You’ve probably had to fire at least one bad employee over the years, but have you ever had to say goodbye to a particularly bad client?
Just like how a bad employee is a drain on your business, bad clients can be just as detrimental, so it is important to know how to identify them and break ties on good terms. By sifting out the problem customers you can increase your profits, reduce staff stress and reclaim lost time.
What Makes a Bad Client
When renewal season rolls around, it’s helpful to be able to identify which clients aren’t a good fit for your business anymore so you can inform them you will not be renewing your contract with them.
Some of the major indicators to consider when deciding if a customer is still worth your time and effort include the location of the property, whether they provide extra sales, the gross profit margin and the ease of doing business with them.
The farther away a client is the more time is spent driving and risk is increased. It’s better to have closer clients and more route density. This alone shouldn’t be the only reason to drop a client but can factor into the decision. Likewise, if the client never purchases extra services above the base contract this alone isn’t a disqualifier for their business. It’s just those who do buy extra services are more profitable.
The gross profit margin can help you know who doesn’t bring in much money, but you shouldn’t consider cutting all these clients until you have brought in more profitable leads.
The ease of doing business with the client is typically the easiest identifier of who you want to work with and who you’d rather not. While you always want to try to satisfy your customer there are always some dealbreakers where you’ll have to draw the line.
Some of the red flags are when customers haggle constantly and are only focused on the price of your services, if they always pay late and/or are constantly dissatisfied with the work and are the source of frequent callbacks.
How to Let Them Go
If you do decide it’s time to part ways with a particular client always be professional and polite. For renewal contracts, let them know when the contract is up that you will not be renewing with them. You can mention how they don’t align with your core customer base, making it clear it was a business decision, not a personal one.
If you don’t have a contract with a renewal date, you can send the customer a cancellation notice with ample time for them to find a new landscape provider. This could be anywhere from 60 to 90 days. You can also refer the client to a company they may be better suited for. Be sure to thank them for their business and keep things amicable.
Another option is to raise your prices as some clients might not be profitable simply because the job was bid wrong in the beginning. This method can weed out some of the customers who only care about the price, but keep in mind it won’t fix the issue if they are a difficult client or located somewhere far out of your preferred service area.
Qualifying your leads early on can help you avoid having to fire clients often, but sometimes you won’t know they’re a bad fit until you start working with them.