Should you dump your bad clients?

If you’re in business in Australia, then it’s almost a forgone conclusion that you have at least one or two bad clients on your books.

And yet all too often, businesses will stick with a client they’ve had awhile – even though they’re often more difficult to content with.

Some companies end up with bad clients due to poor planning, while others have taken on bad clients to stay afloat financially. In fact, last year’s economic slowdown forced many to accept work from wherever they could get it in a bid to keep the doors open, but now might be the time to consider culling the bad clients.

What makes a bad client?

Brendon Walker, managing director of CentricConsulting is a customer services expert. He says trying to categorise a bad client can be a never-ending task given bad client traits come in many forms.

“It depends on what type of business you’re in as to what you call a bad client. In my experience, bad clients tend to come from a misunderstanding of needs, intentions and expectations, which relates back to communication skills,” Walker says.

“Bad clients are generally those who don’t understand what you’re able to offer them. There might be confusion over what you can and can’t deliver, so it’s important to communicate all this up front.”

For other businesses, definitions of a bad client could be disorganised clients, bad payers, those who make constant new requests of your business, those who make too many mistakes or are overly critical clients.

What it can do to your business

Putting up with bad clients can make you and your staff miserable. They also have the power to reduce productivity and motivation, lower the quality of your work and make you question your judgement and business skill.

Craig Reardon, director of digital marketing agency The E Team, says bad clients can suck the life out of a business. While he enjoys a strong relationship with the vast bulk of his clients, he admits a small percentage of relationships don’t work out.

“Not only do bad clients take four to five times longer to deal with, but their dissatisfaction casts a pall over you. Then of course the delays any conflict creates can also delay your cashflow; again compromising the efficiency of your business.”

“You set out to deliver great results for your client and when you are prevented from doing that, it’s a kick in the guts.”

Brisbane-based marketing communications consultant Mel Kettle says bad clients can make you question your judgement, business skill and ability, which can be extremely detrimental to a business.

Kettle culled two clients last year.

“One of them didn’t see the value in the service I was providing, and the other expected me to turn around their business in a ridiculously short time, but wouldn’t follow my advice. The relief I felt after making the difficult decision to cull was profound,” Kettle says.

But the decision wasn’t easy given the client had been a friend first for many years. And while the friendship remains strong, the professional relationship came to an end, she says.

Skye Tipler, director of Melbourne’s Mkt Communications, recalls dealing with an abusive client when she worked in a PR firm some years ago.

“The client would become very abusive if things didn’t instantly go his way. Now I’m really careful, and can spot a bad client a mile off,” Tipler says.

How to avoid bad clients

Reardon says listening to your gut instinct when first dealing with a new client is important.

“If something doesn’t sit quite right with you early on, you may be better to refer them elsewhere and just walk away.”

Walker, meanwhile, suggests keeping a log of communication, events and conversations as indisputable communication evidence of the expectations of both parties. That way you can come back to the client if they’ve deviated from the original brief, he says.

“Take the time in the beginning to understand the client’s needs. You’ve got to tease that information out of them so that your expectations are very clear.”

Knowing how to lead a conversation so that a customer is clear in expressing their expectations is vital, Walker says.

“If both of your expectations are aligned from the beginning, you’ll rarely find problems in the relationship. But if you discover that you can’t meet the needs of the client, you’re setting yourself up for failure and doing your business no favours.”

Or, maybe it’s worth paying your bad clients even more attention in a bid to improve your business, suggests business improvement specialist Martin Moroney, founder of Corporate Futuring. He helps businesses lift their game, part of which involves visiting three clients who love your business – and three who hate it.

“I learn more about a business from the clients who hate it. Actually, you would be surprised by how customers who have had a bad time with a business still agree to help,” Moroney says.

How to end the relationship

But if it’s time to bid farewell, be very careful about how you elect to handle the break-up of a bad client relationship. The way the break-up is handled will influence the reputation of you and your business in the future. And remember, more people will communicate bad news about your firm than communicate good news. Often, a frank face-to-face discussion with the client is far better than sending a formal termination letter.

During the fourth meeting with a new client, Tipler says she decided to resign the business.

“I could see that we were going to clash, so I just told them I didn’t think we were the right fit. He was shocked that anyone would refuse his business, but I’m so glad I made the decision early on.”

Lisa Murray of Brisbane’s Revive Coaching advises people to leave the relationship intact, even when resigning a client.

“Try and leave things on good terms. Lots of people go into who was right and wrong when resigning business, but I’d leave that out of the conversation. You never know who a bad client might refer you way down the track,” Murray says.

Walker says if you’re unable to fulfil contract requirements, consider referring the client to a colleague who can.

“And be up front about why you’re referring the business by having a roundtable discussion or via a briefing document,” Walker says.

“Don’t make excuses when trying to get out of a client relationship – be open and honest.”

“And if your business has made a mistake and your client wants to walk, openly admit to the mistake and issue an apology,” he says. “People crack it when they’re lied to. Honesty is always the best policy.”

BREAKOUT: What makes a bad client?

• Overly critical: Honest feedback can be valuable, but some clients go beyond honesty and constantly complain, making you feel bad about your work.
• Not enough communication: When a client keeps communications short and sweet, it can be great. But make sure you’re properly briefed. If you’ve asked for clearer communication and it’s not forthcoming, it might be time to look to greener pastures.
• Slow payers: Have a look back through your invoices and see how long it takes your clients to pay you. Are they paying on agreed terms, or do they quibble about the invoice? Make sure your clients are sticking to your payment terms.
• Not enough money: We’ve all taken on jobs that don’t pay as much as you’d like, but don’t invest huge slabs of time in low-paying jobs.
• Disorganisation: If a disorganised client is causing problems for your business, it might be time to take stock. The client is well within their rights to operate that way, but don’t let their disorganisation be your problem.
• Unbalanced people: If the client is on an emotional rollercoaster, and especially if those emotions interfere with your work, then think about walking away. Staying away from unbalanced people will make your job much easier.