You must have a horror story or two that involves "clients from hell." This may be a no brainer, but I was surprised to find a website dedicated to sharing those horror stories. (https://clientsfromhell.net/) It seems they even have a podcast about it.
On the flip side, if you haven't had any experience dealing with clients from hell in your service business, you are leaving money on the table.
“What?!,” you might ask. You heard it right the first time. You are losing money.
Think of it this way: having bad experiences with your clients means you have a badge of honor or a battle scar (pick one) where you pushed the boundaries and took chances with your prospects.
Without these experiences, you wouldn't know what your ideal client profile is. This is why I advise businesses that are 18 months to 24 months old to continuously, fearlessly experiment with their service offerings.
I have been there myself. What seemed like a low hanging fruit turned out to be a low hanging poisonous fruit that ruined my entire batch.
This is how you learn what to do and what not to do with finding your ideal client profile. I certainly learned my lesson by pushing the boundaries.
So, it's all good.
Now, what's not good is to keep repeating the same mistake.
From here on out, take what you learned from those experiences and use them to your advantage.
Unless you are the kind of person who likes to compile funny-and-sad-at-the-same-time incidents by dealing with clients from hell, you know you have to minimize the chance of encountering crappy clients.
If you are with me on this, in this post, you will find how to break down this effort and 51 ideas you can actively do to course-correct your business model throughout the year and beyond.
Stating the Obvious
That is: Why sticking with unfit clients is a bad idea.
I don't care how much your business is charging your clients from hell, if you quantify this right, you are always in the red with these clients.
Firstly, it sucks out your team's energy. This will affect the overall performance of your business. As a result, your team is unable to be as attentive as they should be to the clients you value. Hence you will rot your entire batch of clients by even just having one client from hell.
That’s not all. You are demoralizing your team. This will result in a high turnover rate, which is costly.
Secondly, it's always a battle to collect fees. That alone wastes time and energy by chasing them down regularly, renegotiating because they are unhappy, or else, you may have to send them off to a collection agency, etc.
Thirdly, it makes you forget why you do what you do in the first place.
This last piece is huge. If your clients don't energize you, this alone should be the reason you fire them. Not doing so is a sure way to burn out.
Let Me Guess...
Understand the pattern you have created is the first step to diagnose your current condition of getting stuck with unfit clients.
Generally, here's how it goes:
In the moment of uncertainty, desperation and having a low confidence in your business’ ability to generate consistent revenues, you made a decision to take on unfit clients by letting your confirmation bias take over your brain.
You basically gave into the moments of weakness and decided to ignore all the subtle red flags you picked up along the way.
Or another classic scenario is that you were just too oblivious as to what to say yes to and what to say no to.
Either way, by now, you and your team are so fixated on "getting even" by breaking even with these clients, which would cost your business extra time and manpower.
This is completely understandable. You are thinking, "I have to get something out of this terrible client."
Don't. Just...don't. Sooner you let them go, the better. Just cut the losses.
But wait, you are reluctant because you are asking yourself:
"How in the world can I afford to lose that revenue? I can't let these clients go right now."
"I think they are still good contacts to have. So, I should just suck it up."
"I don't want other competitors to take them away from us."
The first concern is a valid one, as even, though it is costing your business in the long-run, they are still contributing to your current cash flow. But rest assured, this post will guide you through with the actionable process.
The second concern, I say, is 50/50. Jim Rohn’s famous quote goes, “We are the average of the 5 people we spend the most time with.” You must ask yourself whether these are high-quality contacts worth keeping even if they are behaving badly. The quote suggests that their contacts can be as crappy as they are because chances are, they are alike.
However, in case you discover that they are simply unfit and are not necessarily clients from hell, then you can always take your time to part your way amicably. So, there is nothing to worry about, is there?
The third concern is plain silly. I would pay my competitors to take my crappy clients away from me. This type of comment comes from the place of ego and insecurity.
In this case, you must ask yourself what truly matters to you and your business. If your answer is, “To prove to the world that I matter and mean something by keeping crappy but big-name clients under my belt to brag about,” then you can just stop reading this post because…I don’t think I can help you.
Breaking the Vicious Cycle
Below are the 5 common signs that you should pay attention to at all times. If your answer is "yes" to most of the situations described below, then you know what you have to do.
1. YOUR SERVICE ISN’T ON TOP OF THEIR MIND.
Most likely, your clients have other pressing matters they are spending the majority of their attention and energy.
You can tell by the way they communicate. They may be slow on getting back to you and/or they don't seem to have a clear objective.
