After nearly 20 years of working as a contractor, advisor, consultant and business owner I have learned is that clients and customers are not all created equal. As we struggle to expand our business we sometimes latch on to every client we can find and then hold on so tightly that we forget that one basic lesson “not all clients are created equal”. It is a harsh reality that we don’t like to admit but there comes a time that you have simply fire a client. Yes “Fire The Client”!
If 3 of the following five 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?”, or, “I was at a party the other night an overheard a conversation and they said everyone should be doing X – I’m not sure what it is, but I need you to implement it now”.
In either case, 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 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. Start tracking those 10, 15, and 30 minutes when the meetings don’t start on time, or when they keep going after the scheduled end time. You might not mind if you are billing them by the hour but it shows they don’t value your time as much as they value someone else’s.
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 meetings, emails and phone calls. Do they question these times? I had a client 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?“ This is 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.
From previous tracking efforts, I typically now allocate a minimum between 10-15 minutes for every client phone call or email that I need to respond to.
4. You Are Working for Pennies!
In the world of consulting and project work, 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. Where Did the ROI Go?
Think about how you felt when you landed the client/project. Did you see dollar signs jumping up and down? Make sure to keep track of everything related to the project (see points 3-4). On a monthly basis, add up all your costs and compare them against your billables. 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 rate 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? 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? Remember, if you’re not delivering you know they will fire or drop you as soon as they can.
While there is no absolute 100% proven method for knowing when to fire the client, most of us will realize we should have done it sooner than later. By looking out for the above symptoms they might give us the wakeup call sooner than later. Of course when it comes to firing the client there are right and wrong ways do it. We’ll cover how to do that next article.