If you’ve been in business for a while, chances are you’ve taken on a client that turned out to be a poor fit. This might have been someone you brought in during your early business development years. Perhaps you made a bad decision when you were hungry and knew better, but needed the money. Sometimes, simply changing focus shifts your client ideal. Occasionally, you’ll discover a customer is more trouble than they’re worth. There are lots of reasons to consider firing a client.
While it can be really hard to do, it makes sense to periodically go through your client list to see if some customers should be jettisoned. Pareto’s Principle applies to business income too – roughly 20% of your clients will generate 80% of your revenue. In the same vein, 80% of your headaches generally come from 20% of your clients. Those high maintenance, hard to satisfy complainers are rarely worth the effort.
It’s important to know what your margins are on various products and services you offer. You also should consider the time and costs involved in maintaining certain clients. As you grow and expand your offerings, you may find certain things you used to offer don’t make sense anymore. That can make some loyal, long-standing customers no longer a good fit.
Know, you’re not doing the client a service by holding on to them. If they’re they’re not who you’re trying to serve now, you’re likely already providing poorer quality deliverables. If they’re costing you more time and money than the majority of your other clients, it’s rarely a good decision to keep them.
It’s better to be thoughtful and strategic about firing a client than to let things deteriorate to the point where you’re both unhappy. That said, there are good and bad ways to handle letting go of a client.
5 tips for firing a client politely
- Talk to your customer before you terminate the relationship. Think about how you can explain the decision while demonstrating you appreciate them. Try to frame your conversation in a way that doesn’t make the customer feel like they’re at fault (even if they are).
- Allow enough time for a seamless transition when possible. Whether you’re providing products or a service, it’s kind to give the customer a heads up with enough warning so they can adjust. This is particularly critical with long-standing clients who have supported you over the years.
- Recommend a different provider if you can. This can make it easier for both of you to part ways on good terms. Any referral you make should be to someone you’ve had enough contact with to know how they operate. Ideally, you’ve been a customer too. Explain why you think this company would be a good resource for their particular needs.
- Offer to help migrate the account to another supplier. Depending on what your business provides, this might include consultative time during the transition. Don’t hesitate to offer these as billable hours. The time and money saved may be significant for the client if you’re in a position to help both them and the new provider transfer things over more easily.
- Send a personal thank you note for their patronage.
Of course, there are some cases where an immediate and curt termination is appropriate. In most situations, though, it’s not. Even big blow ups can be soothed with a thoughtful and kind approach to parting ways.
We’re a small, connected world. It serves no purpose to make someone feel bad about their choice to support you or your business. Don’t forget that your client chose you and paid you for your wares. That takes trust.
When you make it easy for a client to move on, they’ll generally appreciate the gesture. Your objective should be to build good will. Even with bad clients, taking the high road will usually serve you well. You might be surprised how much referral business you get when you decide to handle firing a client with class.