In my previous post, “No Budget? No Problem: The Magic Blueprint to Overcome ‘No Budget’ Objections” outlines what you can do to avoid this from the beginning.
2. YOUR DIRECT CONTACT DOESN’T HAVE THE AUTHORITY TO APPROVE ANYTHING LET ALONE CUTTING CHECKS FOR YOU.
This happens often to B2B businesses. Perhaps your point of contact requires a few heads to sign off to do anything.
Most likely, you didn't close your deal with the decision makers in the beginning. In the worst-case scenario, you don't even know who they are because you are dealing with middle management.
Another important fact to remember is that your contact can leave his or her current position with no advance notice. The successor may not care at all what kind of working relationship you have built with the original contact.
3. YOU ACCIDENTALLY (OR SUBCONSCIOUSLY) UNDERPLAYED YOURSELF AND POSITIONED YOUR COMPANY TO BECOME YOUR CLIENTS’ GOFER.
There are some variations. But, they all come down to this one thing:
They don't value your service to gain new insights, tools, and untapped revenue opportunities.
Instead, they value your business as, "Someone who does what we tell them to do."
This never works. You and your team will never be viewed as a solution provider. To them, you guys are just a bunch of gofers.
Since there's no respect, you will have a harder time collecting your fees as they just don’t feel like paying.
This is common in the beginning of businesses. You aren’t sure whether you will have enough projects lined up. As a part of the effort to fill the pipeline, you position your business lower than you would like.
4. THEY ARE A HOT MESS.
They have their own business operation issues, and you and your team get sucked into it.
They don't know what they want, and they have no processes. As a result, they change their mind frequently or unable to be decisive. This gives you and your team multiple run-arounds that are a complete waste of time.
“There was no way of knowing that they aren’t all together when I met them.”
No worries. There is a way to prevent this by giving them simple instructions in the beginning such as having them fill out a form online. Then you will see if they can turn it out in a timely manner.
5. THEY ARE MORE INTERESTED IN HAVING YOU DO WHAT YOU DON’T SPECIALIZE IN, OR YOU DID “OPUD.”
Sure, you can handle all sorts of add-ons they come back with, but this is not something that's aligned with your core offering. In the world of consulting, this is also called, "scope creeps." I have a clear solution for this and you can find it in “How to Niche Down Your Services When Your Business Has So Much to Offer.”
Another scenario is the case of OPUD. This stands for “Over-Promise, Under-Deliver.” This causes all sorts of issues, and it happens to entrepreneurs who are ego-driven and/or nervous talkers (due to insecurity) who do not know when to stop talking.
As a result, they don’t remember what they promised, and all those promises come back to haunt them. If you feel that you have a tendency to OPUD, consider having another staff to take over the onboarding process with a clear list of SOW (scope of work.)
I'll be honest here - breaking a cycle, especially the bad ones, are incredibly hard. At least, I find it very hard.
But, when your clients from hell turned out to be your top-paying clients, the situation is quite serious. This can easily turn into a massive blow that your business may not be able to withstand.
In my case, admitting that I made some bad choices was relatively easy. I tend to just admit it. It went something like, "Eeeew, wait, this is not good."
What's hard is to figure out what to do next. I knew I had to offload them. I also knew that I had be strategic as to how to proceed. Specifically, I knew better to have a phaseout plan or my business would end up looking like a dried prune...
Yeah... A phaseout plan… Right… How do I do that?
Avoid this Mistake at All Cost: Manufacturing Fictitious Problems to Work on.
There's no magic pill or a formula in the world of entrepreneurship. But, I can provide things I've done so that you can base off of it and see what works and what doesn't.
This prevents you from manufacturing fictitious problems and spend loads of time solving them.
Let me explain.
It's intuitive to think that you may need a grand plan or a brand new offering, or a massive shift to course-correct your business to be shielded from potential clients from hell.
Often, for businesses with some tractions and a track record of sales like the ones my readers operate, none of them are immediately required.
Yet, there's this entrepreneurial urge to do something drastically different and feel this is the way to solve a problem, which will completely sidetrack you from focusing on...what you should be focusing on in the first place!
This is what I mean by manufacturing fictitious problems to work on. This will make you feel better because you feel like you are, "doing something."
The reality is that you are doing something for nothing. I know this because I am guilty of it.
Because I have done this myself, I can tell you why we, entrepreneurs, tend to gravitate towards doing something new and grand.
