When “You’re Fired” Backfires in Building Brand Value

By Knox Bricken, August 23, 2007 — Despite what “you’re fired” did for The Donald, it’s not a brand strategy guaranteed to engender trust and confidence. Yet a growing number of businesses, in their quest for more profitable customers, are using exactly those words to cull out the “bad” ones.

Sprint-Nextel is the latest, having recently sent approximately 1,000 wireless subscribers a termination notice. Their sin? Being customers who paid their bills on time, but taxed precious company resources by calling customer service on average of 25 times monthly to complain about charges and/or technical issues.

Brand management experts often expound on building a brand and retaining customer loyalty through customer service. Few, however, address the issue of what to do when a company no longer wants certain customer groups.

In Angel Customers and Demon Customers (2003), authors Larry Selden and Geoffrey Colvin are in that minority. “In our experience,” they write, “companies typically find that the best 20 percent of their customers account for 150 percent of total profits! The worst 20 percent typically lose money equal to 75 percent of profits.”

Maybe. But the argument fails to account for the long-term impact of such a decision on a company’s brand. Sprint Nextel’s mission statement claims it “aim(s) to be Number One in Customer Experience.” Yet anyone who’s aware of the recent firing incident will likely think: 1) the mission statement is false and I no longer trust this brand; or 2) this statement is only true for hand-selected individuals.

Either way, the credibility and trust in the brand and what it stands for have been badly shaken. It’s not that it never makes sense to fire customers. But those that follow Sprint’s lead should carefully consider the impact of this move on current and potential customers and more importantly, that most fragile asset called brand.