Last week, I wrote about identifying bad clients before you agree to work for them and take their money. But what about those clients who you've already got in the books? What should you do when good relationships sour and you wake up one day to realize that these clients cost you more than they make you? Do you feel confident in your ability to manage difficult clients?
Too many creative professionals are afraid to stand up for themselves and negotiate. They're afraid to make a client unhappy, believing that this person will malign them and tarnish their reputations. Or they are afraid that if spiteful Scrooge's meager checks stop coming then the business will go into a financial tailspin.
How will you pay your bills? How will you pay your team? If you remember only one thing from this post, remember this: Anxiety is a mediocre business coach. Don't make decisions simply to prevent bad things from happening. Make decisions to welcome so many good things into your life that they eventually crowd out the bad ones.
Better questions to ask are these: What good things are you missing out on because you feel beholden to Scrooge? How much money are you losing due to lack of time to devote to better clients, fitful sleep from worrying about the business, unpaid meetings and phone conferences, weak morale on your team, sub-par work, inability to pursue other more lucrative relationships, and general discontentment? How long can you afford to do business with people who try your patience and sap your passion?
If you feel stuck in contracts with difficult clients, try several of these 11 tactics for extricating yourself.
- Have the hard conversation. Clarify what you need and expect out of the relationship. Ask Scrooge what he or she needs and expects. Whether the conversation ends in a new agreement or an impasse, strive to reach a new plateau of communication.
- Decide upon your Difficult Client Rate. Maybe you charge 125-150% of what you normally would or offer no price break for bundled services. Regardless, your objective here is to have this rate ready as a non-negotiable policy when Scrooge comes making big promises and asking for preferential treatment. "Sure, we can have your custom website designed and built out by Monday. That will cost you $1.2 million dollars."
- If you're working on a project-by-project basis with Scrooge, make his latest project your top priority so that you can finish and get them off your books as quickly as possible. Frustration or resentment often cause us to procrastinate and extend the "punishment" when we should be working nights and weekends to jettison the soul-suckers.
- Hand off the work to a contractor. This tactics often gets overlooked. A Scrooge will often suck you into a weird dynamic where you are, in effect, kissing the hands of your captor. "Yes, sir, I'll see to this project myself even though I cringe every time your name shows up on Caller ID." Pawn the project!
- If the project has stalled out entirely, negotiate a "kill fee." This fee is a percentage of the deposit that you will give back, if you owe the client, or a final payment for services rendered, if the client owes you. If you don't already, include a kill fee clause in your contract template with a specific timeframe and terms.
- Become too expensive. Raise your rates or charge an expedite fee for fast turnarounds or short notice. Most people reconsider their ridiculous requests and expectations when they encounter a champagne price tag.
- Let them know that you'll be charging hourly for meetings.
- Actively seek BETTER clients to start cutting yourself away from bad client's purse strings.
- Become "too busy," apologize for becoming too busy, and refer your bad client elsewhere. As long as you're being helpful, bad clients can't interpret your availability as blowing them off and can't feel justified in talking negatively about your treatment of them.
Note: If you referred Scrooge to one of your friends, obviously you don't want your friend to end up in the same position. Remember to call him immediately and pass on a friendly warning.
- "Do away with" or "phase out" the service that you had previously offered the bad client.
- Introduce a new payment schedule, as well as a percentage fee for past due accounts. This percentage could be anywhere from a 1.5% "reminder" to an 18% penalty.
Let's end on a positive note.
Identify what character and personality traits you look for in GOOD clients. Treat new clients as new hires. Develop a list of questions to help qualify hunches so that you won't be bedazzled by a charismatic prospect or fall into the clutches of an egomaniac.
What questions do you ask to gauge whether this prospective client will be honest, respectful, responsive, reasonable, and optimistic? Make a checklist of your Must Haves and Can't Stands.
Take your questions and checklist with you to every sales meeting. You're more likely to turn away bad clients if you have a clear, confident understanding of your compatibility.
Difficult clients are best seen with your rearview mirror.