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How to fire a client

How to fire a client

by | Jul 2, 2015 | Blog, Leadership, Strategy

how to fire a client“You’re fired!” What you need to know about firing a client

In the early stages most independent contractors and businesses encounter a learning curve when it comes to client procurement and business practices. They may need to find their footing in terms of understanding their own interests and strengths. Over time they start to understand what kind of clients mesh with their expertise, interests, temperament, ethical practices, and work style.

Perhaps you’ve heard some say, “I/we don’t take on new clients.” Don’t new clients bring in more work, more connections, more money? At some point in a person’s career or a business’s lifespan, there is a shift that occurs from needing and seeking clients to needing and seeking better clients. Perhaps at some point the seeking part leaves the equation, and the contractor or company is the one being sought by clients. And, perhaps, a business doesn’t need to take on new clients because they’ve found a sweet spot with their current clients.

In order to reach this enviable equilibrium with clients, sometimes certain clients need to go. Consultant Dorie Clark, who authored the Harvard Business Review article, A Consultant’s Guide to Firing a Client, shares, “I’ve been a consultant for the past nine years, and my client list today looks dramatically different than it did when I launched, in large part because of strategic decisions I made to let some clients go and take on others.”

The thought of firing clients makes some people shudder. It can feel like a risk. In many ways it is a risk, but the payoff can be great. It’s advantageous to take stock of the clients you’re currently working with. Are there clients who are temperamental or disrespectful, who drain time or money from your business, who require skills or services you’re not interested in providing, who aren’t willing to pay what you’re worth, who you’ve been working with as a favor (such as legacy clients)? In order to make room for new clients, who align with your skills and practices and pay what you’re worth, some old clients may need to go. In order to lighten your load, if you’re looking to become more lean, selective, or focused, some old clients may need to go.

Another anxiety around letting clients go is the conflict that could arise. The best way to fire a client is to do it in a respectful manner, remembering that your integrity and reputation are both on the line. Even if you’re dealing with an abusive client, take the high road. The Forbes article Four Reasons to Fire a Client also encourages this approach, “Remember to remain neutral, avoiding accusation, and whenever possible give your customer a referral to another provider.”

Here are 5 tips for successful culling of clients:

1.  Do it in writing. Cover potential legal encounters. This is especially useful when citing the client’s breach of contract or working with a disrespectful or petulant client.

2.  Be formal. Even if your relationship has felt informal at times, use professional language.

3.  Be concise and clear. There is no reason to bring emotions into the mix and no reason to be ambiguous. Briefly state why the termination is occurring and when it will take place (e.g. on X date, by the end of the contract, immediately, etc.) This should be an air-tight document.

4.  Be grateful. There’s no need to gush, but even if the relationship has been challenging, express an understanding that clients are the backbone of a business. A simple line like, “we’ve appreciated the opportunity to work with you…” will secure your integrity. After all, it’s not a lie. Most likely you did appreciate the opportunity, but opportunity and experience are two different things.

5.  Be helpful. Don’t leave a client stranded. As previously mentioned, if possible, refer your client to another business. This leaves you in good standing with the client and also fosters connections with other businesses.

At the end of the day, how you handle firing a client could impact the relationships with current and potential clients, as well as your own employees. In a society in which transparency and information are demanded and more available, you want to be sure to end this relationship respectfully. Don’t be the one people are gossiping about, be the one people want to work with.

Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.

Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.

We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.

We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.

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How to Manage Clients Out

by | Jul 31, 2013 | Blog

Earlier this month I wrote a post for EBN about how to manage your company and clients when the classic 80/20 rule applies.  That is, when a small number clients generate 80 percent (or more) of your revenue.  In the post, I made the recommendation to manage clients who are not a good fit with your model out of your portfolio.  Several people responded to the post asking how to go about doing this.  Here’s how.

Once you have determined that a client is not a good fit with your model, manage them out. Managing a client out of your portfolio is tough, tricky, and essential for you and for your client. If your client isn’t the right fit with your model, then you will not be able to provide your client with the best service.  This is the crux of the issue.  You, as a company, need to do the best job possible for your client. If the client doesn’t fit your model, you are not doing a good service by keeping the client in your portfolio.

Saying good-bye

Begin by doing a thorough audit of your relationship with the client.  Identify why the client doesn’t fit your company’s model.  That is, pin-point the disconnect between your client’s needs and what your company offers.  As you do this exercise, look at the relationship with your client over time.  Have you grown apart as your businesses have changes/grown?  Has the relationship never been a good fit?  It is important to drill down and truly assess the relationship.  Document everything.

Next, set up a meeting or a call with the client – breaking up over text or email is unacceptable.  Begin the conversation with honesty and tell the client that you believe they could receive better service and better value if they worked with a company that better fit their model.  If possible, provide the client with names of companies that would be a better fit.

Talk with the client about putting together a transition plan.  Let the client know that the relationship isn’t over immediately and that the lines of communication will always be open.  Alleviate fears that the transition will be difficult.

It is vital that when you talk with the client, you talk about your client’s needs and focus on these.  For example, look at the difference between these two approaches:

#1: You tell your client: “Your business is a niche company not only in terms of product offering but also in terms of location.  I have really enjoyed working with you and watching your company grow.  Because I value you as a client, I believe you would be better served by a company that is well-positioned in the Atlanta metro area and really knows the model car industry.  We just aren’t that company, and I feel we are holding you back.”

#2: You tell your client: “Your business isn’t right for my company.  We don’t have the time or people to devote to your needs.  Our model and yours doesn’t match, we need to recognize this and move on.”

Approach #1 shows your client you understand their needs and that you value the relationship.

Breaking up is hard to do, but if you do it right you will likely receive a call down the road from the client thanking you for breaking up with them.