I recently had to do one of the scariest things for a business owner – tell a client that I can no longer work with them.
Now I’m not just talking about a difficult customer. We all have those – people who think they’re more important than they actually are, who don’t listen very well, and who aren’t very responsive.
I’m talking about toxic clients. They don’t value what you do. They NEVER listen (unless the thing you warned them about happens, then they remember enough to say ‘Why didn’t you do that?’). They never pay on time, and always challenge the price.
Toxic customers exhaust you. They consume so much of your time and energy. They literally suck the life out of you and your staff. Your heart drops when you see an email from them. Every conversation is confrontational: they want more from you for less money. But most frustratingly, they don’t act on your recommendations, meaning you never get the opportunity to help them move their business forward. They think they know best, and simply refuse to hear anything that contravenes their way of thinking.
Breaking up with toxic customers is hard on a number of levels. Small businesses want to take on every customer we can, especially when you’re starting out. Even more so when you have staff relying on you to support their families. By the time you reach the point of realising that the money from this toxic relationship is not worth the personal and professional stress, it’s too late – the negative impact has seeped in.
And because toxic clients don’t usually respond to any challenging (god forbid critical) conversations well – they see it as an attack, and they attack right back – these conversations are even more challenging.
But you reach a point where a client is so disruptive, unpleasant and draining that you are willing to cut your losses and move on, no matter the cost.
Let me be clear: I’m used to challenging situations, especially when starting a new client relationship. I love helping clients to clean up a messy financial situation that was stressing them out and holding them back, and then providing an action plan to help them move forward with less stress and more confidence. Unfortunately some clients are simply unable to change their ways. They can’t even acknowledge there are any problems! As a result, we would never be able to help them move forward. You can’t help them on any level, let alone at the level I want to help all my clients. Life’s too short to operate like that.
When grappling with what to do, it was helpful to revisit my business and personal goals. A key goal for 2020 is finding a better work / life balance for myself and my staff, including improving my physical and mental health. It soon became obvious this relationship was derailing that goal.
Through this journey, I realised that most owners are in business because we want to enjoy what we spend so much of our life doing. We want to create great spaces for our team, and help our clients and staff to grow and thrive. Toxic people drain your energy and stop you from dealing with clients and staff in the way you want. You let opportunities slip that you’d normally jump at if you were in a better headspace.
The first emotion after ending the relationship was relief. Now I’m freed up to concentrate on supporting my fantastic stable of clients, as well as finding new ones who are more aligned with my values.
My one regret is not acting sooner. Unfortunately it took a staff member threatening to quit to force me to act. I should have listened to my gut feeling about this person, and had that difficult conversation before it had such a corrosive effect on my team and myself.
Lessons learned from a toxic client
- Set clear non-financial goals in addition to your sales and profit targets. Document how you want your business to operate, and the environment you want to create. These are hard to measure, but they are important reminders of the importance of creating a safe, happy and healthy environment for you and your team.
- Figure out whether the relationship is salvageable. A lot of this comes down to gut instinct.
- Talk to them about how to constructively change the relationship as it currently stands. You need to give them the opportunity to change their behaviour if they were unaware of the impact their actions have been having.
- If they are not willing to change, then explain that this relationship does not align with how you want to do business, and you can no longer work with them.
- Where possible, provide a referral to a trusted source that you believe will suit them better (ie a larger or smaller firm, depending on their needs). But in extreme circumstances, you don’t want to damage other relationships by dumping that toxic person onto someone else.
- You want to work with clients who are willing to listen and take advice. If they dismiss your recommendations, don’t value what you do, and don’t want to pay for your services, that’s an unsustainable relationship. Cut them loose and move on.
- Clearly explain your fees up-front to head off problems down the track. (My engagement letter provides a list of hourly rates for tasks, on top of any relevant package pricing.)
- Be clear about the type of clients you want to attract – those who value what you do, are happy to pay, and who are pleasant to deal with. Celebrate existing clients like this, and prioritise attracting new clients who fit the bill.