How do you feel about the prospect of firing clients? For many firm owners the process can be intimidating. It can also be difficult to determine whether you should fire a client or try to salvage the relationship with some frank discussion about what needs to change if you are going to continue to work together.
My firm is currently going through the process of evaluating our entire client database to see which clients should be fired. This is the first time that we’ve undertaken a review of our full client list, but we’ve honed our client evaluation criteria to the point where we’re comfortable identifying the clients who we need to let go. In addition, to reduce the number of clients we’ll need to fire in the future, we conduct client interviews prior to agreeing to an engagement so that we know from the get-go whether they are the right fit.
These are the specific criteria we use to evaluate our client relationships:
- Communication skills—Clients who don’t respond to you can be the death knell of any tax or accounting practice. When clients leave us hanging on requests for information or approvals it forces us to operate in an emergency room fashion, which is not our preferred modus operandi. While we all understand that clients are busy, it’s not unreasonable to expect a certain level of mutual business respect, which includes responding to communications in a timely fashion.This is not just a matter of courtesy, it’s a matter of your firm’s success.Consider the strain on you and your staff when a payroll client waits until the last minute to give you their hours or the liability your practice takes on (especially if you’re a CPA firm) when you can’t meet compliance requirements because your client has not made responding to you a priority. If your clients’ communication skills are impeding your ability to function at your peak, it’s likely time to let them go.
- Willingness to adopt technology—If we have a client who is unwilling or simply unable to use our chosen technology workflow, then they have to go. While this may seem like a hard line to draw, it’s a necessary one. If a client doesn’t utilize our chosen tools, it causes communication issues, is inefficient and can jeopardize your ability get work done.For example, SmartVault is the platform we use for all of our document management and exchange with our clients. If a client can’t or won’t use it, it creates a situation where the information we need isn’t accessible in a timely fashion or in a format that we can use in our paperless workflow. This is a deal breaker for us—the client simply doesn’t fit into our business model.
- Revenue—While you might think that revenue would be our most important criteria, it’s really not. Our best clients are not always the highest-paying clients, especially if our high-paying clients are demanding and emotionally draining. In our firm, a client who pays well and is low maintenance is considered more valuable than one who pays more but creates drama or expects us to go to extraordinary lengths to keep them happy.
- Attitude—Another deal breaker for our firm are bad client attitudes. The crux of this client evaluation criterion is simple: If a client is nasty and rude, then we don’t want to work with them. Any client that creates that ill feeling in the pit of your stomach when you see an email or an incoming call from them should, in my opinion, be fired. To me, the stress and strain of that kind of a toxic relationship is not worth the revenue.
I am estimating that we’ll eliminate 25 percent of our client base through our current client base evaluation process. While “losing” this percentage of clients may seem like a drastic measure, I know that it’s the right move for our firm because it will allow us to serve our existing clients better and to focus on the higher value and higher revenue engagements that will fuel our future growth. Parting ways with clients who aren’t a good fit any longer will also create a better work environment for our team, which hopefully means we’ll retain our talent longer.
If you’re ready to take action and fire the clients who no longer serve your practice well, I invite you to use the criteria above as a guide for your own client base evaluation. Once you’ve made the decision to fire the clients who are holding your firm back and have communicated these decisions to those affected calmly and professionally, you’ll be ready to build new client relationships based on mutual respect that truly benefit your firm.