There is an old adage in business that says the customer is always right. In some cases, however, the customer is not right for the business or the business is not right for the customer. It sounds counter-intuitive, but sometimes it is better to let customers go when they aren’t a good fit, freeing yourself of the burden and freeing them to go find a partner that can satisfy their needs.

Dropping Clients: Learning to Ignore Your Sales Instincts

Many sales teams have a moment when the phone rings, the team looks at the caller ID and lets out a collective sigh: Oh no, not them again.

The sales team’s job is to attract and keep clients. It goes against every instinct to voluntarily jettison an account — but instincts aren’t always accurate.

When I was just starting out as a young MD in a business that I had purchased by mortgaging my house, I was battling unruly employees, a steep learning curve, and a severe case of nerves. One day my accountant — to whom I am eternally grateful for this learning experience — told me to sack seven of my top 20 clients.

My natural reaction was to question his sanity and ask if he was trying to put me out of business. His response was that continuing on as I was would put me out of business anyway. He had taken the initiative of examining the existing accounts and speaking with the people who managed them. He learned that when poor relationships coincided with undercharged accounts, those accounts were simply not worth keeping — at least not at the current profit margins and payment terms, which were not affording us the compensation we were worth.

After a review, six of the seven clients agreed to new terms and conditions. The seventh decided it was best for everybody to part ways. The result was larger profit margins and, perhaps equally importantly, improved employee morale.

The Client Review Process: Reverse Qualification

Sales teams qualify leads with systems such as BANT (Budget, Authority, Need, Timing) to identify the traits they want in a prospect. It is equally important, however, to reverse qualify as part of the client review process. During this stage, you will identify traits you can’t tolerate, disqualify those customers that have them, and identify your “walkaway point.”

The disqualification process involves physically writing down a list of things you want and things you don’t want, things you like about your best clients and don’t like about your worst clients.

Finally, develop a strategy of having the difficult conversation where the Account Manager will have to tell the client that they would love to continue doing business, but that in order to maintain a relationship, X,Y and Z will have to happen.

Traits of a Troublesome Client

Legacy clients — clients who have been with a company from the earliest stages and grown with them — are often the most troublesome. Sometimes the business’s growth outpaces the legacy client and the legacy client can’t keep up. Other times, the legacy client leverages the company’s deep gratitude for their early business too much to their advantage. In some cases, the company gave a legacy client a discount early on when they needed the business and the legacy client expects them to continue at that price point into perpetuity.

Other clients are simply too difficult, require too much attention and monopolize a level of the business’s resources that is disproportional to the money their account is worth. Some clients don’t understand how businesses evolve and constantly remind the business that they were never charged for one thing or another in the past, or that a price used to be lower for a certain product or service. Others are simply never happy, no matter how far backwards the business bends to accommodate them.

There will always be lean times of low invoicing where the immediate need for cash requires companies to reluctantly accept problem accounts. As an overarching strategy, however, businesses must reverse qualify all clients and periodically evaluate their current customers to ensure they are achieving fair profit margins and not overburdening their account managers with clients that simply aren’t worth the investment.