…And then I sacked them… And what a relief that was…

Perhaps not unsurprisingly suggesting to someone that they can sack a client often has polar opposite responses…. Most common is “no, I can’t… no mater how much pain there is, I can’t afford to sack them …” and the other is “sack them? Can I really sack them, thank goodness?”…

Interestingly the most highest ranking articles on Google are from accountants but the reasons they raise as to why its perfectly ok to sack a client and the ways it can be done are no different to any business. And clearly its something that impacts accountants quite a lot.

Of course the way you sack a client is reflected in the impact it has on your business. Yes, you will have lost that income stream but I’ll wager the benefits far outweigh the lost of revenue. Perhaps things will be put in perspective if you consider the value of the real net profit to your business from that client?

So what type of clients might you sack?

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The ‘nothing is ever right’ client – have you had those types of client before? When you know you’ve delivered everything according the agreed brief and more besides however, they still find things they wanted to be included, or are not happy with certain aspects of the design or the delivery etc. You redo work at your cost even if there’s some element of scope creep, you even make changes that you think are ill advised but that’s what the client wants. It’s possible you’ll even move staff around so that the client has their favourites working on their account. And still no matter what – it’s not good enough.

This is not just a client who takes a lot of time and energy to manage, they’ll also have an impact on the people in the business who work with them and their account, product or service. So it can have a knock on effect in the business and potentially on other client work.

The ‘I know better than you’ client – probably very similar to the ‘nothing is ever right’ – no matter what you suggest about the design, delivery, strategy, plans etc. you have the feeling they are only paying lip service to it and that they don’t really respect what you are doing or believe in you. And whilst there are times that yes, the client does know best it’s not always the case and why did they hire you in the first place if it wasn’t for your ideas, expertise, reputation, knowledge and skills?

The “I’m the client and so I can behave however I want and say whatever I want” client – sometimes we may have even behaved like this ourselves, mostly borne out of sheer frustration and sometimes from the pressures put on us or perceived pressure put on us. But with most clients its very much ego based. And they are likely to treat people in this way whether they are suppliers, employees, peers or possibly friends and family. And you know what, its not acceptable. No matter how badly things are going it doesn’t mean a client can behave in any way or say whatever they like. Usually such behaviour signals a breakdown in the relationship….

There’s usually some sort of indication during the buying stage that someone is going to be like this and if there is then why would you want to do business with this type of client? If they behave like that with you, as the business owner or leader, then potentially they behave even more badly with others they are in contact with who they perceive to be less important. You may also have certain expectations of how your employees behave with clients and the language they use, why should they accept something different from a client?

And when working with clients it’s a partnership, a collaboration; there should be no finger pointing as each is accountable.

The ‘I want a bargain client’ – there’s nothing wrong with having a budget and working with someone to get the best possible value in any arrangement but some people just want things on the cheap. They keep chipping away at the price, even when you think the price has been agreed they come back and want to revisit it. This signals two things – firstly they don’t really value the goods or services you are providing since they just want cheap.

And secondly they are just as likely to go somewhere else because they think someone else’s offering is cheaper. So having invested in building the relationship and providing value they may just terminate the arrangement because someone else is cheaper, not taking into account the work that’s already been done, value, added value, time spent understanding them and their business etc.

I’m sure that like me you can recognise some if not all of these types of clients. And the thing is these clients can really drag a business down; by the amount of time that you need to dedicate to them, the number of reworks that need to be done often just because, revisiting contract and payment arrangements, the additional support needed by the people delivering the services/products and so on. So when you take all of that into account the real value to the business… the real net profit will be less than is being booked/attributed to that client. With the obverse side of the coin that this additional time is time that’s not been spent on other activities that could add even greater value to the business.

So how do you go about sacking the client?

  • Make sure that you have all the facts and background before speaking to them. Not just someone’s version of a story or anecdotal evidence especially if price, quality, delivery etc. has come under scrutiny.
  • When talking to the client start with the facts, anything that’s subjective should be raised after this and it becomes less easy to prove and each party may have different expectations/perceptions. Don’t use an accusatory tone, just be very matter of fact.
  • Also find out what’s going on for them, especially if there’s a marked difference in their behaviour (any type of behaviour) – it could be something personal or there could be something is happening in the business. It doesn’t excuse bad behaviour but gives you a better understanding and something that can be discussed and possibly worked through.
  • Stop doing so much for the client; its entirely possible that you’ve been doing so much for them as a favour, to add value etc. that they’ve lost sight of what the original agreement was. By taking a step back you can both evaluate the relationship.
  • If there are timescales and so on with in a client agreement then start to enforce these… this in part is taking back control of the relationship.
  • Start billing for all the additional work or at least prepare a statement so they can see the cost of the additional work. After all if you are doing additional work for that client you can’t be delivering to another client who would be paying you. If the boot were on the other foot how would they feel about it?
  • When presented with this type of data, reinforced arrangements, and more closely managed relationships some clients will choose to leave of their own accord.
  • Tell them that your business is changing and that you are no longer able to support them but at the same time provide them with the details of people you would recommend to them. Perhaps talk to the alternative supplier in advance; only recommend someone you would use for yourself or your business. You might say that due to the growth of other clients, types of clients and so on.
  • Increase your fees/prices, especially for those clients who keep haggling with the price or do not pay on time. The worse case scenario is that you’ll get paid more for dealing with them but if they do stay then you’ll have to consider what other criteria you might want to put in place or whether its just a case of asking them to leave in any event.
  • Be honest with the client explaining to them the overall impact that its having on your business and the people in the business where its behaviour and continually not taking agreed action.

If losing the client is going to be a major loss in profit then spend time finding alternative clients that you do want to work with so that you are replacing one income stream with another. You might do this so that there’s almost a seamless transition from one income stream to another.

You can’t control how they then talk about you…. Any more than you can when you are still in a client relationship and there may be a need for some level of damage limitation.

The benefits of sacking a client or clients who are no longer serving the business well are several fold. It’s likely to make an immediate difference to the morale of the people in the business and very likely that you’ll gain even greater respect from them. They will understand that the business will take a short term hit but the long term gains will outweigh those quite quickly. It may also reduce the stress the business is under.

Certainly you’ll have more energy and time to spend on business development and other clients, as will others in the business.

Use it as a learning, warning signs for the future, setting guidelines about how you’ll work with clients, making sure that you don’t fall foul of Pareto’s rule with more than 80% of your business being generated from only 20% of your clients.

So yes, sacking a client can have financial implications and you have to manage the fall out but you are entirely within your rights to sack a client and it could just be one of the best things that you ever did…

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