When is it time to fire your client?Feb 19, 2019
When do you say, “Enough is enough”?
Have you gotten to the point in a client relationship that you need to stop what you’re doing, call it quits, and move on?
Knowing when to fire your client is one of selling's biggest challenges.
If you need proof of the importance of knowing when and how to call a halt to a client relationship, let me share with you a startling statistic. An article on the Forbes website stated, “it can cost five times more to attract a new customer than it does to keep an existing one.” So, why would you ever get rid of an existing client if it costs so much more to get a new one?
As I reflected on this fact, I reviewed some of my recent deals. I remembered the number of emails and phone calls required to make a single appointment, and the number of appointments and conference calls to make a single sale. My personal experience supported the statistic. Again, why would you ever want to say good-bye to a customer’s business?
How do you deal with a problem client?
My colleague and friend Roy Chitwood, former president of Max Sacks International, told the following anecdote.
One of his clients called, seeking an opinion about a dilemma he was facing with one of his largest clients.
He asked what he should do with a client who pays their bills but is never satisfied, despite repeated concessions and extra effort. In the face of the time and money spent acquiring an account, Roy's client asked: "Is there a scenario when it's okay, or even preferable, to stop serving a client for reasons other than lack of payment or blatant dishonesty? If so, what's the scenario?"
Roy considered the acquisition costs and began thinking about the rationale of keeping a client regardless of their impact. Roy’s client was partially right. Acknowledging the time and money investment a salesperson and company make to acquire a new account, he surely shouldn't just give up a large client. Or should he?
With his interest piqued, Roy asked for more background. Then he understood why his client was debating cutting ties. Roy's client had changed the rules of engagement and expectations by over-servicing this client on one occasion.
Months earlier, the customer was in a bind and needed a rush delivery. Because it was a low-ebb period at Roy’s client’s company, a large order was rushed in an incredibly short period of time without extra charges.
During normal production times, this quick turnaround time wouldn't have been possible or profitable. Moreover, a hefty rush-order fee would normally be applied due to delaying other orders.
The end user company believed that if it could be done once, it not only could be, but should be done every time. No exceptions. A spirited discussion ensued to explain that this one order was fulfilled as a favor and act of good faith. The provider assured the client it wasn't physically or fiscally possible to do so regularly. Then the relationship hit the fan. His client not only disagreed but demanded to receive extraordinary service with every order. He threatened to walk away without regard for a need for win-win for both sides.
Was this illegal? No. Unethical? Perhaps. Unprofessional? Unquestionably.
The recipient of an extra-mile effort decided this one exception should become the norm, exploiting the established goodwill.
Eliminating a large client that pays on time is a difficult business decision for many reasons.
From a practical standpoint, a company and their sales team often are in a comfort zone with such a client. Barring a major oversight, a provider can count on a specific amount of business during a specific time period. This means steady sales, steady commissions and big steps toward healthy P&Ls. .
From an emotional standpoint, winning the account was the result of hard work by the sales rep and the company. It would be hard to just let it go, especially considering the amount of lost sales it would take to replace it.
When is it time to fire your client?
As Roy advised his client, a company is warranted in dropping a client in a situation like this or where the following conditions exist.
- You're spending an inordinate amount of time on a client than any other of similar size without considerably higher sales. Why is this important? Because a sales person only has one thing to spend and that’s their time. Spend it wisely. Don’t confuse activity with results.
- You're regularly providing concessions such as rush orders without charge, higher-than-average price breaks or freebies to sweeten each sale. These extraordinary efforts have become the new and now expected modus operandi. It’s painful and expensive to continue to do so.
- Your customer grinds on your support and customer service team and makes their lives miserable. Internal morale within your company is threatened by the belligerent, heavy-handed tactics of a toxic client to the point of risking employee turnover. You need to protect your people.
- Your customer often threatens to switch to a competitor if you don't meet their demands. These customers—now taking on a dominant, demanding position over you—grind on the efforts and goodwill of your staff. Nothing is good enough, or quick enough, or priced right. It’s a dismal, downward spiral.
A customer's decision to buy from you should be a mutually beneficial and respectful. As much as clients feel they're in control of the relationship, they can't be overly controlling or expect it to be too one-sided.
Remember, your product or service is secondary to the expertise and professional guidance you provide. Don't underestimate the added value your wisdom and experience offer.
An Austrian economist, Ludwig von Mises, observed,
"Value is not intrinsic; it is not in things. It is within us."
As a skilled sales professional, the client should view you as a trusted consultant. You or your company should never allow yourselves to be held hostage. There's nothing wrong with your client ethically playing hardball and pushing for the best deal. However, you must establish parameters that all parties will work within from the start of the relationship and which must be win-win for both parties.
Getting rid of a difficult client is hard but worth it
My experience is that getting rid of a hard-earned client is a difficult decision but one that ultimately can be liberating.
- First, doing so will take you from your comfort zone and demand that you exercise many of the sales skills you likely haven’t been routinely using. There’s no growth in the comfort zone and no comfort in the growth zone. For the good of your company, sometimes you need to cut a customer loose even if it requires a courageous conversation to do so.
- Second, it can improve your self-esteem and emotional well-being. Happiness and fulfillment often depend on where you focus. Remove the negative influences, like a bad client, so you can spend your energy on positive endeavors like winning new and mutually beneficial accounts. You’ll thank yourself for the change.
- Third, the lesson learned is a valuable tool to be added to your sales toolbox. When a similar scenario arises, you'll know how to handle it expertly with more confidence and less stress.
You never should be held hostage by a client or a client by you. If a client is determined on being your captor, surprise them. Exercise this famous line:
"Don't walk away mad. Just walk away."
My guess is the client won't be satisfied with any vendor. Be willing to get away from a bad situation to more fully enjoy your professional and personal life.
Do you have clients that you should consider firing?
Good luck and good selling. Ron.
[Note: Thanks to our friend and mentor, Roy Chitwood, for his contributions to this article.]