Sometimes things just aren’t meant to be.
We’ve all been there… we’ve all met people at times in our life and thought that a relationship was going to work out, only to discover after you’ve peeled back the layers that perhaps it just wasn’t meant to be.
Bitter pill to swallow
This happens in business all the time. But often we only think about it in terms of why the customer doesn’t select us, or why a customer has broken up with us. Being dumped by a client is a bitter pill to swallow… it’s a blow to both our ego and our bottom line.
We rarely consider the fact that we too have choices in whether to continue a relationship with an existing client, or even refuse a new client. The truth is that not every prospect is a match for our business.
Sometimes it is as simple as being too expensive for a prospect, and in cases like this, you may want to refer the prospect to another firm. But in many cases, a prospect can be detrimental to a business.
The composition of your client base is significant.
(Image Composition Lesson by DrWhimsy, Creative Commons)
It communicates a lot of information about your organization, and it shapes your enterprise. Clients dictate the employees you need to hire, the partners you need to engage, and the work that will be performed. Clients largely contribute to your organizational culture.
I’ve always believed that we become the people that surround us.
I also believe that we all have choices in selecting those that are closest to us – our circle of influence. This applies to the business environment as well. We are extensions of our clients, and they are extensions of us. So selecting the right clients for our organization is essential to building the organization that the leadership envisions.
There are many scenarios in which you want to reconsider working with a new client or existing client.
Questions to consider when evaluating new clients
1.) Does the client’s mission align with your values?
This is a very important consideration. Quite a few times, we have had the opportunity to perform work for organizations that I fundamentally couldn’t support. One example is the tobacco lobbyists.
Several years ago, a pro-tobacco lobbyist wanted to hire us to do marketing and outreach. There was just no way I could accept this work.
As a mother, I work hard to educate our kids about the dangers of smoking. I fundamentally oppose everything that this group is trying to accomplish.
2.) Do you want to help the client achieve their goals? Do you believe they can accomplish what they are trying to do?
We’ve had potential clients contact us to design and develop training programs to achieve objectives that we did not think were realistic. In one particular instance, the money was very good, and I’m sure they found a company to perform the work. But we did not see the link between the client’s vision/objectives, and the training they wanted. It was just too much of a stretch. So we declined the work, not only because we couldn’t buy into it, but also because we believed it would have set us up for failure.
3.) Does the client’s needs align with your competitive differentiators? (price, quality, speed, etc.)
No company can be all things to all people. Some customers are looking for the lowest price or quickest turnaround. In cases like that, we are not a match. So we decline this type of work.
4.) Will the client infuse chaos into your organization?
(Image above, right flush, Chaos by Dave Pearson, Creative Commons)
Some client organizations are very chaotic. While “managed chaos” can be productive, “unmanaged chaos” can be detrimental. Clients that don’t respect our processes, our people, or our culture won’t be happy with our service.
5.) Can the client afford your service?
When we first launched 14 years ago, low price was definitely a competitive differentiator. This is often the case with new businesses because they don’t have the overhead that accompanies growth. In addition, new businesses are working to build their client base, and establish their presence and credibility. Mature businesses follow a completely different business model, having migrated from a price-oriented service to a value-oriented service. If a customer can’t afford our service, it’s not a match from a short-term and long-term perspective.
6.) Is this a one-time client? And if it is, does that fit your business model?
For our business, one-time clients are not good investments. Many small businesses get trapped in the cycle of working with one-time customers, which forces them to live the life of a gypsy… constantly moving from one client to another. So much energy goes into acquiring the knowledge about a customer, and building the relationship. It is the same level of energy for one-time client or a repeat client. But with a one-time client, you don’t have additional business when the project is over.
7.) By taking on the client, are you in any way compromising the perception of the value you provide?
(image below, Altered Perceptions by Paddy, Creative Commons)
This is a really important point for Information Experts. We are on several government-wide area contracts (GWACs) that many agencies like to use. We also hold multiple GSA schedules, and we are 8a-certified, which are also gateways to specific opportunities. Many organizations that have these contracts, schedules, and certifications do “pass-throughs,” which enable companies that lack these gateways to work with government customers. They see these pass-throughs as opportunities to make “easy” money (by charging an administrative fee) and to get into an agency.
A note on pass-throughs
But I don’t view pass-throughs in such a positive light. While there are some rare exceptions that warrant a pass-through, I believe pass-throughs ultimately diminish the value of our organization. Our role is basically reduced to one of a contract administrator, and often creates a situation in which we are unable to demonstrate the value we can bring to our client. In addition, there is risk associated with being a pass-through because ultimately as the prime contractor, we are responsible for delivering – even though we are not performing the work.
8.) Is the prospect’s requirement aligned with your core competency?
Like so many companies, we’ve discovered business opportunities that look great on the surface,
…but once you start digging, you realize there are many other companies that can perform the work better than you can.
I don’t believe that a company can be all things to all customers. By sticking with your core competencies, small businesses have an opportunity to build a reputation of dependability and expertise in areas in which they really shine.
9.) Is the client in an industry you currently support, or want to support?
Sometimes great work comes along that is right in your sweet spot and in the industries you serve. And sometimes work comes along that you are able to do, but it is in an industry that you know nothing about. At this point, businesses need to determine whether they want to invest the money and resources required to branch out into that industry.
What to look at when re-evaluating existing clients
Some client relationships are meant to last forever, and some are not. As the business owner, it is important to be aware of any customer that could potentially jeopardize your organization or credibility. I am not suggesting that small businesses don’t honor their agreements to deliver. However, once a project is completed, the company needs to closely evaluate whether the client is a fit for the company moving forward.
Does the client disrespect or abuse your employees?
We have had many cases over the years in which my employees have been subjected to abusive behavior. Even under stressful deadlines, this isn’t acceptable. Nothing damages employee morale faster than abusive behavior.
Are you working with incompetent people?
Few things are as frustrating as working with someone who thinks they know a lot and are not open to learning, when they actually know very little. Not only is it frustrating; it is hazardous to a successful outcome.
Are you set up for failure on a project?
Sometimes a project is at-risk from the very beginning. When you see red flags, run. I talk about this from our experience of jumping from a run-away train that is about to crash.
We worked on a project as part of a team (we were a subcontractor), and we quickly learned that the Prime lacked the knowledge, experience, and personnel to complete the work.
We implemented stringent project management processes because the Prime’s project manager didn’t. We tried to put accountability processes in place, including daily check-ins, conference calls, and project status reports to keep the schedule on track (they didn’t have these either).
The project was doomed to fail.
When it was apparent to the entire team that the project was in serious jeopardy, the project manager tried to place the blame on our assigned resources. We had no choice but to terminate the relationship because our credibility was on the line and we could not be affiliated with this failure.
Businesses work so hard to build their reputation, provide quality service, and make a difference. The right clients enable business owners to achieve these objectives. The wrong clients can poison the entire well, and put the organization at risk.
So choose wisely.
- Marissa Levin’s Women Grow Business series on sales for small business growth;
Guest contributor Marissa Levin is Founder and CEO of Information Experts. Launching a new Women Grow Business series on sales strategy, Marissa was named a 2008 BRAVO Award winner by SmartCEO Magazine (which honors the region’s 25 most influential women CEOs) and recently was listed in Washington’s 100 Technology Titans by Washingtonian Magazine. Describing her true passion as “helping other business owners be successful with their own business growth”, Marissa can be reached through her blog Marissa Levin.Google+