Fire your demon clients?

John Moore points us to a 'net frenzy on Sprint's dropping their 1000 worst customers. The particulars of the Sprint case aside, I wonder if every business should adopt the same approach. In an interview posted at, Geoffrey Colvin (co-author of Angel Customers & Demon Customers: Discover Which is Which and Turbo-Charge Your Stock) says
In our experience across a wide range of industries, 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, while the remaining 60 percent of customers account for the rest. Knowing which customers are angels and which are demons presents an enormous opportunity.
If "a wide range of industries" includes marketing (or services, generally), then this means we should be doing the same analysis. In some ways, it's intuitive. We all know clients who take up tremendous resources—in personnel and in emotions. Most of us won't get rid of these clients because they provide substantial revenue. But, here's the point. These clients should be evaluated on profit, not revenue. When looked at from a profitability perspective, chances are you'll find that at best your "demon" clients generate almost no profit and your "angel" clients are making up for it, leaving your firm with a dismal average in between. What if you could just get rid of all the demons and get angels? Profit would soar. The trouble here is that most service companies don't have the ability to make the crucial measurement. When they do, they might be surprised. And when they take action, so might their demon clients!