In Bad Economic Times, Should You Fire Clients?

October 29th, 2009 by Rob Berman Leave a reply »

It seems to go against the grain to fire clients when the economy is not doing well.

Seven thoughts on reviewing your client base for potential clients to fire.

1. Time could be better spent finding new clients who cause less aggravation.

Time is fungible – it can’t be replaced once used up.  Are you spending excessive hours handling annoying clients?  Why do so when you can find new clients who cause less annoyance?

2. If clients are not paying now, why do you expect them to pay later?

Investing more and more time with a client who is falling farther and farther behind in payments is a losing proposition.  Do you really think they will ever pay you 100% of receivables?

3. If you spend more time with your profitable clients they will appreciate your time.  Then, they are more likely to offer referrals.

Referrals are the lifeblood of a business.  It is much easier to close these prospects.  They have their expectations in a reasonable place because the referrer has already told them about your company.

4. Business is Business – Personal is Personal.

If you do business with friends or your clients become friends, it is often trickier to deal with any negatives.  You need to separate the two – treat them like any another client.  Hopefully, they also will recognize the two different relationships and separate them.

5. If they view your product or service as a commodity then, you will continue to be beat up on price.

Your company and the relationship manager need to continue to reinforce your value proposition.  Unique or high value products and services are not, and cannot, be commodities.  Call clients out on the price game or let them be someone else’s client.

6. You have outgrown the client.

Sentimentality for long-term clients is to be admired.  Yet, your organization may not be a good fit for them.  Do them and yourself a favor, refer them to another firm who is a better match.

Your client may appreciate your candor and reward it with referrals.  The new firm will be more inclined to cross-refer when the situation presents itself.

7. Your staff is being abused by the client.

Customers occasionally become upset especially in long-term relationships.  However, if they persist in abusive language or actions it may be time to move on.

The Takeaway

In poor economic times firing clients can actually increase profitability.  Those clients who take too much time, money and effort are dragging down margins.

Those are my thoughts.  How about you?

  1. Do you have clients you should fire?
  2. Have you ever fired clients?
  3. Do you look at the profitability of your clients?
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