Have you ever found yourself in the awkward position of being stuck with a bad customer? Bad customers are soon obvious -- they consistently pay their invoices late (if ever); they call you and expect immediate turnaround at 4 a.m. on a weekend; they complain about the quality of your work or product, even when it is the strongest product you’ve ever delivered. I have found myself exasperated on more than one occasion with a diva of a client, and I always ask myself, “How did I let get myself into this situation . . . again?”
If you have ever been blessed with a difficult customer, you have likely begun to identify the red flags in order to avoid them in the future, but if you haven’t, let me offer a few key findings from my own experience to help you avoid the headaches. Learn from three of my experiences so you can avoid falling into them yourself:
Mistake No. 1: Ignoring problematic contract negotiations
I read the book Blink by Malcolm Gladwell many years ago, but one point comes back to me over and over again. Gladwell explained a concept called thin slicing, which posits that we know within the first seconds of meeting another person whether we will have a positive or negative long-term interaction.
This is particularly on point when you first meet with a prospective client in a prospecting situation. If your prospect is hard-balling you before you are at the negotiating table, or if they “nickle-and-dime” you early on, they will almost certainly be a nightmare as a client. First and foremost, pay close attention to your earliest interactions to determine whether you will get along. It will pay dividends later in your relationship.
I’m a big believer in what my coach and friend Reid Mahalko says: “Unless you are a hell yes, you are a hell no.”
In addition to heeding this myself, I now always share it with my prospects. It’s a way of telling them that if they have any concerns whatsoever about working with me, this is the time to address them.
This is especially true when it comes to rates and fees. We want to provide true value to our customers, and we want to price our products and services according to their market value. If a customer pushes too hard on your pricing in early days, it is better to turn them away and make room for another customer who will be happy to pay what your product is worth. I would much rather ensure that each of my customers is excited and fully on board than deal with a lukewarm relationship for months to come.
Mistake No. 2: Forgiving clients who have checked out or failed to secure buy-in from their team
If you have mistakenly accepted a “hell no” prospect after the contract phase and are now working with them, the key is to quickly find a champion at the top of the decision-making tree within the company. I once signed with a technology company that gave me early signals of not being an ideal client. I began my first week working with the company only to find out that the CEO was only part-time and just uninterested, not only in our relationship, but in his company’s concept altogether. As a result, he never responded to my and others’ email requests, and he blew off important deadlines.
I knew within a month that I had to fire this client, but I kicked myself for ignoring my early misgivings in the first place. Ensure that your customer is committed to ultimate success with you early on by identifying and assessing the true decision-maker as early as possible. If they aren’t interested in your joint success, it will be nearly impossible to succeed with them.
Mistake No. 3: Failing to recognize when a customer’s business is heading south
I recently worked with a company that was in a high growth industry and had some early successes. They were on a rocketship, it seemed, and I was eager to help them reach success. However, they were undergoing changes in management and dips in the industry.
My invoices began getting paid more and more slowly over time, the CEO stopped attending meetings, and I sensed that both our relationship and his attention to our project began to wane. At first, I was convinced that my team must not be delivering on what we intended, but more than a year after I began seeing the warning signs, the client closed its doors due to problems in another section of the company. Despite the work my team and I put in, my invoices were ultimately left unpaid.
When working with corporate clients, it is important to pay attention to their overall business and to keep in close communication with leadership to understand if there are real solvency risks ahead. At times like these, strong collection practices are more important than ever.
I have certainly learned how to find the right client (the hard way), but I am grateful for the lessons each of my customers has taught me over the years. I only hope that these lessons can be helpful to you so that you can identify the right clients on day one.