homemade crafts e-commerce site was "a platform that provides meaning to people, and an opportunity to validate their art, their craft.” For years the site served as a place for artists to set up shop and sell their homemade goods and vintage items.

So why did Etsy, which was created for the micro-producer, alienate its indie sellers by allowing popular sellers to mass-manufacture their goods?

Growth is great, but the quality of your business will suffer if you give in to every opportunity. Lee Wilson, head of SEO at Vertical Leap , explains the potential repercussions of welcoming business opportunities that contradict your company’s principles:

Historically as a service head, I've been involved in the decision-making process of turning down and rejecting potential new customers when the fit is substantially out of sync with your business approach and ethos. It has been a rare situation, but it does happen.

From an SEO stance, the driving factor tends to be a heavy intended focus on lower quality and short-term mentalities that I would not ethically want to be associated with, due to the long-term expected damage this could incur for a business. If you sacrifice your business differentiation, ethos, culture and other areas for one piece of new business, you need to question the validity of your service.

Lee Wilson, Head of SEO, Vertical Leap

If your design software company regularly donates to charities that help keep our oceans clean, it would seem counter-productive to accept a customer that mass produces cheap plastic goods.

Though it may be difficult at times when money is at stake, it’s best to establish firm boundaries and stick to them. Existing customers will appreciate your loyalty to the brand.

You would harm the customer

Let’s say all of your marketing efforts worked and now a customer is compelled to buy your software. Your sales agent takes a look at the customer’s website and quickly realizes that your product wouldn’t actually benefit them. Would you still go for the sale?

"Who am I to doubt the customer's wishes?" is one way to look at it. But the Moral Foundations Theory defines this as harmful behavior. Shaurya Jain, founder of Attention Always , explains:

You need to be sure that you will be able to add more value to your customer's business than you charge them. I always ask my potential clients how much their website traffic is worth to them and what is the conversion rate of that traffic. If the expected increase in site traffic and leads is less than my fee, I reject to take them on for their own good.

cartoon of chat bubbles with a halo and devil horns

Refusing customers feels counter-productive to growth. But the consequences of taking on someone who gains little value from your business may rear its head weeks or months down the line. You might soon hear, “Your product has been useless to me so far. This was a waste of money.”

The customers you turn down may respect your honesty and return once their business has grown, or refer others to you. The ones you take advantage of will be lost forever if they realize your trick. It’s best to not put your reputation on the line.

Customer rejection script example

The best method for denying customers is by being honest, brief and helpful. If you let the customer know in a few words why they’re being rejected and offer some kind of help with their search, it may minimize blowback or misunderstanding.

Here is a script example that can be adapted for live chat, email or phone messages:

Thank you for your interest in our (company/service/products). Unfortunately, we won’t be able to further help you with your (the service you provide) needs. We’ve learned that aspects of your business model do not agree with our company mission, but we’ve included a list of providers we recommend. We wish you luck in your search.

What not to say: Don’t take this situation as an opportunity to tell the company why their business model is wrong. If you don’t agree with it, simply don’t work with them. Try to maintain composure if they’re being irate.

Rejecting customers isn’t always easy, but it’s often necessary

There’s a chance you’ll face a few refusal actions from customers. They may ask to speak to a manager to try and circumvent the rules or become emotional and threaten your business. No matter the reaction, try to stay polite. This weakens the customer’s ammunition and shows that you can’t be pushed around.

Cutting problematic customers loose will give you more time to focus on existing clients and build better relationships. You may lose money in the short run; but if rejecting customers means protecting your reputation, morals and employees, it’s worth it in the long run.