When it's time to fire a client

They’ll also know that it doesn’t stop there. Once a relationship has been established, outstanding customer service needs to be delivered if the relationship is to continue to thrive, and grow into a long-term valuable client.

With all this effort every customer lost feels like a failure, and represents a real loss for the company in terms of future revenue and the cost of replacing that client. With this in mind, one of the most difficult decisions to make is when to proactively end a client relationship. 

It’s natural to want to weed out non-paying or slow paying clients. They show up on receivable reports every month – you know who they are, and for unprofitable clients you either have to raise prices or let go. Let’s face it, even the client understands that the long-term relationship must be one based on a mutual sense of value, profitable for the provider and with timely payment. This is business 101.

There’s another group of clients that’s more difficult to deal with, and I had a bit of a wake-up call with respect to this the other day. While reviewing our production pipeline and team workload, the issue of challenging clients came up. All together they represent about 1 per cent of our client base, but in terms of stress for the team, their percentage share is much higher. 

If you’re a freelancer, or a small agency where you deal directly with clients, you might be more proactive about firing these clients. In a larger organisation though, you might not realise the demoralising impact these clients have on your team.

As we talked, my team was able to identify the unprofitable clients, and the clients who push us hard in a positive way. I learned of their frustration with the cases where clients never seem to be pleased. Our company culture is to do anything we can to please a client. We ask for regular feedback and reviews, with any negative feedback taken seriously. Mistakes happen, we learn and correct, and take responsibility for our failures. But what about the client who’s frequently unhappy with us, or who’s never happy? 

I’ve put these clients into a few categories with some suggestions on how to manage the situation.

 

Bad services fit: Not every customer is a good fit for your company’s services or products. Maybe what started as a good fit changed over time because of changes to your respective businesses, or perhaps one or both of you didn’t pay enough attention at the beginning to ensure a good fit. Either way this is the easiest category to address - in most cases the client needs to find a new vendor. It’s not personal, you can clearly articulate the gap of what they need and what you provide. A recommendation to another vendor is a good way to ease the transition.

 

Expectations mismatch: Sometimes what appears to be a bad services fit is really an expectations mismatch. It’s unusual for clients to have absolute or non-negotiable requirements, they just want to understand what’s promised, and have that delivered. A frank discussion is always a great place to start. Be clear about what you do, what you don’t do, and where you see the gap. If you can find a mutual agreement on expectations you can both live with, that’s fantastic. You’ve probably turned an unhappy client into a happy one. If not, then this is a bad services fit. 

 

Off-track: Our best intentions can occasionally be our worst enemy. Perhaps in an effort to meet a client’s request you stretch a little, and find yourself with an unprofitable client or inconsistent quality/service because you’ve gone outside your core competencies. Whether the client is delighted or dissatisfied, you will still have to continually make that special effort. This is a difficult place to be in because in essence you’ve promised something you can’t deliver. Again, there’s no better place to start than an open and honest discussion. From there the way forward may be more complex and could take time to find a fair solution. Nevertheless, as difficult as it can be, something needs to change and you may lose a client.

 

Difficult personality: The relentless and rude complaining client. Perhaps a result from failing to deliver what was promised, or just a case of an unpleasant personality. Even though you need to face and correct your mistakes, there are acceptable behaviour limits. It can be very demoralising for your team, and may erode their positive attitude towards all clients. If you have a client who’s never happy, you can see if standing up to the bully helps, if not then this is a case where you should fire the client. You can do better.

In all situations take corrective action or end the relationship early. Over time it just becomes more complex and difficult. Face the facts and make your decision in the best interest of your people and company.

 

Derek Brown is managing director of Pronto Marketing (www.prontomarketing.com), and former marketing director of Microsoft (Thailand). Follow his article in the Hi! Managers column every first Friday of the month.