Save Your Company By Firing Your CustomersJeff Schmitt
A wake-up call is speeding your way. If you trust the stats, the recovery is lurching forward. Customers are tentatively opening their wallets. The question is: Does this translate to profits or just revenue offset by costs? Sure, it's hard to earn a buck these days. But when was the last time you looked closely at your book of business? No, I'm not talking about account growth and targets.
I'm talking about the three Ps. Is the customer profitable? Are you still proficient at the work? Do both still rank as a priority?
Dropping clients is never easy. And right-sizing afterward is even harder. Nevertheless, you can't ignore facts: Some clients' best days have long passed. To position yourself for a recovery, you must align your structure and expenses. So which clients should stay and which should go? Ask yourself if the troublesome customers are affecting your business in the following adverse ways.
1) Cultivating misery: You know who they are—the clients who drive your employees to drink with their tirades, snarky jabs, and threats. They're always complaining that the work isn't good enough, bullying you with minute contract terms at 2 a.m. Your people dread returning their calls or e-mails. The result—employee fatigue, cynicism, and antipathy—inevitably spills into relationships with other customers. Don't let it. Provide proper notice to bad clients and help them land elsewhere, but dump them nonetheless. The time, energy, and morale improvement you gain will inevitably offset the loss. Who knows? Their experiences elsewhere may just steer them back to you … with humble hearts and better terms.
2) Exceeding Scope: Sure, you want to stretch. Your employees crave challenging and meaningful work that sharpens their skills. But do you really want to stray so far from your mission and capabilities? You know the end result: greater infrastructure, complexity, costs, and risk for failure. The question: Are these competencies attracting lucrative work? If not, you're just stealing from Peter to pay Judas.
3) Not Producing Growth: You're streamlining, focusing on core competencies and clients with the highest return on investment. That's what good businesses do. Here's another thing they do: provide ideas to help customers leverage technology, identify new markets, and better serve existing customers. If you've helped your client tap all available revenue streams, there's nothing more you can do. For whatever reason, that customer is just circling the drain. Don't get sucked down, too.
4) Failing Your Customers: You can't be good at everything. For whatever reason, you're falling short of client standards. You've tried everything, but it's just not working. Despite this, they're still willing to give you another chance. But the truth is obvious: You're not doing them any good continuing this charade. Be merciful and do what they can't. They'll eventually find satisfaction elsewhere.
5) Siphoning Too Much Time: They have good intentions. But they're always calling, looking to experiment with this or that variable. That's welcome when it's part of the work statement. But indecisiveness, constant requests, improvising, and revisions cost plenty. Set expectations to pacify them. Say "no" or charge extra to get their attention. Exercise your out clause to save yourself the headaches.
6) Sticking with a Dying Partnership: What do you think of when you hear "partner?" I'm guessing that you'll list such terms as shared values, vision, and compromise. In some cases, you won't feel like you're "in this together." Instead you're haggling and stepping on each other's toes. Maybe you're holding on because you've invested so much in each other—or are afraid to move on. But those are the wrong reasons to continue a partnership. If you know deep inside that it won't improve, just let it go.
7) Tolerating Payment Issues: Net 30 became Net 60, which begot Net 90. The check is in the mail, they always say, and prepay is never an option. But you have bills, too. The client may have cash flow issues. Don't let them take you down, too.
8) Driving Down Price: Someone is squeezing your customers, so they turn around and do the same to you. In reality, they're just using you, playing you against your competitors, cutting into your margins. Know what? They'll be dropping you for a lower price soon enough. Beat them to the punch before they soak up too much of your billable.
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