To be successful, a business requires a strong consumer base as its foundation. Building a sturdy support takes time and effort. As customers are the lifeblood of every business, there is an adage that they should be treated as kings. This is not always applicable since there are different types of patrons. There are those who are difficult to handle (or the so-called energy drainers) that will eventually bring any business down. These firms would go on struggling as their problematic patrons continue to burden them. In these cases, it is not a surprise if they terminate those clients.
Dismissing a client is never easy. Rather than going through this bitter process later down the road, it is always better to be more selective when taking in prospects. Weeding out potentially problematic customers can be done by setting standards or eligibility criteria and by being aware of the red flags at an early stage. Among these signs are: making unreasonable demands, haggling for the price, showing lack of respect and asking for the rules to be bent for them.
Taking every client that comes your way, including the bad ones, would only result in more severe problems later. In addition to the previously enumerated signals, other issues that you may encounter later would include: missing or delaying payments, unresponsiveness (or deferring any required information) and making calls at inappropriate hours expecting the team to work 24/7 to make every penny worth. The cumulative effect of these activities will burden the company’s resources.
Though it is hard to do, expulsion is often the correct and fair decision both for you and the client. There will be adverse impacts on the company’s profitability for a short period but will eventually have beneficial effects on the organization’s emotional health. Turning down potential prospects and letting off problematic customers will give you more time to best serve your existing clients and acquire more supporters. But, how do you end relationships with a client?
Immediate dismissal can only be done if and when a client makes an awful offense. Nonetheless, as every law requires the exercise of due process, each customer should be treated with fairness and professionalism. Nobody wants to offend nor be offended. When problems arise and become too hard to handle, the foremost thing to do is to talk with the consumer about the inconveniences he is causing to the company. Patrons should be given the chance to defend themselves. Oftentimes, they are not aware of their harmful behavior unless somebody tells them. In most cases, clients would offer solutions to voluntarily rectify the situation. Otherwise, you can suggest ways that are agreeable to both parties. It will be better to make a follow up, in writing, on the verbal agreements made or expectations about the customers. If they made improvements during the early stage and then slid back to their old habits, the only option left is to let go. Holding on to the relationship is a “lose-lose” situation as both parties get what they do not deserve (i.e., delivering an average work for the client who ought to have better).
Letting go of a client in a diplomatic and professional way involves various steps: review of the contracts, preparation of the supporting documents and the proper notice. You must ensure that the contract or agreements made with the client has provisions about cancellations, such as the termination period and conditions. Check also the obligations of both parties regarding deliverables and payments. Make a documentation that you can show to the client. This must include the tasks that were completed and paid/unpaid. Similarly, make a list of the pending deliverables that were already paid/not yet paid by the client. Decide on how these issues will be settled and ensure not to leave any loose ends. Also prepare a list of selected companies offering the same services as yours to provide later for the client.
After you have fully equipped yourself with the necessary information and documents, you can now proceed with the ‘firing’ process, which requires a face-to-face encounter with the client. Use any agenda that will entice the client to attend, such as project status, urgent update, etc. During the meeting, gradually inform the client of the actual purpose, but make sure they understand the issue at the end of the day. Here are a couple of options on how you may want to approach them:
Option 1. (Direct) Start by informing them about the situation or dilemma you are facing, how you feel about it and your thoughts of ending the relationship. The client may protest, and you may lend your ear. If you are already determined to cut the ties, proceed and verbalize politely that you are ending the relationship. Just make sure that you are fully prepared for any backlash, such as a lawsuit or ethics complaint.
Option 2. (Indirect) Instead of mentioning any of the client’s infractions, give various justifications (e.g. you are fully booked and cannot continue with the project due to the demands the client made following the initial agreement). Regardless of the option you choose, be sure to remain professional at all times.
After clarifying that you are no longer willing or able to work with the clients, you can provide them with the recommended list of service providers. You may emphasize that those companies might be a better fit for their project. After this, you should discuss the pending obligations of each party. Before the meeting is over, ensure that you have reached an agreement on how and when to settle any issues. Some choose to put this in writing, especially if a big sum of money is involved. In most cases, companies just walk away and do not demand for additional payment from clients that they simply want to get rid of.
Terminating a relationship with a client cannot be avoided. Any business owner, in this regard, should learn the art of diplomacy when dismissing a client. Do it as gracefully as you can, because this will reflect your professionalism. Above all, have the courage to let go of those customers who do not fit so you can accommodate the better and suitable ones!
M.L. Galvez-Ver | DBPC Blog