May 25, 2012

When To Fire A Client

Saying “no” is hard. Saying “I don’t want your business anymore” is even harder. Firing clients is delicate and difficult, but it’s essential to growing your business.

Ok, let’s qualify this a little. Firing a bad client is not hard. Firing a client who treats you or your staff like shit, or firing a client who is downright unprofitable is not hard. These are easy decisions. You may tolerate their bad behavior a couple of times, but life’s too short to put up with that nonsense long term.

Mediocre clients are a different story. They’re not quite bad, but they’re not good either. Mediocre clients are the most problematic, because they prevent your business from achieving its full potential.

Mediocre clients are the weeds in your garden, and they need to be pulled so you have a vibrant, healthy business. You can spot these weeds typically in three places: legacy clients, temperamental clients and clients that were brought on for their perceived “future potential.”

Legacy Clients

Legacy clients can be some of the most challenging cases, because they’re long term customers. They are often early clients that helped you get established, or clients you’ve known for years and have personal relationships with. The challenge with legacy clients is businesses change. Your business changes, and so too does your clients’ businesses.

Do an analysis of these accounts. Are these clients still a good fit? Are they using your most current products and services? Are they inline with your other clients in terms of size, fit and profitability? If not, it maybe it’s time to part ways.

Temperamental Clients

Temperamental clients are the proverbial hot potatoes. They’re passed from client manager to client manager, because they’re not easy to work with. These clients are a challenge, because they’re hard to support and deliver consistent results for.

Do you have any hot potatoes? If so, are you delivering the level of service you want and expect for your customers? If not, it’s time to direct these clients to another solution.

“Future Potential” Clients

“Future potential” clients are the worst. A rookie sales mistake is selling a “pilot project” or giving a discount, because the client has so much “potential.” These deals may look good on paper, but they rarely materialize.

These clients don’t really need that much analysis. Did the account materialize, yes or no? Is there anything you can do to grow the relationship and take it to the next level, yes or no? If no, cut your losses.

How to get rid of them

Once you identify the mediocre clients to fire you need a strategy to separate the relationship.

The operative word is “gracefully.” These people are your clients. They have a relationship with you and your business, and in many cases these relationships are well entrenched. You’re not going to call these clients out of the blue and pull a Donald on them and say, “You’re fired!” No. Be graceful, be courteous and be helpful.

Help your clients move on:

  1. Make a referral. Help them replace your services by getting them in touch with someone else you believe in and know will do good work.
  2. Make a clean break. Explain the situation, be transparent and wish them well in the future.

How do you manage mediocre clients?

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