When It’s Time to Fire Your Client

How many times have you returned from a client meeting and thought or said “Those guys are killing us…”?  Forget about the reasonable expectation for continuous improvement or driving costs out of the delivery model, I am talking about a client who just keeps asking for more than was agreed to in the written contract or even reasonably expected as part of normal business.

So what do you do?  Sometimes you have to say to the client, “You’re Fired!”.  Maybe not in that self-satisfying way that guarantees you’ve killed the relationship, any future relationship, and opportunities to leverage that client for business elsewhere, but in a more reasonable “let’s sit across the table and talk about how we’ve grown apart” way.

Yes, it is often a scary proposition and has both relationship and financial implications (see my upcoming post Understanding the Cost of Acquiring and Retaining Your Customers) but history has proven that death, by massive hemorrhage or a thousand small cuts, nonetheless is  death.  Fortunately, the latter can be a painful and drawn out process or one that can be avoided if the signs are recognized and acted upon accordingly.

Afraid to act?  Consider the penalties for inaction.

1) You find a way to meet the client needs but seriously jeopardize your profit margins and find yourself having to make up for the shortfall elsewhere.

2) Although you find a way to deliver to the short-term needs, you can’t maintain that level of service and ultimately find your client unhappy.

3) In order to meet the growing demand, you are now using your best resources to provide services to the client, hurting margins, sacrificing other opportunities, or penalizing other more strategic clients.

4) You are setting a precedent that becomes hard to break with that client and could snowball with future business.

5) Your own employees begin to feel the weight of the client demands and can show their dissatisfaction in their level of service or by seeking other opportunities.

6) You are not giving the client a chance to respond to the problem which may not be apparent to them and are also not giving yourself the chance to find a more equitable position either now or in the future.

So how do we extricate ourselves from this dilemma without destroying all the goodness (assuming there is some) that has been created?  Honesty.  No not in-your-face “you’re killing us” honesty but “honey, does this dress make me look fat?” honesty.

The process normally works best if your service or delivery has not already taken a turn south and the client is already growing impatient, but in either case, some tactful planning and execution can extricate you from the situation.  In many cases, the individual or individuals who purchased the product or services is not the person stretching the levels of service. I have found that conversations that start in one of these ways can often get you to the desired goal without too much collateral damage.

Dear client,

1)  It seems that your needs have grown beyond what we have originally discussed or priced….

2) As you know, we always preach the meaning and intent of a contract or statement of work above the literal terms, but…we are drifting so far from the literal terms that we may not be able to provide the service that you deserve…

3) We are both in business, you to serve your clients and us to serve you and our other clients. However, if we can’t deliver our products or services in a profitable way, we won’t be around to serve you in the future.  We believe that we have a good relationship and have done a good job to date, in meeting your needs, but…..

All of these conversations normally conclude in two ways: 1) we adjust the contract to reflect the current needs, or 2) we mutually agree that we can no longer provide the level of service that they expect and deserve, and we should find a way to bring it to a close before either party is permanently scarred.

So the next time you find yourself in a situation where you have done what was promised or should be reasonably expected and still find yourself losing ground, consider taking a proactive stance and address the issue before your relationship or reputation is damaged beyond repair.

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About Tod Kerr

Tod is a senior corporate leader with 20 years of experience managing business operations in numerous functional areas, with a focus on developing and marketing business to business technology solutions to world-wide high tech markets that allow customers to operate their business more efficiently by driving out costs, improving productivity, and creating value for their clients.
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