When we face a challenge or a problem that needs to get fixed, we need extra courage to tackle it. In other words, we need to get fired up. In order for us to get fired up, we feel like we need a new and grand plan just like coming up with New Year’s Resolution.
However, I don’t want to dismiss this by saying this is a “shiny object syndrome.” That’s not accurate (although some do have this issue.) More often than not, we need extra motivation, and intuitively, we believe a new and grand plan helps us push ourselves out of our comfort zone. This is not, by any means, just having a “shiny object syndrome.”
It is normal to feel this urge but be very mindful of it. Chances are the answers you are looking for can be right under your nose.
Instead, my recommendation is to take a good look at what is exactly going on with your business and work on the below first.
1. Strengthen what's working, study it closely & double-down on them,
2. Pivot if necessary knowing this may take some time.
3. Have prospects apply for your services.
Pivoting, in particular, should be considered as an ongoing effort for your business. This requires a series of experiments to get it right. The good news is you get to start now while you double-down on what is currently working.
The Phaseout Plan
The key here is not to be reactive and impulsive with this process. Understand this can take 6 months up to a year.
1. QUANTIFY How Much You Rely on Clients that Make Your Life Miserable
2. GENERATE a Plan for the Next 2 QTRs (6 months.)
3. CRAFT & IMPLEMENT Your Own Systematic "Preventative" Strategy in Place.
4. UPDATE Your First 2-QTR Plan for the Following 2-QTRs.
5. ENSURE You are on Track with Your Routine Strategy and Don’t Give in to "Devil's Whispers."
Let this be, hopefully, the last time you will ever have to deal with this commonly known business challenge.
I, for one, sworn to myself, "Never, ever, ever again."
Quantify How Much You Rely on Clients that Make Your Life (and Your Team’s Life) Miserable.
Figure out how much % out of your total gross revenue they take up. Here's the rule of thumb.
If the revenue coming from these top paying clients combined to be more than 30% of the total gross revenue, you need a plan. In many cases, businesses rely on top paying clients up to 50% or more, say equally divided up between 2 large clients. This must be avoided.
It's too risky to depend on this much revenue from the clients who are giving you a hard time. Even if you are happy with those clients, I suggest you keep them at 30% combined in general.
On the other hand, if your clients from hell don’t take up 30% of your revenue, I still recommend you take action on them so that you lower the risk level. Conducting a quarterly review on your entire client roster is highly, highly encouraged because this will ultimately reduce your stress level.
Generate a Plan for the Next 2 Quarters (6 months.)
Now that you know how much % you will have to replace with new projects or clients and you clarify which offer is working out in your business, you will get to work on your first 2 QTR plan.
First, in dollars (or in any other currencies), figure out how much per month this % gets translated in. Say the annual gross is $1M, 30% is $300K. You divide $300K by 12 months, and you know you need to make up $25K per month with new projects.
Consider the 1st quarter to be the “experimental phase.” For the next 3 months, you will do rapid experimentations with a few outreach campaigns with your warm contacts.
In addition, during the first quarter, you will only do activities that will convert your cold contacts to warm contacts. I am against cold-calling and cold-emailing. As obvious as it may sound, they are cold for a reason. A conversation rate is much lower with this tactic. This shotgun approach is the least desired activity for your time.
Instead, spend this time to convert them into warmer contacts by providing values through your free content, free audit/assessment, and just maintaining open dialogs with them.
By the time you are entering the 2nd quarter, you may have already replaced some of your undesirable clients with the new ones.
Be sure to document your process of what worked and what to be avoided at this point. During the 2nd quarter, you will intentionally double-down on implementing the strategy that worked in the 1st quarter.
Craft & Implement Your Own Systematic "Preventative" Strategy in Place.
Know that what you are experimenting will soon become your routine strategy that you and your team will implement all year around.
As you may have noticed, the first 2 steps described above are basically the process to establish an effective onboarding process. Over 6 months or so, you will spot what works the best for your business. Now, you will make this to be the standard onboarding strategy.
Be sure to collect feedback from your contacts even if they may not buy from you at this time. Their insights can help you shape your offerings.
More importantly, look for patterns and trends with their responses to see if they exhibit the signs of potentially becoming clients from hell. You will then incorporate systems to shut them out in your onboarding process before you and your team spend too much time and resources with those.
My favorite and the most effective method is creating an intake form.
The ones who are not serious or are not in dire need of my services will never complete this form as it is extensive. It is designed to be extensive on purpose so that I get to weed them out.
