Friday April 24, 2015
It’s cheaper to keep an old customer than to attract a new one – unless that client is a toxic one. A bad client can sap your energy, take up too much of your valuable time, and put stress on you and your team. The costs of these drains can be hard to measure. In fact, they’re often much higher than you realize.
But breaking up with a bad client is rarely an easy decision – especially if you don’t have a ready replacement. Here are some tips to help you make the decision, and what to do if you decide it’s time to break things off.
Look at the Numbers
First, look at the objective data. How much time and resources do you spend on your bad client, compared to how much revenue they bring your way? It’s good practice to frequently “audit” all your customer relationships, so you know which ones are the most valuable. Learn how to gauge your customer value here.
Evaluate the Health of the Relationship
Choosing to let a go of a bad client can be a really tough decision – and in most cases, should be a last resort. However, because small business relationships tend to be so close, an unhealthy one can do serious damage to you and your team’s morale and productivity.
If your client relationship has a number of these characteristics, or if one of these dominates the relationship, it’s likely time to let them go:
- Controlling: Micromanages, is never satisfied, constantly demand changes
- Abusive: Treats you or your employees poorly
- Demanding: Wants things done their way, on their schedule, on their budget
- Manipulative: Threatens you or compares you to others to get their way
- Uncommunicative: Difficult to reach, doesn’t express needs
- Unreliable: Doesn’t pay you on time
- Disrespectful: Takes too much of your time, doesn’t recognize relationship boundaries
Many clients exhibit some of these qualities in varying degrees – dealing with difficult people is part of any job, including small business management. But know your limits!
Try Setting Clearer Boundaries
You might be able to save the relationship by having an honest conversation.
Avoid putting the client on the defensive by using “I” language rather than “you” language. For example: “I feel very stressed when deadlines suddenly get changed” is much more diplomatic than “You always change the deadlines on me and it’s very stressful.”
Set clear boundaries that you can both agree upon, and determine the consequences if those boundaries are overstepped. Never feel bad for defending a boundary that both parties agreed on!
Make a Decision
When you’ve looked at the numbers, evaluated the relationship, and tried to set clearer boundaries, it’s time to make a decision – and stick to it.
If you’re on the fence, and aren’t quite ready to let a bad client go, make sure to set a clear deadline. If by that time the client’s behavior hasn’t improved, it’s time to be strong and rip off the band aid.
If you’re ready to break things off, here’s what to do:
Be Incredibly Respectful
Ending a client relationship has one especially complicated element. This person is hopefully still going to be part of your network, and they’re certainly going to let people know if they feel they’ve been treated badly. Client breakups have to be handled very, very respectfully.
As the one ending the client relationship, it’s on you to set a tone of respect, civility, and calm. Here are some suggestions:
- Be clear and concise
- Listen more than you talk – you can learn a lot from these tough conversations
- Be tactful (and never insulting!) but don’t lie
- Express thankfulness for all that was good
- Be constructive rather than critical
- Avoid getting into an apology loop – one “I’m sorry” is plenty
Being respectful is a good first step in keeping the relationship on as good of terms as possible. But you’re going to have to do more than that to avoid burning bridges.
Honor Your Commitments
You client is, in some ways, your “employer,” so it’s only polite to give notice rather than dropping everything and leaving suddenly. Two weeks’ notice isn’t a bad guideline, but it will depend on your business and the projects you’re working on for the client.
In most cases, you should at least offer to finish your current projects. Offering to do so shows that you aren’t a “quitter” and that you take your commitments seriously.
Continue working to make things right by recommending others in your industry better suited to their needs. Take that advice with a grain of salt, however – your peers won’t appreciate you sending real monsters their way. But if you can think of a better fit, you can do both parties a favor by making the introduction.
You can’t guarantee your former client won’t bad mouth you. But if you were respectful and made every effort to honor your commitments, you can honestly say you did everything you could to make things right. Hopefully your efforts pay off, and you can keep that person as part of your professional network.
Learn for Next Time
After the dust has settled, take time to evaluate what happened and why. Write a post-mortem of the problems you had with that bad client, including any warning signs you ignored. The goal is to address those issues earlier next time, and even to avoid bad clients altogether.
It can be hard to remember the details objectively, which is one of the reasons it’s so important to use CRM software. For a small business, invest in a tool that tracks customer interactions chronologically so you can look back with a clear eye.
AllProWebTools’ CRM, for example, is built around a Workflow Timeline, which is a live feed of a client’s complete history with your business. Basically, anytime anyone in the company talks to a client, they post it to the client’s Timeline. This creates a comprehensive log of a client’s history – perfect for both auditing clients and looking for red flags.
It’s true that it’s cheaper to keep a returning customer than to find a new one – even more so if your client relationships are all healthy. Parting ways with the bad clients however, helps you devote more time to the work that makes you truly happy.
Sometimes discussing a bad client with an outside source like a business coach might be beneficial before pulling the plug. Need some help determining the value of that client? Contact one of our AllPro Bookkeeping Experts. We have the support you need. Take a look at our Expert directory today.