I’ve often heard it said that there are no bad clients, only bad prospects and bad systems.
Whilst that might be true and it’s a mantra that you can apply going forward, it probably doesn’t help you with where you are today.
So what do you do if you’ve got a bad client today?
Well, first of all, what is a bad client? A bad client can take a number of guises.
- They can be the clients who don’t pay enough for the work that’s needed.
- They can be clients who demand scope-creep in projects all the time.
- They can be the clients who demand unreasonable turn-around and deadline times.
- They can be the clients who treat you in a master-slave relationship. Where they just want to bark orders at you and expect you to jump at every moment.
- They can be the clients disrespect and insult you all the time.
I’m sure every agencies have them. The relationship starts off well and then deteriorates rapidly into a relationship where your team just dread answering the phone to that client.
So what do you do?
The first step is not to go all Alan Sugar and start pointing your finger over the desk and shouting, “You’re fired!”
The first step is to understand what the client actually contributes to your business, and that comes from knowing your numbers.
The two numbers we really need to understand are:
- How much turnover does that client contribute towards the agencies overall turnover? Don’t forget we always advise that any one client never contributes more than 20% of your total turnover.
- How much profit does that client contribute towards the agency? Is this your most profitable client or your least profitable client?
Even after knowing these numbers sometimes there is no substitute for getting rid of that client.
What can you do to make sure that sacking that client has the least impact on your agency?
First of all, consider waiting to sack the client until you can go out and replace the client with new work – either additional work from other clients – or by signing a new client to replace the gap that this client’s going to leave when they get fired.
Understand how the cash flow of your agency will be affected by sacking the client.
Understand the impact on your team of sacking the client.
Always act professionally and sack the client in the right way.
Call them in for a meeting, or a write well-scripted letter or email laying out the reasons why you can no longer continue to work with that client. If it’s price, maybe a discussion with the client would reap benefits.
Working with a client recently, we had exactly the situation where the client felt that they should have a master-slave relationship with the agency and didn’t want to pay for lots of the work that they were having done.
Interestingly, once the agency up put to the courage to sack the client and sent the sacking letter, the client called the agency and asked for a meeting. At that meeting, the client apologised for their behaviour and a new deal was struck going forward.
The client now behaves impeccably towards the agency and the agency gets the income and the profit from that client that they deserve. So sometimes just threatening to exit a client can actually reap huge rewards.
Do you know who your most profitable clients are? Contact us to arrange an agency review and we’d be more than happy to show you how to work it out