Get All Access for $5/mo

3 Customer Nightmares and What I Learned From Them Avoid the headaches of dealing with difficult clients by watching for these red flags.

By Candace Sjogren

Opinions expressed by Entrepreneur contributors are their own.

Caiaimage | Trevor Adeline | Getty Images

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?"

Related: What to Do When a Client Breaks Up With You

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."

Related: Want to Keep Your Clients Happy? Listen Closely.

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.

Related: 5 Reasons You Should Ask Your Clients for a Performance Review

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.

Candace Sjogren

Head of Alternative Lending at Marqeta

Candace Sjogren is head of alternative lending at Marqeta and managing partner at CXO Solutions, a management consulting firm. Prior to CXO, Sjogren was the founder and CEO of two fintech companies and chief strategy officer at Dealstruck and LoanHero, and continues to serve as an angel investor.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Side Hustle He Started in His College Apartment Turned Into a $70,000-a-Month Income Stream — Then Earned Nearly $2 Million Last Year

Kyle Morrand and his college roommates loved playing retro video games — and the pastime would help launch his career.

Business News

New Southwest Airlines Major Investor Wants to Force Out CEO, Slams Company's 'Stubborn Unwillingness to Evolve'

Elliot Investment Management announced a $1.9 billion stake in the Dallas-based Southwest Airlines on Monday and is urging shareholders to vote for new leadership.

Science & Technology

Why We Shouldn't Fear AI in Education (and How to Use It Effectively)

Facing resistance to new technologies in the educational process is nothing new, and AI is no exception. Yet, this powerful tool is set to overcome these challenges and revolutionize education, preparing students and professionals for a future of unparalleled efficiency and personalized learning.

Business News

Elon Musk Threatens to Ban Employees from Using Apple Products, Says Will Lock Devices in 'Cages'

The Tesla founder sounded off on X following Apple's 2024 Worldwide Developer Conference on Monday.

Business News

Apple's AI Has a Catch — And It Could Help Boost Sales

Not every iPhone owner will get to use the new Apple Intelligence.

Business News

Y Combinator Helped Launch Reddit, Airbnb and Dropbox. Here's What I Learned From Its Free Startup School.

The famed startup accelerator offers a free course on building a business — and answers five pressing questions for founders.