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Most service-based businesses have encountered a nightmare client. This person makes outrageous demands of your team and expects them to be met yesterday. He or she doesn't respect the due date on the invoice and refuses to pay you on time. And when it comes to communicating with your company, this client either pesters you 24/7 or can't be reached at all.
The old cliché may say that the customer is always right, but these difficult clients are usually not worth your time, frustration and, as may be the case, lost income. Although you may be hesitant to drop or "fire" a client, it could very well be in your business's best interest in the long run.
"For a [business] relationship to have long-term success, both parties have to be in a position to do their very best possible work," said Matt Dopkiss, co-founder of digital marketing agency Dynamit. "If the frictions overpower the momentum, the relationship will grind to a halt. You usually know it far in advance, but you're reluctant to admit it. You rationalize, you put in extra effort, you try to stay optimistic — but once the chemistry is gone, it's over."
Dropping a client isn't a decision to be made lightly or hastily — a business relationship with a paying customer should be ended only if it's actively hurting your company. Here are a few questions to ask yourself to determine if you need to reconsider working with a particular client.
Does the client continually expect more from us, but won't raise its budget? Small businesses typically operate on a lean budget to begin with. If a client keeps asking for more from your company but refuses to pay a higher price for your services, you'll end up stretching yourself too thin to justify keeping the client, said Geoff McQueen, CEO of professional services automation software AffinityLive.
Does the client regularly miss or reschedule calls and meetings? Communication breakdowns like this are a clear warning sign of a failing relationship, Dopkiss said. No one wants to have their time wasted, so watch out for a pattern of phone tag and last-minute cancellations.
Do we have to follow up with the client repeatedly to get paid? Because you're providing a service and not a point-of-sale physical product, some clients may get the idea that it's OK to not pay you right away. One late payment is forgivable, but clients that continually miss payment due dates limit your ability to pay your staff and grow your business, McQueen said.
Is the client stalling on a project or not giving us feedback? Dopkiss noted that some clients will seem positive about your business relationship on the surface, but then put a project on hold indefinitely or stop responding when you ask about it. These shady situations aren't good for either party — the client doesn't get the services they need, and your company doesn't get paid.
Has the client stopped taking our advice? Professional disagreements are a normal and natural part of the business process, and a client may not be thrilled with the strategy your company suggested. But you don't want clients who fight you at every turn, even though they hired you to help them.
"You're going to get the blame if things don't work, regardless [of the circumstances]," McQueen said. "If they're not listening to you, you'll end up in a bad situation no matter what."
Dropping your client
If you answered "yes" to the questions listed above, you might want to start thinking about how to tactfully separate yourself from your client. David Silverstein, a global business consultant and CEO of operational strategy consulting firm BMGI, said that "firing" clients is almost never good for a business's culture and reputation. Instead of outright dropping them, he recommended attempting to let them drop themselves.
"Service businesses need to take care of everyone, and they need to learn to turn unhappy or unsatisfied clients into happy ones," Silverstein told Business News Daily. "So devise a strategy that causes bad clients to 'opt out,' as opposed to dropping them.The best way to create an opt-out strategy is to raise your price."
Sometimes, the client won't elect to leave after a price hike, or perhaps you'd rather not raise your prices. Before you officially show him or her the door, though, it's important to have an open, honest dialogue with the client to try to salvage the relationship.
McQueen advised approaching the subject like any conflict-based negotiation: Be frank about the problems and issues your company is having , and explain why your current arrangement isn't acceptable. If the client is willing, try to work things out, he said.
"Explain the problem, propose an amicable parting and offer to aid the client in the transition," Dopkiss added. "Sometimes, they'll accept your offer. Other times, the client might just surprise you by recommitting to the relationship."
If you do end up parting ways, be sure to remain polite and professional about it.
"It's important to be respectful, honest and compassionate in any sort of breakup," Dopkiss said. "Without expectation, aid the client to as smooth and seamless a transition as you can manage. Be a good partner to them through the end."
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