You Know When to Fire a Bad Employee. But What About a Bad Client?

All employees are good employees, right? Wrong. As a business owner or HR professional, you can probably  recall plenty of instances when this wasn’t the case and you had to let staff members go.

The same is true with your clients. Most of them are amazing and fantastic. And if you could simply clone those clients over and over again, things would be grand! But much like employees, not every client is the best fit, and not all of them are good for business.

Wondering who those clients might be? Here are 4 common client traps to avoid:

1. The takers

Takers are high-maintenance clients who feel entitled to excess amounts of time, attention and/or product. These folks seem to think your business exists simply to deliver on their every desire. Nothing you do is ever quite enough for the takers, despite the amount of discounted merchandise or over-and-above service you may provide.

A taker can come off as harsh and demanding or soft-spoken and sweet, but regardless of their demeanor, they are always asking for something extra. These clients can suck the hours out of the day, the life out of your customer service staff, and the profit out of your profit margin.

2. The meanies

Meanies are those clients who feel entitled to treat you and your staff however they like. As if by virtue of being a customer, they have the right to behave as though your employees work for them. These individuals firmly believe the customer is always right, and they aren’t afraid to scream it online or directly at your staff, along with various other unsavory things.

If your business strategy is to force a smile and indulge the meanies, your employees will quickly internalize the message that you care more about a few caustic clients than you do your own team. Get ready to say goodbye to your best and brightest and hello to the high cost of turnover.

3. The drama queens

Who doesn’t love a good drama? Your accountant, that’s who. Drama queens always have a million reasons why they’re late for meetings, late on deadlines, and late on invoices. Drama queens have the most amazing stories. So amazing you may be tempted to ignore the fact that you’re not actually getting paid.

It’s natural to want to help the drama queens, especially if you’re a good-hearted person or company. But as much as you may want to empathize, at the end of the day, you literally cannot afford to do business with people who aren’t paying you. Unless you can. In which case, feel free to give away as much of your time, product and services as you like!

4. The big fish

The big fish is that client who provides a disproportionately large chunk of your overall revenue. And knows it. And uses it against you.

Big fish assume they have earned the right to special privileges, and will ask for and expect things that are well outside the norm. If you try to say no, your big fish will threaten to take their business elsewhere, setting your entire team into a panic.

Big fish may seem great from a revenue perspective, but they can easily hold your business hostage, keeping you so wrapped up in meeting their demands that you don’t have the time, energy or resources to bring on additional clients who could add to (and help diversify!) your revenue stream. Which makes you even more dependent on the big fish. This is a dangerous game. If your revenue is largely dependent on a few key clients, one big fish can literally bring down your entire business.

Additional warning signs

Not all toxic clients will fall into neat little categories. If you’re wondering how to determine if a client is doing more harm than good, here are some things to look for:

Client Toxicity Test: Do you have clients who…

  • Ignore your advice
  • Treat your staff poorly
  • Neglect to pay invoices
  • Fail to respond to requests
  • Seem incapable of listening
  • Make unreasonable demands
  • Suck the life out of your team
  • Continually argue about pricing
  • Refuse to appreciate your efforts
  • Consistently get sent to voice mail

If the answer is yes to two or more of these questions for any one client, you’ve got potential for serious trouble.

What now?

Letting go of customers may seem completely counter-intuitive, but the simple truth is that toxic clients and behaviors will only hurt your business. Revenue gained from these kinds of accounts can be quickly offset by the costs associated with increased stress levels and reduced employee productivity, morale, and retention.

When it comes to saying goodbye to most toxic clients, the formula is pretty straight forward:

  • Be professional (No bridge burning necessary)
  • Politely explain the situation (Cite specific examples)
  • State that you will no longer be working with them (Don’t leave it up for debate)
  • Set expectations of what happens next (Any refunds, expiration dates, etc.)
  • Make referrals as needed (Go ahead, send them to your competitors!)

Firing a big fish may be considerably more difficult, as you will need to consider the following:

  • How will you operate without that revenue?
  • How will you replace that revenue moving forward?

These are valid concerns, but they don’t necessarily need to prevent you from cutting your big fish loose. The harsh reality is that these clients can choose to sever the relationship at any time, for any reason. You need to be thinking about these things already.

Firing clients is difficult, but sometimes it just needs to be done. Once you’ve identified who needs to go and let them down gently, you may be surprised at the enormous wave of relief you feel— and the amount of time you have to put back into improving your business.

Get in touch with Raffa Financial Services here.

Reposted from the Raffa Financial Services Blog.  

Photo by alphaspirit

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