When is it time to fire a client?
About 5 – 6 years ago I took part on a panel moderated by Nine Lives Media (MSP Mentor, The VAR guy) editor, Joe Panettieri at a CompTIA event to discuss when is it time to fire a client? We had a lively discussion going about the differences between customers and clients, what types of clients you want and more. I recall sharing that in my MSP business I was running, I would typically fire my bottom 20% clients each year. In other words, the least desirable/profitable 20% of my client base were not renewed by my company. These client was either too much trouble, took up too much bandwidth, didn’t pay on time, didn’t listen to our advice or there was something that made the relationship no longer work. They say that 80% of your business comes from 20% of your clients.
What determination do you use when you have to let a client go? If you are upset with a client is it worth firing them? Have you spoken to them about why you are upset with them or their staff? If they don’t know what they did to bother you, they can’t fix it. This is where your written and verbal communication skills come into play. Let say, you have spoken to them, written to them and still nothing has been resolved. You have decided it is time to “fire” that client.
Once you have made the business decision to part ways with a client, how do you communicate this to the client? Bad news is never taken well. I recommend, whenever possible, speaking to them face to face. If you can, schedule a meeting with your client a minimum of 30 days before their contract expires so you can inform them that you will no longer be able to support their company and why. You should also put it in writing. Create a letter to give them along with all of their network and technical documentation so the next firm can easily come in and take over. You never want to hold your client’s network hostage, no matter how painful the parting of the ways may be.
When it comes to parting ways with a client, communication is very important. Not every business relationship is meant to last forever. As Managed Services Providers we need to position ourselves at the C-Level table with the business owner. When you accomplish this, you will have total trust from your client. If the trust is broken on some level, it is difficult to continue to work with that firm. Make sure that your communication is clear and concise. If not, you may turn out to look like a whining baby.
I hope the information I am sharing on my blog can help you make the right decision on when to fire a client and when to stick it out. Good clients are hard to find and trust me when I say, you need to communicate with your good clients more often so that little problems don’t turn into huge issues and cost you both money and your reputation.
All the best in success,