Bad clients aren’t just a nuisance, they’re bad for business. They can take an inordinate amount of time to service. They may complain about irrelevant details, avoid paying their bills or drag payments out forever. They can be a huge emotional drain. Or, more often than we care to know, they can do all of the above.
Firing these bad apples can be an attractive option. But what if that client is buying a profitable product from you? What if they’re 60% of your revenue? Firing them will eliminate a big headache, but it may also put you out of business.
Not all clients are created equal. When you’re considering a “keep ‘em or kill ‘em” approach, take these steps first.
- CONDUCT A CLIENT ASSESSMENT
Assess your problem clients, considering factors like their historical revenue, projected future revenue, their core values and other indicators. Keep in mind, if a client was the ideal client before, you may be able to nudge them gently back to their former selves.
- REMIND THEM WHY THEY DO BUSINESS WITH YOU
To you, a problem client is nothing more than a pain in the neck. But to them, your business obviously has redeeming qualities that keep them working with you. Schedule a meeting with the client and explain the challenges you are facing with them. Ask them if they’ll make the commitment to improve. It may be an awkward situation, and they may say no, but either way, the conversation can’t make things worse.
- MATCH PERSONALITIES
Sometimes, business difficulties are nothing more than a personality mismatch. If you’re consistently having trouble with the same employee, ask the client if they can assign a new liaison from the company. Even if you’re dealing with the boss, they may be willing to let you work with one of their employees or colleagues instead.
- LAY DOWN THE LAW
This is one of the toughest parts of being a vendor, but it’s critically important. You need to clearly outline the rules of what is or isn’t acceptable. Meet with the client and tell them exactly what is wrong, exactly what they need to do to fix it and exactly what the consequences will be if they don’t.
- SET A STOP-LOSS
Once you’ve tried addressing the issues you’re having with the client, put a deadline by which your suggested changes must be implemented. Plan and commit to the action you will take at that time, depending on what the client does.
- GET OUT OF THE TRAP
If nothing fixes the problem, yet you decide to continue the relationship, you need to realize the problem is not the client’s, but yours. There is something in your actions that indicates you are willing to be treated the way they are treating you. It’s unlikely that they’ll stop. At this point, your best bet is probably to bite the bullet and fire the client once and for all.
MIKE MICHALOWICZ (pronounced mi-KAL- o-wits) started his first business at the age of 24, moving his young family to the only safe place he could afford-a retirement building. With no experience, no contacts and no savings, he systematically bootstrapped a multimillion-dollar business. Then he did it again. And again. Now he is doing it for other entrepreneurs. Mike is the CEO of Provendus Group, a consulting firm that ignites explosive growth in companies that have plateaued; a former small business columnist for The Wall Street Journal; MSNBC’s business makeover expert; a keynote speaker on entrepreneurship; and the author of the cult classic book The Toilet Paper Entrepreneur. His newest book, The Pumpkin Plan, has already been called “the next E-Myth!” For more information, visit www.mikemichalowicz.com/