Clients come in many varieties. Some are thoughtful, professional, and cooperative and always pay on time. Then there are the other ones. When a client goes beyond “difficult,” to being such a burden on your resources and other client suffer.
Every small business has this kind of clients: The problem child. The screamer. Mr. or Ms. Picky. The micro scope scanner. The late payer. Risk taker.
Maybe your client never returns your calls, or, on the flip side, needs to instant-message you at all hours. Their flaws may differ, but the bottom line is the same: They’re your worst client.
This client is way more work to deal with than the rest of your client list, pays way less or way slower, or all of the above. Perhaps the best thing you can do is get rid of them.
Why would you do such a thing — especially in this awful economic climate? Difficult clients cost you energy, waste your resources which include time cost of your staff. It’s exhausting and possibly even annoying to deal with them. Your workplace becomes less desirable, too — making it harder to keep good employees on the payroll. Then, you may simply lose the drive to find new business as you run around trying to meet your hell-client’s impossible demands.
You may think you need the business, but the reality is as soon as you give a nightmare client the goodbye kiss, you’ll probably find twice as much work elsewhere. The negativity a bad client puts into your life tends to keep you from finding quality clients.
If 3 of the following 6 signs are present in any of your working relationships, I strongly suggest you fire that client. Chances are, they are impacting your bottom line and your personal sanity.
1. They Stop Respecting You
Do you remember when you landed them as customer? Did everything out of your mouth seem like gold to them, like words of wisdom from some guru high on a mountain top? We all knew this honeymoon won’t last forever. There will come a time when your words no longer carry the same weight and, in fact don’t carry any weight at all. Instead of looking at how to implement your ideas, or merely asking for some clarification and justification for them, the clients starts demanding more. You’re met with responses like, “Well I checked with my wife’s brother’s friend’s son who took a course on it last year and he said we shouldn’t be doing it that way. Why do you think we should?”
They are now valuing the opinions of strangers who don’t know the ins and outs of their business more than you do. There is nothing ever wrong with your clients getting a second opinion, but when they put more value in the opinion of strangers, you know you have a relationship problem.
2. They Don’t Value Your Time
Many business owners forget that time is money especially those traders who is not services orientated and you can’t waste time making the client happy. Just think how many times you’ve shown up on time for meetings, and they make you wait, and they keep postponed meeting date last minute.
Along these lines if your client is within a reasonable commute, how often do they insist you come into their offices for a physical meeting when a telephone meeting would have sufficed? Start adding up all the travel time plus the meeting time and you’ll quickly see that a 1 hour meeting is actually eating upwards to a ½ day of your time. Is the client getting invoice for a ½ day consultation? (See point 3)
3. Questioning Your Time
When generating client invoices always make sure to invoice for all the travelling, meetings, emails and phone calls. Do they question these times even you did not put into such detail? I had clients once who kept saying, “When I call you, you have the answer I want in generally less than 30 seconds how come you’re billing so much?“ ‘’Your report is just 2 piece of paper how come you’re billing so much?’’ These are not an unreasonable question, but how they respond to your answer is an indicator that it might be time to think about “firing the client”.
My typical answer is, when you call or email, I have to stop what I’m doing, respond to you, then remember where I was and start up again. All this takes time. The fact that I know the answer off-top of my head is because I work at keeping up to date. I read about the field all day long and apply what I learn to your needs and therefore I need to charge for that effort. I would able to summaries your solution or analysis in just 2 pages is because I have the know-how skill to save your time go into the detail works.
4. You Are Working for Pennies!
In the world of consulting and project base services, we are frequently required to do our best efforts at estimating how much time something is going to take and provide a fixed quote for it. If you estimated wrong that’s your fault and not the clients. Yet there are many clients who will try to take advantage of the fixed price and try to squeeze additional deliverables and then play the helpless game (“We need this little thing done as well, but I don’t have budget. I know you can help us”), which works extremely well if the client’s reprehensive is an extremely good looking person of the opposite sex.
I don’t advocate saying no to everything, but start keeping track. All those little things add up very quickly and you might see what you thought was a decent hourly rate start dropping to a level you wouldn’t have never taken on the job for. Remember time is money and time not spent on the needy (and unwilling to pay client) is time not spent finding a more profitable clients.
5. High rate of job risk and complexity
Rates 1 to 10 of your client risk and the potential liability a client brings to the business. Whether it is an audit client in a high-risk industry, management attitude or lack of controls, or a tax client that constantly pushes the limit on deductions and income reporting, or legal service client that may drag you into potential lawsuit, some clients pose a higher risk to the your business than other clients.
The pressure you sustained for rate of 7 and above is a long term health killer to your personal life and as well for the business. Even though the reward is handsome or fees you billed is profitable, it still might pose a great risk to your business. Most of your time end up handling their lawsuit when risk outburst, probably include you. The least bad scenario would happen is extra energy needed to counter finger-pointing and blaming game.
6. Where Did the ROI Go?
Think about how you felt when you landed the client or project. Did you see RM signs jumping up and down? Make sure to keep track of everything related to the project. On a monthly basis, add up all your costs and compare them against your billable. Now calculate your ROI. Is this the kind of return on your investment you were planning on at the start? If not, you need to talk to your client about fees increases or other forms of compensation for your time. Do this according to the terms of your contract as the contract comes up for renewal. Is the client willing to work with you on a new rate of fees? Are they inflexible? How does the ROI compare to your other clients? Can you easily replace this client with higher ROI clients if you had more time to do so?
Ultimately all parties have to make a reasonable profit (ROI), and if the client doesn’t think your ROI is worth it from their perspective, most likely they’re not the client for you. Rest assured your client is thinking the same thing about you with every invoice they pay. Did I get my money’s worth from this guy? Remember, if you’re not delivering you know they will fire or drop you as soon as they can.