Running your own business can be tough, but one of the therapeutic advantages of dealing with the stresses of self-employment is the ability to fire stroppy customers.
Steve Cody, the proprietor of marketing agency Peppercom, gives a list of five types of clients worth sacking in Inc Magazine.
It’s a good list although it misses the general “pain in the ass” client who demands a solid gold level of service for a pittance. These are particularly common if you pitch to the lowest end of the market.
Lists like Steve’s are good reminder of Pareto’s Law, or the 80/20 rule which is usually put in terms of 80% of business revenues come from 20% of customers.
The converse is also true, 80% of business hassles come from just 20% of customers and they are almost certainly not the most profitable ones.
Pandering too much to the bad customers can hurt your health as well – running your own business is stressful enough without dealing with troublesome clients.
So sacking bad clients is good, not only is it therapeutic but it also helps the bank account. It’s worthwhile doing whenever a customer drives you too far.
Go on, you know you want to.
On the face of it this looks like a good list. But I wonder – how did they come to be clients in the first place?
What often happens where there is no planning around the fundamental issue of the character of the business that is to be created – or refashioned – is that of boundaries, values and expectations. Expectations of customers and expectations that you will be willing to satisfy.
It may seem basic but time and time again, businesses just ‘growed like Topsy’ and had not real consideration given to these matters. No vision to work toward. No way to express to employees and customers what the rules of engagement will be and no real leadership from management.
When it comes to sacking clients, that can be a very good idea. But the devil is of course in the detail and honestly, the average business has no idea of who the good clients are (measured in both an objective an subjective way), and very often the clients they think are the good ones – are not. Not by a long shot.
I would definitely suggest a proper analysis of all of that stuff before you go tossing that baby out of the tub.
All good points Lindy, I’d say though that this is one area where business owners and managers can an informed judgement just by looking at their ledger.
There’s also the gut feel – I refused to work for a number of customers while running PC Rescue simply because I didn’t like their behaviour.
A reliable early warning sign was the requests for ‘contras’ or “do this job for free and there’ll be more work later.”
The reason many people go into their own business is to be their own boss, often they’re disappointed with the reality but being able to tell clients “no” is certainly one of the benefits.
Yes trusting your instincts is valuable. But where it is an ad hoc decision each time there is a system missing that would make such decisions much easier.
Looking at the ledger would be a good start point – if the manager or owner is able to quantify the lifetime value of the client and where they are the relative stage of their business cycle and relationship with that business. Going through this process with accountants in the past none of them had a gut feeling about the value of their top clients that coincided with the real data.
I agree a benefit that many look for in owning a business. My guess is that there are very few business owners who actually have that feeling of ability to say no to clients any more than they are able to spend more time doing what they like to do or have more money. Indeed this is an area where many business owners I observe have never really developed their personal strengths and tuned their business in such a way to enjoy these possibilities, and in the process increase the profitability of their business.
Sadly.