I heard somebody the other day tell
a group of his peers that he’s serving fewer clients these days and working far
less than he used to. But, he says, he’s much happier than he used to be, and
he’s making much more money.
His secret: he’s telling some of
his long-standing clients that he cannot serve them anymore, and he’s sending
them to somebody else – usually his competition. Mind you he’s not ridding
himself of his best clients. He’s shedding those clients that don’t pay on
time, that quibble about his fees, that drive his staff nuts with their nit
picking, who have unrealistic expectations, or who are downright abusive and
expect to get away with it because they are paying for the right to do so.
Still, it’s tough to tell someone who pays, and who keeps coming back to pay
again and again, that it’s time to hit the road.
He calls it ‘tough love’. Whatever
you call it, it is a tough prescription for many to follow.
Our relationships with our clients
are much like marriages. In the old days people stayed in bad marriages out of
a sense of duty - whether for the kids or because of the social stigma of a divorce.
Except for cases of abuse or infidelity, divorce was rarely an option. But
today the stigma is gone, and we see more and more marriages ending in divorce.
And in business too we are seeing
commercial relationships that are undergoing more and more disruption. In the
old days any client that paid their bill – even if we had to hound them to pay –
was viewed as a good client. The key criteria for accepting a client seemed to
be their ability to pay – nothing more. But with increasing frequency we hear about
professional service providers who are divorcing themselves from bad clients.
Just as in a domestic marriage,
divorcing a client is usually a gradual process. “Surprise, I don’t want you as
a client anymore” situations rarely occur. Most often the process of
deterioration is slow. The relationship becomes less personally and
professionally fulfilling. What once were minor irritants become festering
problems. You cringe when you’re told they are on the phone, or you avoid them
when you see them out in public. Divorces in business usually occur because
service providers and their clients have ignored the maintenance of their
relationship. They have let what once were small irritants grow to become major
stumbling blocks to growth in their relationship.
Many organizations are undertaking
a periodic evaluation of all their clients (and you could add here, referral
sources, vendors and others) and ranking them on a number of criteria to
determine whether they should retain them as clients or let them pass on to
someone else. It might be a good idea to get your staff involved in the ranking
process. Ultimately, besides the objective questions you have to ask, you’ll
have a number of emotional issues that you’ll have to deal with. In fact, it
might be a good idea to get some outside independent advice and counsel when
you go through this process. Client relationships are often the result of
personal relationships, either directly or through referral sources. And,
people often have an ego investment in retaining a client.
Here are just a couple of things
you might use when you consider the vitality of your client relationships:
- Are we making money or just making ends meet on this client?
- Do they pay on time or are they consistently late or overdue?
- Does the client treat us like an ally or an enemy?
- Do they cooperate with us by providing, on a timely basis, information we need to effectively serve them? Or do you have to badger them?
- Are they always late and thus forcing us to rush to meet their demands?
- Are they nice people? Are they pleasant to work with, or are they rude or crude? Does our staff like working with them?
- Does the client see us as a valuable service provider and as a business resource, or are we merely viewed as a commodity vendor or worse yet a necessary evil?
- Does the client refer other clients to us? Or is there the possibility that what they say about us in the marketplace is unfavorable?
Once you’ve scored your clients on these questions you then have to
determine whether the relationship is worth saving.
Is there still time to have a
heart-to-heart talk with your client to see if things can be saved, or is it
already too late? If the relationship is worth saving, you’ll have your work
cut out for you. Don’t expect to resurrect a relationship overnight that has
been on the decline for months or years. The longer you’ve been in a
relationship, the longer you’ll have to spend getting it back on track.
Ranking the client at the bottom of
the list and then deciding that it is not worth working to fix the relationship
still doesn’t make it easy to make a break. But, once you’ve made the decision
to make a break, don’t delay. Your best approach is to send them a letter that
says something like this: “It appears that your business needs no longer match
up with our capabilities and interests, and therefore we will be unable to
provide service to you in the future. We believe you will be better served if
you establish a relationship with another provider, and suggest you contact
(fill in the name and address of another provider here). We will be happy to
send your new service provider your records and to cooperate in any way we can
to make this transition as smooth as possible. We wish you all the best for
your future success.”
Now who you send them to is up to
you, but the fellow I mentioned at the beginning of this article sends them to
his top competitor in town. The reason: he’d like to see his competitor bogged
down in these high-demand, low-margin clients so he won’t have the time for the
high-margin clients. By the way, whenever he gets a referral from his
competitor he’s alert to the possibility that the competitor is “returning the
favor!”
You'll discover a couple of things
once you’ve made the break.
First, your staff will likely
applaud the move. I’ve known several firms who had “killer clients” that wore
on staff and caused excessive turnover. For some reason the bosses never
realized this, or the cost of turnover would have been an early warning
indicator and a factor in whether or not to the retain the client.
Another thing you’ll notice is that
you’re much more relaxed and refreshed in the office – not having to worry
about dealing with that horrible client anymore. And you’ll certainly find that
you have more time for your better clients – more time to add value to them and
a better opportunity to charge higher fees.
Those who have gone through a
divorce know by experience that divorce is a “process” – often taking a long
time – it is not a single event. The good news is that in a business breakup,
you’ll be able to move on and begin new relationships. And you too will most
likely find that you are happier and able to make more money than if you stayed
in that bad relationship.
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