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Is Your Business Benefiting by Retaining All Those Clients?

written by: N Nayab•edited by: Ginny Edwards•updated: 7/21/2011

The success of any business depends on putting the available time to the most productive and remunerative use. Some clients however impede the productive use of time and cause more trouble than they are worth. Learn the characteristics of such clients to understand when to fire a client.

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    When to Fire a Client Any business tries to fulfill customer needs and to gain revenue in excess of the expenses incurred in undertaking such service. As the adage goes, “the customer is the king” and businesses need to do everything possible to deliver a high quality product or service and thereby delight the customer.

    Some customers however press for huge discounts, indulge in unethical conduct, or make unreasonable demands. While businesses may humor such customers on a one-off basis, no business can sustain itself serving such types of customers on a regular basis.

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    Discounts

    The most common form of unreasonable demand made by clients is asking for discounts on product pricing when fixed prices remain the policy and the norm. Some clients may insist on too high of a discount that makes the transaction nonviable for the business. Giving in to hefty discounts to clients with a “something for nothing” attitude sets a bad precedent because not only would the same client refuse to accept anything else the next time around, but other clients would feel cheated and soon start demanding the same nonviable discounts.

    Successful businesses provide discounts to clients only on obtaining something favorable in return, such as a bulk order, an upfront payment, free advertising, or other considerations. Cultivate your ability to distinguish between potential long-term clients and clients who are out to secure a good offer and then disappear.

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    Unethical Conduct

    Trust and integrity are the cornerstones of a good business relationship, and a dishonest client is sure to cause more harm than good for the business. If your client indulges in any of these unethical conducts, do not hesitate to end the relationship:

    • Asking you to indulge in unethical practices on their behalf, such as issuing false or misleading advertisements
    • Lying or not honoring agreed on things such as payment schedule
    • Demanding inside information on their competitors who also deals with you
    • Asking through a representative for a bribe to conclude the deal
    • Being rude and abusive and finding fault for little or no reason

    Condoning a lapse or indulging in unethical conduct for short-term gains invariably leads to a second and bigger lapse, very often ruining the business. Firing dishonest, unethical and abusive clients may cause a temporary dent in profits or cash flow, but bodes well for the business in the long run. Such brave actions improve the spirit, pride and productivity of the employees who have to put up with such unethical and difficult clients.

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    Unreasonable Demands

    At times, clients make demands on additional products and services that do not fit with the business' core focus. Do not fall for the temptation to offer such additional services. Diluting your effort from the core activity causes loss of focus that leads to damages that extend beyond the specific project.

    The client may also exhibit other types of unreasonable demands such as placing tight deadlines arbitrarily, breathing down your neck by calling you up on weekends and holidays, or conversely not honoring appointments and frequently canceling meetings. While businesses should readily support a client in genuine cases of tight deadlines, supporting a client for whom tight deadlines and a disregard of others time are the norm is not worth the while.

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    Severing the Relationship

    Identifying when to fire a client is easy. The hard part is severing the relationship. Doing so during the course of an ongoing project or pending a contract is difficult and in any case not advisable. Businesses would do well to sever the relationship per the relevant clauses in the agreement, incurring the loss meantime to avoid negative publicity.

    The following are some ways to fire a client if the contract is renewable or if no contract exists:

    • Saying a firm “no” to unreasonable demands outside the scope of the agreement or accepted conventions, sticking to the original contract or estimate, and not giving in to any concessions or entertaining any scope creep
    • Raising rates for the difficult client, forcing them to look elsewhere
    • Not entertaining the client’s phone calls or visits outside the official hours of the business
    • Flatly refusing anything to do with unethical behavior

    Time is money, and the best way to make finite time count is by spending it on clients who provide the maximum returns on invested time, and avoiding unprofitable customers.

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    Reference

    Source: author's experience

    Image Credit: flickr.com/Wouter Kiel under cc by 2.0.