I also have a full set of “negative keywords” listed in my Google AdWords. One of them is “make money fast.” Those are the ones I stay far, far away from. This is just another example of systematically weeding bad ones out.
In your case, this can be the first call session with a list of specifically designed questionnaires to spot red flags. This is something you will have to experiment to see what works the best for you.
Update Your First 2-QTR Plan for the Following 2-QTRs.
Right about now would be a good time to pull out some of the new and grand ideas you initially came up with 3 months ago that you did not implement.
Depending on the results from your business development activities you have executed the last 3 months, you may pick just one of those ideas to test while you continue tweaking your new onboarding system.
The past quarter was your “experimental phase.” This quarter is the “refinement phase” with another layer of experimentations that are closely controlled.
Avoid conducting “shotgun style” experimentations at this stage. Either you pick one new idea i.e. a new offer or conduct one experiment you need more time to monitor as some efforts require longer testing time.
As for your onboarding system, you may have been hands-on with the process in the beginning. Now is the time to refine the process and see where it can be delegated or automated. This also requires a bit of testing because you don’t want to take your foot off the gas for activities that are crucial just for the sake of delegation and automation.
Ensure You Are on Track with Your Routine Strategy and Don’t Give in to "Devil's Whispers"
Each month, you will take a look at the data from all of your efforts to replace your current clients from hell and tweak your strategy accordingly.
Devil's Whispers: Fully expect that you will hear from the devil himself.
A minute you decide to let them go, almost always this will happen:
All of a sudden, they start to behave much, much better.
Like an abusive boyfriend suddenly shows up with a bouquet of flowers apologizing and promising he'll be a better person, or a distant girlfriend turns up out of nowhere and tells you she had a moment of clarity and that you are the one she wants… after all the drama and stupid games.
You get my drift.
Unfortunately, I don't have any scientific data to back this one up. But, from my own experience and stories I’ve heard from other entrepreneurs, this happens almost every time when you consciously decide to let them go without actually telling them.
How do they sense this? Do they even know you are trying to leave them?
I don't know. All I know is that this happens all the time and no one talks about it.
What happens next is tragic. Pay attention as this is too important to miss: You will start second-guessing your move.
"Ah, I guess they’ve finally learned a lesson."
"Phew, thank goodness, maybe I don't have to have this uncomfortable conversation with them."
“Maybe it was just a fluke.”
Stop. Stop. Stop!
This is the reason I call this "Devil's Whispers" because they are so tempting.
Understand that this happens almost all the time to anyone and everyone, and you just need to get over it. Do not give in. Period!
If this happens to you, ask yourself these questions:
1. How does it make you feel if you and your team only do what you all are good at without having to deal with nonsense coming from crappy clients?
2. Shouldn't you be making more money working with people who "get" your business and who wants to be part of your movement?
3. Do you know the time you waste on them is cutting into your profit margin, and at the end you are barely breaking even with them if not negative? What's the point of you running a business?
See, devil's whispers show up because you are dying to find a way out of this, meaning you want to avoid facing the fact that you need to let them go.
I feel you. I've been there too many times until I figured this out that it is just a “thing” to get over and that this is the sign I am on the right path. It is counter-intuitive, and you just need to get with the program.
And, from the bottom of my heart, I'm telling you that you need to let them go. By doing so, trust me, you will make more money.
As Entrepreneurs, Everything You Do Must Have Significant Meaning to Your Business.
I know. You are upset. I didn’t list 51 ideas to implement in the beginning of this post.
There is a reason for this. Without you going through what I covered above, the list will just be a list. You will be flying blind.
Did you notice this whole post is carefully designed just to do one thing? Can you guess what that is?
This post is designed to repel unwanted inquiries for my business. If you read this from the beginning, you may recall there is even a sentence that says, “stop reading this post.”
Why do you think I even put that in there? “To be a bit cheeky?” No. It is intentional.
You are reading this because you have gone through some terrible experiences with clients from hell. The biggest advice I can give you so that you don’t need to go through this again is this:
Everything you do in your business must be super-intentional to do one thing:
Acquire the right clients (or customers) you can be excited about.
Another important job for you is to keep your team energized and hire wisely, but this is a whole another post for another day.
OK, you have suffered enough going through this post. Here is the list of 51 ideas you can implement to get rid of your clients from hell…fast!
