Difficult clients

Today I am faced with an awkward decision – how to handle a problem client from years ago.
Here’s the back story:
In 2003 we sold the client in question a fairly expensive brush cutter. This was literally a week after the large forest fires in the area and this kind of device was in demand from both landscaping companies and paranoid homeowners. The person in question works in a landscaping related field and thought it would be a useful tool to have.
Fast forward 30+ days later, after the end of our 30 day cashback no-questions warranty and the client wants to refund the brush cutter. As we’re debating about how to handle this the client senses that things may not go fully their way so they become abusive, insulting and derogatory about our business practices. To make a long story short we take the high road and refund them via cheque along with the following letter:
“Please find enclosed a full cash refund for the brush cutter purchased from our establishment.
We apologize for the delay in processing, however your claim was out of warranty and required authorization from the owner of the store. After consideration of the circumstances we have elected to return your funds in full rather than issue store credit, which is our standard response to instances such as this.
During the refund request from yourself certain allegations were made regarding our personal credibility and integrity as a firm. We are not prepared to be libeled or insulted, especially when someone is asking us to extend to them service that goes beyond our standard warranty. As a result of this we have elected to request that you discontinue your patronage of our firm and kindly take your business elsewhere.”
Now, on to the reason for the blog . . . last week I found them shopping in our store again. This has been nearly 5 years since I banned them from shopping with us. Now we’ve moved locations and I’m unsure if they realize it’s the same operation so that could be a factor. But the real question is what do I do about it:

  1. Advise them of the ban and request that they depart the store. This costs me any future business with them (which is something I’d already accepted years ago). Of course, since they’ve proven to be a problem client then perhaps that’s not a bad loss.
  2. Do I shut up and sell them the items they are asking me about and take my profit in hopes that they won’t continue with their difficult history. People can change.
  3. Do I advise them that I know who they are and that we’ll let bygones be bygones BUT that any purchase they make from us is AS-IS final sale. Of course, since they wouldn’t honor the terms of the last sales agreement who is to say that we care to risk it again.

We’ve always prided ourselves on beating the competition in every factor: price, warranty, professionalism, product range etc. I really hate to send clients away as I think it’s poor service. But, you need to limit your risk as well.
So that’s my fun question for the day.