How Do I Fire a Client?
A few years ago, I called a mentor of mine for a friendly catch up. She’s one of those women who always has a clear, impressive answer to that mundane question, “How are you?” So she started telling me about her business’s growth numbers, priorities for the year, and then something surprising: that they had just fired a very significant client.
The story was: as she was wrapping up an annual review with one of her star employees, she asked, “What can I do to make your job better?” To which this person replied, “X client makes my life miserable. If I didn’t have to work with them, I’d be happier.” So the CEO investigated how much resource said client was taking and how they treated her staff. And that was that; they were gone shortly after. This anecdote planted a seed in me for years to come: don’t be afraid to fire a client.
There are two important things to note from the above anecdote. First, this CEO asked one of her top performing people the thoughtful question: “How can I make your job better?” (Hello, employee retention). Then, she listened and considered the challenge in both quantitative and qualitative ways.
Quantitative means that the client isn’t profitable. Now, the reasons for this could be many. Perhaps you’ve priced your products or services incorrectly. Maybe they don’t follow your businesses processes. Maybe you don’t have processes. Or maybe they’ve been a longtime client who fits into the old business model, but they haven’t evolved as your business has. They wouldn’t pass through your quote gate, today.
And here’s a really important point: this isn’t their fault. Often, it’s the opposite. We find that business owners often don’t communicate correct pricing, boundaries, and expectations. So in this case, it sounds way too harsh to say “fire a client.” We simply need to take ownership of that, then align on expectations (more below).
The qualitative reasons are ironically much clearer, in my opinion. If a client is abusing your team or violating your company’s values, it’s a no brainer. Fire them.
So those are the two general criteria as to when you’d fire a client. Now, the tough part: how :/ Here are 5 practical tips:
1. Consider: is there anything they can do or change, to become an ideal client?
For example, if they accept a price increase; stop calling your team on the weekends; or add an additional service to what they currently buy, could they be an ideal client? If the answer is yes, consider presenting this as an option (not an ultimatum, an option) so that you can continue to work together. However, if the answer is “Nothing could make us want to keep working with them,” be clear about that and hold firm.
2. Schedule a time to speak on the phone (better yet, in person).
You know me and my pick-up-the-phone advice <insert eyerolls from clients all across the globe, haha>, so I’ll leave it at that. Also, follow these tips for a difficult conversation.
3. Be transparent about why, and take some of the blame.
It’s a good rule of thumb to enter into a conversation like this from a place of “What part of this can I own and apologize for?” I know that it may sound counterintuitive, but there’s scientific evidence to support that by saying “I’m sorry” first, you can completely diffuse a situation. As Dr. Dan Ariely, my favorite behavioral economist, writes about in the Upside of Irrationality,
‘Sorry’ often wins the day… people expressed less interest in suing doctors who had assumed responsibility, apologized, and planned a means of avoiding the error in the future.
So the apology could simply be, “I’m sorry that I haven’t communicated this to you before now.” Then, honestly (and tactfully) share why you’re no longer a good business match.
Here’s a common mistake: people often want to chicken out with, “Our project queue is full right now.” What often happens is that a client or prospect will respond, “That’s okay, I can wait until you have availability.” And you haven’t solved the issue; you’ve just kicked a super awkward conversation down the road. Remember: clear is kind, and if you’re not a match for each other, it’s not bad. You’re just objectively not a match. It’s okay!
4. Leave with clear action steps.
Ensure that you two walk away with the same, clear understanding. And if needed, logistical steps to sever the relationship. This may include things like canceling billing, communication plans to your respective teams, off-boarding processes, etc. Then, follow-up the meeting or call with an email to confirm your respective understandings and next steps in writing. Here’s a mega-millions bonus: if you know another company who would be a great fit for this client, refer them, and make it a win-win-win!
5. Go out with grace.
As you can imagine, if you’ve been able to refer them to another business that’s a good fit, that’s the most gorgeous and graceful way to go out and leave on great terms. You may even keep and improve your relationship! Make sure that you follow up with the logistical components too. In our business, if we discontinue our relationship with a client, we give them a defined amount of time and instructions on how to download the contents of their client portal so that they have a nice little package and records of our work together and can keep and continue using.
And before I go, allow me to say one thing about the harsh-sounding phrase “fire a client.” I do not mean this in some dramatic, emotionally-charged way. In fact, here’s what I really do believe: if your company should no longer be working with someone, releasing them is in the best interest of everyone, including them.
If you’re no longer aligned (for whatever reason: be it money, process, people…), it means that the exchange of value is off. You’re not getting the best of them, and they’re not getting the best of you. Which like I said, isn’t great for them either. So please don’t get me wrong. I’m not saying that this is easy, but I am saying that it’ll be for the greater good.
When done in integrity – marrying hearts and smarts – it truly will make everyone better. I also understand the practical side that it’s incredibly scary to fire a client; especially a big revenue one! Honestly though, in all my experience, when you get brave enough to move away from the wrong thing, the right one always comes along.
