Ending a relationship with a bad client
Ever had a customer whose nuisance value exceeded his profit potential? Or who demanded champagne service at beer prices? The fact is, some customers just aren't worth it--but how do you deal with such a situation? The first step, says Carl Larkin, founder and CEO of Larkin, Meeder & Schweidel Inc., an advertising and public relations firm in Dallas, is recognizing that the relationship needs to end. Larkin has made the difficult decision to resign accounts a number of times over the past few years. It may be time to end the relationship when your client:
- doesn't respect or appreciate your work
- makes excessive demands on your company and staff
- is not fair-minded in either his or her expectations or what he or she is willing to pay
- wants work done cheaply and under unrealistic deadlines
- pays his or her bills late or doesn't pay at all
- pushes you to the limit in all areas, taking advantage at every turn
- sees you as a disposable vendor and not as a valued partner
It's always a good idea, Larkin says, to try to fix the problem before you simply drop the customer. "Put the offending party or parties on notice," he says. "Talk to them. Outline what the problems are, what the possible solutions are, and ask for their cooperation to help reach those solutions." Be sure to document these efforts so you can refer to them later, if necessary.
If your attempts to make the relationship a mutually productive one don't work, it may be time to move on and focus on more profitable clients or prospective clients. Calculate what you will lose in gross revenue, and decide if your business can stand the financial hit. If you can't, Larkin advises, "put up with the current problem client until you can replace that client's revenues with one or more new clients."
Once you're in a position to let the client go, ask for a meeting with the highest-ranking people in the company. Calmly and professionally explain the situation, review your efforts to correct the problems, and make it clear that you'll have to terminate the relationship if things don't change. "Sometimes those higher-ranking people will see the wisdom of what you've done and will intervene and make a difference so that you can continue under a better relationship," says Larkin.
But if they don't, be prepared to move forward with the termination. Have a plan in place to make the transition as smooth as possible. "Usually I have a recommendation ready of some other companies that might have an operating style that will mesh with this client," says Larkin. He stresses the importance of keeping your professionalism throughout the process. No matter how badly the client behaves, he says, "you always want to maintain your integrity and the integrity of your business."
Larkin, Meeder & Schweidel Inc., 2501 Cedar Springs Rd., #400, Dallas, TX 75201, (214) 979-5000
Jacquelyn Lynn is a business writer in Winter Park,