Bad customers cause you sleepless nights, upset employees and lost revenue. Here’s how to fire a client that is causing you more grief than profit. This technique also helps in firing a client without hurting your reputation. Knowing how to fire a client that doesn’t truly value your services will allow you to focus on your best clients and generate more money for your business.
Is Firing a Client Good or Bad?
Yes, you should fire a client that is bad for your business. It’s possible that your pricing strategy when you accepted the customer’s business was calculated incorrectly. Or, more likely, you have a client who is taking advantage of you.
Spotting a bad client is easy enough. They are the ones who squawk about every fee, don’t want to upgrade to your higher-end services, and the worse part is that they don’t listen to your recommendations and may even blame you when things go wrong because of their inaction.
You can probably recall the trouble signs that you saw (and maybe ignored) before you agreed to work with clients like this. Sometimes, these bad customers want more services for free than you bargained for.
Why do we keep people like this as customers?
It’s usually because we don’t want to turn away the business.
Add up all of the time bad customers take up, including your lost hours of sleep, the anxiety they instilled and the time you wasted just thinking about what a problem they are, the time they took away on weekends so you couldn’t be with your family and friends.
You will find that you are getting paid minimum wage or less when you deal with bad customers.
That’s right, you could have made more money flipping burgers at McDonalds than you did with this bad client.
You have to fire a client who is detrimental to your growth unless you want to continue to make minimum wage – or less.
How to Fire a Client
Follow these steps on how to fire a client nicely so that they don’t hurt your reputation in the industry. It’s a small world and the last thing you want is a bad customer bad mouthing your business.
1. Tell your customer that you would like to do a client review
If it is a fairly new client and you are already seeing signs of significant future headaches, tell them it is a “post onboarding review.” For older troublesome clients, schedule an “annual client review.”
2. Talk about what is going well and what is beyond their current fee
Ask your client how they feel the relationship is going. Then, tell them what you think is going well and what, from your perspective, is beyond the scope of what you had outlined for the project.
3. Discuss a fee increase, if appropriate
If your customer is used to getting a lot of free services from you and you are okay with keeping them if they simply paid you more money, say something like this:
We provided these additional services without extra charges as a courtesy. We absorbed the cost, but unfortunately we can no longer continue to do so. To provide the level of support you need going forward, our recommendation is to put you on a higher-tiered service plan (or an increased retainer).
If an increased fee is not an option for them, then explain what it will cost on an hourly basis and be very clear that you will have to bill them for it.
Don’t be shy about asking for more money.
Remember, you are not making money on bad customers. They drive your staff nuts and cost you more than they pay you.
Once you have presented your options, they will either consider your recommendations or look for another company they can take advantage of.
If losing them seems to painful for you, think about the headaches you are about to encounter and decide if you are okay with that.
How to Get Rid of Toxic Customers
If you find yourself in a situation where the client is paying you a fair fee but they are driving you crazy, you may have no option but to tell them that you are probably not the best fit for what they need.
When appropriate, you can say that you have been evaluating their needs and it is beyond the scope of your original understanding of what they were looking for.
Firing a client this way must be done gently so you may want to practice with a colleague or in front of the mirror before you meet with your client in person.
Before getting rid of any customer, check with your attorney to make sure you do not have any financial or legal obligations that may come back to bite you. The last thing you want is to fire a client who later sues you for breach of contract. That would cause you even more grief.
Avoiding Bad Customers
Firing a client is emotionally difficult. To avoid signing up bad customer in the first place, create an ideal customer profile. Anyone who doesn’t fit that description isn’t the type of customer you want.
At first, this is hard to do because you have to turn away business, something nobody likes doing. But the alternative is to lose money over people who see your services as a commodity or are just too difficult to work with.