Huh?
That right! FIRE clients. How’s that for a great business idea? You may be thinking that I’ve gone nuts. But before you go off and tell your friends about how the guy who usually gives really good business advice must have stayed out in the sun too long, let me explain.
Firing clients was one of the best things I ever did in my business. It increased our revenue, improved morale among employees, and freed up time to focus on our very best clients. It took me a long time to make the leap, but once I did it, I wondered why in the world I hadn’t done it much sooner.
Before I tell you why I did it, let me tell you why I hesitated, since you may be there right now.
I thought that I couldn’t afford to fire any clients. How in the world could my business take such a hit? “I have bills to pay, employees to maintain and investments I need to make.” That’s how I kept justifying it. I wanted more than anything to tell some of these clients to go away – dealing with some of them was excruciating – but I kept thinking that as soon as I signed up a couple more of the “right” clients, then I could make the move. The problem is that day never came. Not because we didn’t sign up more clients, but because I always kept justifying why we had to keep them on.
Then one day, after almost losing my minds with one of our “special” clients I took a look at the hard facts.
The Facts
Dealing with these problem clients took about 65% of our time, but only represented about 25% of our revenue. They frequently paid slower than our best clients, they placed unreasonable demands on our staff, and dealing with them was physically and mentally exhausting. That in itself should have been enough to make the move to fire those clients, but it was the next fact that really made the decision a no-brainer for me. Our top 2 revenue producing clients commanded less than 20% of our time and dealing with them was an absolute pleasure!
My brain went into hyperdrive. What would happen if we spent a little more time with our top clients and increase their business and spend the rest of the time finding more clients like our best customers instead of dealing with problem customers? The numbers weren’t lying.
I made the move and fired 4 clients in one day. If the sound of that terrifies you, don’t worry, I was freaking out too!
The conversations with the affected clients went much smoother than I thought, and by the end of the day, I felt like a completely new person. I was energized, my staff was on fire with excitement, and ready to bring on new clients. In case you’re wondering, we made the move at the beginning of the month, and by the end of the month, we had made up most of the revenue we had “given up” from those problem clients by expanding our service offerings to our top customers alone. Just by paying a little extra attention to them.
If you are considering making the move like I did, make sure you do it the right way.
Here are a 3 tips to keep in mind when firing a problem client:
1. Give them sufficient notice. Even though you want to stop the pain, bear it long enough to do things the right way. I’m sure you’ve heard the saying “It’s a small world…” It is. Especially in business. You never know when you’ll cross paths with that client again. Make sure you don’t burn any bridges.
2. Refer them to another provider. This worked really well for me. I expressed to them that we were changing directions strategically and that as a result, our service offering would no longer best serve their needs. I then gave them 2 or 3 options of other providers they could use instead. I even offered to make an introductory call on their behalf. All of them were blown away by my offer to go above and beyond for them.
3. Increase your rates by 2 or 3 times. This one usually helps the client to make the decision on their own to part ways with your company. However, it is riskier because some clients may actually be willing to pay you! (This is an eye opener that should make you question your entire pricing structure). But if they are willing to pay you the extra money, then the added profitability may allow you to hire someone to specifically look after that account, effectively isolating the problem from the rest of the company.
Do you have clients you wish you could fire? What are you waiting for? If you’ve already been there and made the move, I’d love to know how it’s gone for you and any advice you can offer other entrepreneurs.
(Photo Credit: E Online)
{ 2 comments… read them below or add one }
Great advice. I did fire one of my client, which drag me down. Even they pay pretty good, but it is not worth the time to focus on just one client. There is potential to get more customers signup and grow biz faster.
Found your blog from the The Millionaire Fastlane page. Great blog! I am hooked.
You are absolutely right Terence! It’s also great to see that you can make more money by focusing on the right kind of client. Thanks for sharing and stopping by. Hope to see you around here often!
{ 1 trackback }