Are D-Class Clients Damaging Your Business?

This month within Bookwiz Academy we have been discussing the topics, Managing Scope Creep, Client Reviews and how to implement Fee Increases (the right way).

We have also been talking about D-Class Clients and the damage they can do to your business.

When it comes to client reviews, you need to consider more than just scope and fees. You also need to determine whether a client is the right fit for your business – are they healthy, happy and profitable? Are they your ideal, or dream, client?

I have had more than my fair share of D-Class clients. In the early years of running a business, I had the mindset that “any client is a good client”.

How wrong I was!

In fact, some clients can be downright damaging – not only to your financials, but to your team, reputation and mental health!

In an ideal world, your clients should all be A and B clients. C clients could move either way (up or down), and while you may keep some around for cash flow reasons, they need to be carefully monitored.

D clients, need to be disengaged….FAST! 

Does this sound like any of your clients? 

  • They are never happy, even when you go above and beyond.
  • They are unorganised, ignore your emails and calls and fail to provide information in a timely manner (or at all).
  • They “rubbish” or ignore your recommendations and think they know better.
  • You (and/or your team) feel your anxiety levels rise the moment you see an email or call coming through from them.
  • They are disrespectful and rude to you and/or your team.
  • They complain about fees, refuse direct debit options and are always late to pay.

If you can say YES to all or even a few of these points, then that is a clear sign you have yourself a D-Class client, and even if they are a high value client, in terms of revenue, they will likely damage your business in one way or another (not to mention your sanity).

The best way to manage a D Client, is to disengage with them. By retaining a client like this, you will create an ongoing list of issues that will chip away at you (and your business).

  • They can damage Team morale – you may even lose valuable employees.
  • They can make you and your team feel unappreciated and undervalued, and create anxiety. 
  • Productivity and profitability can be compromised.
  • You can waste a lot of time attending to them, time that could be far better spent on a high value client who you actually enjoy working with.
  • They can create roadblocks and inefficiencies, and hinder your ability to engage new clients.
  • You risk having them damage your reputation.
  • Eventually, they can take the joy out of something you usually love to do and cause you to question your abilities or even question if you want to continue in your business! 

If you have been wasting time trying to please a D-Class client, rip that band-aid off and commence the disengagement! The relief you will feel will be worth it!

How to disengage a D-Class Client 

I have done this a number of times over the years, and it’s not as hard as you may think.

I am a big advocate of face-to-face conversations, and I do think that is says something about your character if you can rustle up the courage to have difficult conversations.

Though, my number one tip when it comes to disengagement, is to:

Remain Professional at All Times

If you are disengaging because it has become quite volatile, and you feel that a face to face conversation will only fuel the fire, you may chose to stick to email. I have made this choice in the past. A client, who had always been quite difficult to deal with, and was clearly not a fit for our business or core values, one day stepped over the line. They really upset a team member, and I realised that could no longer trust or respect them. I support my team and believe in them 100% – there was no way that I was loosing someone as a result of a D-class client’s unacceptable behaviour. After trying to communicate my concerns with the client, I realised that it was not going to be a win-win situation. More over, I realised that they were not worth fighting for. So, I curated a well crafted email, thanked them for their patronage to date, and handed in our resignation.

When it comes to disengagement, email does have a benefit – you can carefully choose your words, communicate your message, and create a paper trail. If written well, you can also make it clear that this is the best outcome for both parties. In my experience, if the relationship is not feeling like a good fit for you, it probably wasn’t for them either, and deep down they know it is the right decision.

There are a few elements that you should include in all disengagement communications:

  • Thank them for their patronage / support to date, and the opportunity to provide them with your services.
  • Provide a reason for why you will no longer be able to provide services to them, e.g:
  • Your business has changed direction, or its area of specialty, and will no longer be providing the services that the client currently utilises.
  • You’ve reviewed the Scope and Letter of Engagement, and determined that due to XYZ (e.g. rising costs of business, new legislation), it is unfortunately no longer viable to provide the same level of services that you have delivered to date.
  • While you have enjoyed growing together over the past few years, your respective businesses have evolved, and unfortunately you no longer believe you are the right fit for each other, or that you can provide further value at this point in time.
  • Confirm the notice period and the final day of work.
  • Outline key projects or workflows to be completed, and suggested completion date.
  • Outline the handover process.
  • Let them know that you will follow up with a phone call / meeting invitation / email to discuss the matter further, and determine next steps.

A few examples:

“Dear Client,

We’ve recently conducted a review of our business model, and as we are increasing our focus on XYZ, we are unfortunately unable to service clients with requirements outside of this scope.

While we have greatly appreciated the opportunity to work and grow with you over the pas XXX, unfortunately this means that we will no longer be able to provide services to you under our current LOE.

As per our Letter of Engagement, I wish to confirm that we will be providing X weeks-notice, with our final day working on your file being XX/XX/XX. 

We will ensure all current projects and workflows, including XYZ, will be delivered by our previously agreed deadlines. We will also provide a handover document, which you can provide to the incoming bookkeeper, so they are across the account and any open tasks.

I will give you a call tomorrow to discuss any matters of concerns, and so we can work on a smooth transition to your new provider.

I wish you success in all your future endeavours. 

Kind regards 

 OR

“Dear Client,

Thank you for the opportunity to provide services to your business.

We greatly appreciate the relationship we have built with you over XXX, though I feel that our respective businesses and values have evolved, and that we no longer share the synergies we once did. While this is a difficult decision, I believe there is strength in acknowledging that we may no longer be the best fit for each other, and I have made the decision to terminate our engagement.

As per our Letter of Engagement, I wish to confirm that we will be providing X weeks-notice, with our final day working on your file being XX/XX/XX. 

We will ensure all current projects and workflows, including XYZ, will be delivered by our previously agreed deadlines. We will also provide a handover document, which you can provide to the incoming bookkeeper, so they are across the account and any open tasks.

I will give you a call tomorrow to discuss any matters of concerns, and so we can work on a smooth transition to your new provider.

I wish you success in all your future endeavours. 

Kind regards 

What Next?

Once you’ve bitten the bullet and officially terminated the agreement, you need to see out the engagement period:

  • professionally
  • in line with your core values
  • as per your scope in your Letter of Engagement
  • as per your agreed handover process and handover document

If you have a relationship with the client’s accountant, take the time to communicate the termination to them, and keep them abreast of the handover process and document.

Your job is not over until the end date, and you need to ensure that you leave the client and the state of the account in a manner that reflects your level of professionalism, values and work ethic. If you can hold your head high when you sign out of that account for the last time, you have successfully disengaged a D-class client!

If you are interested in learning more about this, or any of the other topics we have covered this month (including acess to some pretty cool templates and checklists) head over to the Bookwiz Academy website HERE and find out more about our membership.

Keep Thriving!

Martine

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