How to Fire a Client
Why on earth would you want to fire a client? Isn’t that somewhat like quitting a job? Well, yes and no. Typically it is not a good business practice to give a client a ‘two-week notice’ and then wash your hands of them. However, I did recently give this advice to someone who asked. This person’s circumstance was different. They happened to ‘luck into’ this particular client, and they are an individual as opposed to a business entity. It was unlikely that this person would be out marketing further clients of this nature, so in this case, I said “sure, you can give a two-week notice”.
So, how do you fire a client and why would you? There are many reasons you may want to part ways with a client. The reasons typically fall into three categories: you’ve realigned your service area or services offered, the client is difficult or the client is slow paying. Take a bit of time and list out your clients, you can easily pull a list from your invoicing or accounting software and grade them. A very simple way to grade your client is this:
A: Pays on time, always reasonable and a pleasure to work with. You smile when you see their name pop up on your caller ID.
B: Typically pays on time, makes few additional requests, may be just a client that is not noteworthy good or bad, or maybe not the ideal size or industry.
C: Tends to pay late frequently, asks for many extras, expects ‘free’ on items that are out of the scope of the contract, is stressful to work with.
D: Never pays on time, uses foul or abusive language to you or your team, extremely difficult and unreasonable requests, this client always leaves you feeling like you need a drink / chocolate / long walk to reset.
F: Anything worse than D. These clients must GO!
Once you get into perspective the types of clients you have, it stands to reason to start with those in the D & F categories as the first to go. That doesn’t mean you have to let them all go at once (unless you can afford to). But, I will tell you from experience, releasing those that stress you the most makes way for your creativity to work with your good clients and attract more of those types.
One of the ways to gently fire a client is to raise your rate. Beware though, if they are truly an unbearable client and they chose to pay that rate, you might be stuck with them.
When you have restructured your services or service area, that is a simple communication. I always find it is received best when you offer some alternative referral sources that may be able to help them.
And finally for those extremely difficult clients, you will need to think at least 5 steps ahead of them on what they may ask about this change. Make your announcement irrefutable as well as clear and concise. Keep it genuine and honest. Do not mention any of the negative or stressful things about this relationship, instead mention 1 – 2 good things about working with them. When applicable, offer alternative referral sources – always contact the alternate source in advance to ensure they are accepting new clients of this type. And give at least a 30 day notice unless your contract requires more than that.
Article by Denise Cagan, DCA Virtual Business Support