Running a business isn’t easy, but every once in a while, you just might start feeling like you have it all figured out. Usually, that’s also about the time you discover that one or more of your business strategies is actually working against you. One super common bad practice that might surprise you: Trying to hang on to every client.
Also see: “10 unconventional job search tips and strategies.”
All clients are good clients, right? Wrong. While it’s true that you need customers to remain profitable, not all of them are good for business. Here are five counter-productive client traps to avoid:
1) The takers. Takers are high-maintenance clients who feel entitled to excess amounts of time, attention and/or product. These folks seem to think your business exists simply to deliver on their every desire. Nothing you do is ever quite enough for the takers, despite the amount of discounted merchandise or over-and-above service you may provide.
A taker can come off as harsh and demanding or soft-spoken and sweet, but regardless of their demeanor, they are always asking for something extra. These clients can suck the hours out of the day, the life out of your customer service staff, and the profit out of your profit margin.
2) The meanies. Meanies are those clients who feel free to treat you and your employees however they like. As if by virtue of being a customer, they have the right to behave as though your staff works for them. These individuals firmly believe the customer is always right, and they aren’t afraid to scream it online or directly at your staff, along with various other unsavory things.
If your business strategy is to force a smile and indulge the meanies, your employees will quickly internalize the message that you care more about a few caustic clients than you do your own team. Get ready to say goodbye to your best and brightest and hello to the high cost of turnover.
3) The drama queens. Who doesn’t love a good drama? Your accountant, that’s who. Drama queens always have a million reasons why they’re late for meetings, late on deadlines, and most importantly, late on invoices. Drama queens have the most amazing stories. So amazing you may be tempted to ignore the fact that you’re not getting paid. It’s natural to want to help the drama queens, especially if you’re a good-hearted person or company.
But as much as you may want to empathize, at the end of the day, you literally cannot afford to do business with people who aren’t paying you. Unless you can. In which case, feel free to give away as much of your time, product and services as you like.
4) The mess makers. Ah, the mess makers. These are the fine folks who pay for your product, knowledge or advice, but then go all do-it-yourself on you. Like the guy who buys a new desk, refuses to read the instructions on how to put it together, then wants to return it because one side is six inches higher than the other. Best-case scenario, mess makers will offer to pay you to fix the messes they create.
And while it might be tempting to see this as a double revenue opportunity, it’s not. Why? Because the time you spent fixing something for one client has prevented you from doing great something for another client, or taking the time to cultivate a new client. And because mess makers clearly don’t value your knowledge and advice, you will become increasingly more frustrated with each interaction.
5) The big fish. The big fish is that client who provides a disproportionately large chunk of your overall revenue. And knows it. And uses it against you. Big fish think they have earned the right to special privileges, and will ask for and expect things that are well outside the norm. If you try to say no, your big fish will threaten to take their business elsewhere, setting your entire team into a panic.
Big fish may seem great from a revenue perspective, but they’re really just holding your business hostage, keeping you so wrapped up in meeting their demands that you don’t have the time, energy or resources to bring on additional clients who could add to (and help diversify!) your revenue stream. Which makes you even more dependent on the big fish. This is a very dangerous game. If your revenue is largely dependent on a couple of clients, one big fish can bring down your entire business.
Other warning signs
Not all toxic clients will fall into neat little categories. If you’re a Nancy Drew type who wants to find the clues and solve the mystery of whether or not to keep certain customers on your list, here are some things to watch for:
· Client Toxicity Test: Do you have clients who …
· Ignore your advice
· Treat your staff poorly
· Neglect to pay invoices
· Fail to respond to requests
· Seem incapable of listening
· Make unreasonable demands
· Suck the life out of your team
· Continually argue about pricing
· Refuse to appreciate your efforts
· Consistently get sent to voicemail
If the answer is yes to two or more of these questions for any one client, you’ve got potential for serious trouble.
So what should you do? Fire your clients? Yes. You need to let go of your most caustic customers, even if it seems completely counter-intuitive. The simple truth is that prioritizing toxic clients and behaviors will only hurt your business. Revenue gained from these kinds of accounts can be very quickly offset by the costs associated with increased stress levels and reduced employee productivity, morale, and retention.
When it comes to saying goodbye to most toxic clients, the formula is pretty straight forward:
· Be professional (No bridge burning necessary)
· Politely explain the situation (Cite specific examples)
· State that you will no longer be working with them (Don’t leave it up for debate)
· Set expectations of what happens next (Any refunds, expiration dates, etc.)
· Make referrals as needed (Go ahead, send them to your competitors!)
Firing a big fish may be considerably more difficult, as you will need to consider the following:
· How will you operate without that revenue?
· How will you replace that revenue moving forward?
Do not let this stop you from cutting your big fish loose. The harsh reality is that these clients can choose to sever the relationship at any time, for any reason. You need to be thinking about these things already.
Firing clients is difficult, but it can and should be done. Sometimes you have to make uncomfortable changes to get where you need to go. Once you’ve identified who needs to go and let them down gently, you may be surprised at the enormous wave of relief you feel — and the amount of time you have to put back into improving your business.
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