Fire a Client this Month

1 Dec

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Sometimes in order to move forward in your business, you need to take a step back and look at the landscape of your customer base. Is there a sore thumb taking too much of your time that needs to get the boot?

I work with a company that attacked this problem earlier in the year by asking each member of their account management team three questions:

  1. If you could fire one of your customers this quarter, who would it be?
  2. Why?
  3. If we lost their business, how could we replace that revenue?

The first two questions attacked their primary objective – identifying and generating a discussion on who could be defined as a “bad client”. But the third question ended up leading them to opportunities that they didn’t realize existed (but that story is for another day). It also uncovered some solutions for actually keeping some of their difficult customers. Similar to the simplicity of the questions, they determined that the 8 customers identified had only three possible outcomes: (1) Resolve outstanding issues (2) Raise the rates or (3) Fire the client.

Resolution: Many problematic clients are often mislabeled and shouldn’t be fired. Assuming they aren’t verbally abusing you every week, difficult clients can be serviceable. Sometimes there is an elephant in the room that no one is discussing. Are they are making unreasonable demands? Are they responding to your needs? So often, these issues aren’t explained to the client and therefore the headaches continue. A face-to-face meeting discussing your challenges in fulfilling their needs can often remove the obstacles and change the relationship.

Pricing: If they are just a demanding client, it’s time to raise your fees to the appropriate number that – by the hour – is equitable or similar to your other clients. For companies that sell goods, you can’t always raise that rate, but the servicing fees around the product can always be added or adjusted and guarantees can be better defined. If you are strictly a service company, then your time is your primary asset and it cannot get out of whack for a too long before creating internal problems (loss in productivity, missing other goals and turnover ). If they feel that your rates are unreasonable, they can/will start shopping for an alternative resource.

Fire the Customer: ABC Silver is a mythical customer that makes up 2% of your business and takes 15% of your company’s time. As the problems persist, the issues are addressed in two in-person meetings. The challenges continue and the client continues to not listen or respond to your needs. ABC Silver is a client that needs to be fired. I know you are worried about losing 2% of your sales but flip it upside down – you are going to gain 15% of your time and should easily be able to recoup that lost revenue by focusing on better customers and more business development.

How do you fire a customer? Here are three scripts that may help if you make the transition with a client: http://www.nicholasreese.com/problem-client-scripts/. I personally don’t believe firing has to be as painstaking as you might make it out to be.

Make it a great week~ Drew Schmitz

If interested in a complimentary copy of my sales eBook, click here: Sales Neutrinos or request a PDF directly from me at drew@blueoctopusllc.com. 

drew@blueoctopusllc.com

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