Business ventures are a give and take experience. Having a healthy relationship with your clients is necessary for your business to succeed. There’s a key word there: “healthy”. A healthy relationship has to be established on both sides by the client and by you.
Obviously, your client and you have separate goals you want to achieve, but the end result you want to attain is to benefit both of you. Yet, we’ve all been taught the client is always right. But if the relationship becomes toxic, and the customer becomes highly unprofitable it is wise to walk away from the relationship and let them choose a new vendor. Small businesses simply can’t afford to continue business relationships that drain their profits and resources.
Let’s take a look at some examples of the behaviors that are red flags for a potentially toxic client
Psycho Dialer (or emailer)
An over communicative client is someone who contacts you way too much. Communication is key for a healthy relationship. However, just like in to a romantic relationship, there is a need for space and your own time.
If they are calling late at night, sending too many emails, texts, or voicemails that could be handled at during business hours — these are all bad signs. If it’s a red flag in a relationship, it’s a red flag in business.
Of course, it’s important that your client cares about your work and the work you do for them, but unless it’s a major situation involving their account that needs to be handled immediately, it can wait for a later time.
Clients should recognize you have others clients as well and can’t spend all your time directly on them. Treating a client with excessive precedence sets you up to let them down later, when you can’t afford to pay as much attention to them. This can happen for many reasons, from increased business to the realization that you’ve given too much to this client and are now stuck.
Unrealistic Time Expectations
Time is money, they say. Not everyone wants to pay for all that time consistently, though. If this comes up with a client you have recently started working with, this often can be a cause for concern. In this day and age of free music and free news, people often have unfair expectations of free (or very cheap) services.
They wouldn’t want this turned back upon them if they owned a business, though, and this is your company. You need to be firm in expressing how much time you can spend on a specific project and what that will cost. This leads directly into the next point…
They Want it Free
Clients reach out to you for services you can provide, services they wouldn’t be able to obtain without you. Because of this, they need to respect that fact and not constantly try to get lower prices or ‘deals’ for your services. Naturally, you can and should help them out slightly if there are reasonable circumstances, but if you give in too much, you risk damaging your brand. If this issue keeps coming up, it might be better to part ways with this client.
All the extra time you spend discussing price is the time that you could have spent working with other clients. Essentially, this means you’re losing double the money on this “always better deal seeking” client.
In our company’s case, we recently had a legal transcription client that asked up-front for a lower rate than what we quoted, and when we hesitated slightly, he spotted an opening. He refused to commit until he had received a free trial. We acquiesced, even though his needs were low-volume and the free trial we use is typically for high-volume long-term clients.
Within three months, he was back on the phone, trying to get another 10% discount. At this point, we suggested he move to another firm with lower prices, because it had become clear price and not quality was such a priority to him it was not worth our time. At his rates and volume, our profit margin was too narrow, and our business interests did not match up.
Overly Aggressive Demands
Whether it’s a client you recently started working with, or one you have collaborated with for some time, never let business matters be conducted in an aggressive tone.
This is not to say, however, that you shouldn’t make small concessions or be lenient with your time or pricing with clients you have an established relationship with. You never want to do anything that would jeopardize your important relationships, after all.
Another example from our experience: A (former) medical transcription client called so much that our office personnel began to noticeably lose productivity. Not only were there excessive calls, they were rude and called so often that our office staff started to avoid answering their calls. Rudeness was one thing, but it was frequently accompanied by unfounded claims of lateness and requests for files to be compensated for various reasons. Reports seemed to go missing on a weekly basis.
Our staff would log into their account and not see evidence of any of what they were talking about. When presented with this evidence, complete with tracking and timestamps every step of the way, that specific complaint would mysteriously vanish, only to be replaced with a new one. The situation became so bad that after internal discussions, we set up a spreadsheet tracking their calls.
Three months and many nasty calls later, the client was sent the spreadsheet documenting their calls and issues, our response, and a request for them to find a new transcription company. After three months of them searching, we were finally free of their toxicity when they found a new transcription company to work with.
It’s key to remember that not every client is valuable. There are some that not only can have live without, you’ll be better off doing so, like customers that are frequent headaches. If you find yourself frequently thinking negatively about a client, it might be time to reconsider your relationship with them. Candice Galek, Forbes 30 Under 30 winner and Founder and CEO of Bikini Luxe, said it well in her recent article in Inc. “Every customer isn’t valuable–there are some that we can certainly live without. Like the customers who are headaches for your company for example. The ones who won’t lead to any more referrals or sales, and who give your staff trouble time and again.”
Sometimes, you’ll find it’s a new client, demanding free services and hurling insults at your company or employees. The wisest thing to do in these situations is to respond in a calm yet firm way. State your opinion and business perspective and why you have chosen your course of action. If more harassment ensues, it’s typically best to part ways.
Remember that you can always find new clients. You can’t, however, recover wasted time or image trying to satisfy a client that will never be satisfied. You deserve the respect and the satisfaction of fair compensation for all your hard work, and you should be confident your prices are already very fair. This is when to fire a toxic client is punching you in the face.