It’s difficult to win new business. It’s more difficult to imagine getting rid of a client that you worked hard to acquire. But sometimes you need to fire a nightmare client.
Here’s what led me to fire my first nightmare client. I visited him with two requests: to treat my employees better (he was abusive, yelling at them, belittling them and cursing at them; I asked him to apologize and be respectful in the future) and to square his account (he owed us hundreds of thousands of dollars, and our many calls about it were unanswered). As I left this client’s office, I mentioned to his chief financial officer that we hadn’t been paid in some time and asked to be paid. I didn’t think much of it because the CFO was responsible for releasing the payment.
Shortly after I left, my cellphone rang. I answered to the angry ranting of my client. He was furious that I spoke to his CFO about overdue payments. He screamed that I wasn’t to speak to anyone in his company other than him. Cramming a slew of curse words into a single sentence, he threatened to fire my company and me.
I waited as he finished his outburst. Then I very calmly said, “You don’t have to worry about firing me. I’m firing you.” There was silence. He was stunned. After a moment passed, he let out an uncomfortable laugh and said, “You wouldn’t do that to me. I spend millions of dollars with your company.” I said, “I just did. You’ll be getting a formal notice in the mail, but let this serve as your notification.”
It’s not easy to fire any client. It’s harder to fire a large client. But sometimes it’s necessary for the growth and the health of your business.
Protect your employees.
The price of your company’s morale and culture is too high a price to pay for keeping such a client, even a large one. Your employees are your greatest assets, and you can’t afford to allow them to be ground down by a nightmare client. You can replace the client, but replacing your employees only provides your nightmare client with a new crop of people to abuse.
You can’t put a client before the employees who will be serving your other clients.
Sometimes it is about the money.
You also should fire clients that are unwilling to compensate your company for the value you create for them. Sometimes clients are nightmares because they are too expensive to serve—at least in the way they expect to be served. These clients want everything that you have to offer, but they’re unwilling to pay a price that allows you to deliver those results and still be profitable.
In the case above, my nightmare client was using my company as a bank. He wasn’t paying our company, but we had to pay interest on the money we borrowed to serve his account.
All difficult clients aren’t nightmare clients.
Before you fire a client, I want to be clear about clients who are challenging but who are not truly nightmare clients.
A client that is demanding—one that requires business results that aren’t easily obtained or that stretches your capabilities—isn’t necessarily a nightmare client. Demanding clients can actually help you grow your business by improving your capabilities and helping you find new ways to create value for other clients.
Although nightmare clients are always adversarial, demanding clients can be partner-minded, seeking ways that you can work together so both of you grow. It’s the demanding clients’ willingness to be good partners and share their responsibility for results that makes them worthwhile to keep around.
So here’s how to fire a client.
If you evaluate a troublesome client and determine that the nightmare label fits, it’s time to sever ties. The process is not always easy, and it’s rarely pleasant. You take action calmly, professionally and dispassionately. One of you is already adversarial, and being argumentative won’t make the firing any easier.
In the best-case scenario, you ax the customer face to face. You explain why the relationship isn’t working and why you are opting out of service. Then you talk about the next steps and transition.
If you have a contractual relationship requiring that you give your client notice, you provide that notice. You give that customer time to find another supplier, especially if you are serving as a strategic partner.
There is never a reason for you to do or say anything unprofessional. And remember, this customer may be a nightmare, but he or she can tell other people—including your potential clients—that you left them in a bind at the end. And obviously that’s a scenario you want to avoid.