Good Riddance

Ending a relationship with a bad client

By Jacquelyn Lynn Originally published Jul 27, 2004

Opinions expressed by Entrepreneur contributors are their own.

Ever had a customer whose nuisance value exceeded his profitpotential? Or who demanded champagne service at beer prices? Thefact is, some customers just aren't worth it--but how do youdeal with such a situation? The first step, says Carl Larkin,founder and CEO of Larkin, Meeder & Schweidel Inc., anadvertising and public relations firm in Dallas, is recognizingthat the relationship needs to end. Larkin has made the difficultdecision to resign accounts a number of times over the past fewyears. 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 heor 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 everyturn
  • sees you as a disposable vendor and not as a valuedpartner

It's always a good idea, Larkin says, to try to fix theproblem before you simply drop the customer. "Put theoffending party or parties on notice," he says. "Talk tothem. Outline what the problems are, what the possible solutionsare, and ask for their cooperation to help reach thosesolutions." Be sure to document these efforts so you can referto them later, if necessary.

If your attempts to make the relationship a mutually productiveone don't work, it may be time to move on and focus on moreprofitable clients or prospective clients. Calculate what you willlose in gross revenue, and decide if your business can stand thefinancial hit. If you can't, Larkin advises, "put up withthe current problem client until you can replace that client'srevenues with one or more new clients."

Once you're in a position to let the client go, ask for ameeting with the highest-ranking people in the company. Calmly andprofessionally explain the situation, review your efforts tocorrect the problems, and make it clear that you'll have toterminate the relationship if things don't change."Sometimes those higher-ranking people will see the wisdom ofwhat you've done and will intervene and make a difference sothat you can continue under a better relationship," saysLarkin.

But if they don't, be prepared to move forward with thetermination. Have a plan in place to make the transition as smoothas possible. "Usually I have a recommendation ready of someother companies that might have an operating style that will meshwith this client," says Larkin. He stresses the importance ofkeeping your professionalism throughout the process. No matter howbadly the client behaves, he says, "you always want tomaintain your integrity and the integrity of yourbusiness."

Contact Sources

Larkin, Meeder & Schweidel Inc., 2501 Cedar SpringsRd., #400, Dallas, TX 75201, (214) 979-5000

Jacquelyn Lynn is a business writer in Winter Park,Florida.

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