51 Ideas You can Implement to Phase Out Your Clients from Hell
Here, the entire list is categorized in 3 different areas to be digestible. They are:
Business Development (Lead Generation / Marketing / Sales / PR)
Finance & Legal
1. Productize and standardize your services. This is the ultimate method of shutting out any “scope creeps.”
2. Stop DIY your non-revenue generating business activities & streamline your business.
3. Rewire your brain to resist the urge to take on prospects with red flags. This is ongoing.
4. Shift your focus on your exit strategy to leave no stones unturned with your clients from hell.
5. Strategically allocate a small chunk of time to explore ways to boost your authority in your industry.
6. Structure an onboarding system specifically designed to repel unwanted prospects.
7. Review your pricing strategy to avoid “feast & famine” cycles by adding variations.
8. Collect honest insights from your team by doing post-mortem on your clients from hell. Measure how much time and resources were wasted.
9. Explore additional vertical offers before you consider horizontal offers.
10. Proactively turn down projects and clients if they are not fit. Have a list of contacts that you can recommend to them to go to.
11. Be strategic about experimenting with new offers throughout the year for additional revenue streams.
12. Update your visuals (on your website and social media) focusing on you and your team in action.
13. While you are at it, get rid of stock photos that do not represent your business vision and value.
14. Continuously research where your prospects flock online and offline. Find out what’s currently working for them for a new jolt of inspirations.
15. Stop treating social media like a bastard child. Decide if you are in or out.
16. Book teaching & workshop opportunities. Be sure to take photos and videotape.
17. Write a whitepaper, a case study or an eBook on a super niche focused topic. This comes in handy for your cold contacts.
18. Offer limited time only services that can be wrapped up over a shorter time period as opposed to that of requiring a longer engagement.
19. Go down the list of your warm contacts to find people with a healthy size audience and propose a partnership opportunity.
20. Focus on how you can help your peers and... You guessed it, do them with no expectations of them returning your favor.
21. Book an appointment with your lawyers, bankers, insurance agents and accountants to find out if their clients can use your services.
22. Send out handwritten cards to your past clients. While you are at it, schedule this out for the next 2 years on your calendar. Intentionally avoid all major holidays for less competition.
23. Listen how others describe your business. If you feel they are off, then it is your responsibility to rework your message.
24. Create presentation decks. You can repurpose or reformat this to create webinars and videos.
25. Enter your firm for competitions and awards.
26. Reach out to the past clients for positive reviews and testimonials to be added to your website.
27. Seek additional referrals from the past clients. Ideally, you have something they want or need help with so that you don’t come across as a needy one.
28. Set up a seasonal peer newsletter for possible referrals. Don’t assume they are always thinking of you.
29. Reach out to newer contacts to get feedback on your free content.
30. Check out job boards and learn about companies that are needing your expertise and start compiling your cold list (to warm up to, not to cold-call them.)
31. Follow up with your past employees to see if they know anyone needing help.
32. Conduct a series of long-term paid ads strategy.
33. Review your business’ online presence to ensure it is aligned with your new efforts.
34. Stop treating your website as an “electronic brochure.” Clean it up and add high quality and/or interactive contents.
35. The same goes for all your business social media platforms. Clean up posts that are not relevant. Be consistent with high-quality posts.
36. Once you decide to discontinue some offerings, make a big deal about it and let your network know.
37. Instead of going to conferences in your industry, go to the ones in your clients’ industry.
38. When in doubt, throw a party. Invitation-only parties are more desired.
39. Work on things that do not scale i.e. conducting a survey, co-hosting an event, etc. These will help put you in front of prospects.
40. Get help to gain local press presence.
41. Consider being part of local business events including ones hosted by a chamber of commerce.
42. Organize a meetup group to showcase your expertise or become a co-organizer.
43. Hyperlinks under your email signature may not be enough. Add thumb nail visuals people can click on.
Finance & Legal
44. Explore ways to operate with less especially with labor. Your new effort may allow you to cut down the number of employees.
45. Update your payment terms to collect faster. Hope you are not offering net 30, 60, 90…
46. Pay upfront for the tools (especially SaaS tools) you will continue to use & stop paying month-to-month.
47. Review expenses thoroughly and cut down on unnecessary expenses.
48. Kill your deceptively lucrative, but high-cost offerings. This requires a deep review with your KPIs.
49. Revise your standard terms and conditions incorporating your new rules of engagement with your lawyer.
50. Be sure that your business is covered by Professional Liability other than general liability.
51. Charge for everything including your discovery calls so that you get to see how fast they will pay (or to see if they are committed.)
Feel free to comment below for the ones you are unclear about. I am considering to provide additional explanations for each idea if requested.