Are you so busy trying to find new clients that you haven’t taken the time to work out if they will be good for your business? It may seem to go against the grain, but there will be times on your business journey that you will find yourself turning clients away. Read on to find out how to identify “bad” clients and send them on their way…
1. Define your ideal client
Before identifying customers you want to avoid, you need to define your ideal client. Among your current clients, who are your favourites and why are they easy to do business with? Which ones drive you crazy and take up too much of your time? Why do they drive you up the wall? I know that my marketing consultancy’s ideal clients are the profitable ones. They understand the value of marketing and, based on the value that my team delivers, they have potential to buy more services from us. In addition, these customers are relationship-based as opposed to transaction-based. Knowing these things, I am able to actively seek out the type of client I want to work with.
2. Identify your boundaries
Now that you know what your ideal client looks like, you need to define your boundaries in terms of what type of business is acceptable to you and what is not. Although it’s hard to say “no” to potential work, particularly when starting out, the truth is that all business is not good business. You need to know where you are prepared to compromise and where not.
For example, it may be worth taking on work that doesn’t pay particularly well if it’s going to help you build useful relationships, or look good on your CV. On the other hand, it may not be worth saying “yes” to a contract that pays brilliantly, but puts your business’s reputation at risk because it happens to be a job for the mob. It’s an extreme example, but you get the point. Identify your boundaries and you’ll find it easier to know when to take on a job and when to let it go.
3. Know when to say “no”
There are many good reasons to turn someone away. I’m willing to say “no” to a prospective job if I feel that there is a clash of values, if the customer doesn’t see value in the services I offer (which will often cause issues regarding payment down the line), if I’ve had previous negative experiences with the client, or if I feel that I am not the best person to provide the services required. Because I have identified these issues as possible reasons to turn down a job, I’m quickly able to assess whether or not to take on a prospective client.
4. Analyse existing clients
Once you have identified your boundaries, the next step is to analyse your current client database. Often, the top 20% of a business’s clients account for 80% of its revenue. When I go through this exercise with my clients, many of them also realise that the bottom 20% of their clients cause 80% of their headaches and sap their time and energy. An audit of your current customer base may yield some surprising results.
Once you’ve assessed your client base, you can make some business decisions. Ask yourself whether you’re spending enough time marketing to the top 20% of your clients. After all, you already know they’re good clients, so it makes sense to try to do more work with them. Look at whether you’re wasting time marketing to the bottom 20% of your clients. It might be worth letting these clients go. Although it sounds tough, it means freeing yourself up for better clients.
5. Focus on the clients you want
Having assessed your current clients, you can move on to developing a marketing strategy that targets the type of clients that you want to work with. Get feedback from your top clients on what works for them, and do more of that when you target new clients. This should ensure that you attract the clients you want to work with, but should you attract a few that don’t meet your criteria, politely explain that you don’t feel you’re the best person or company to serve them, and refer them on where possible.
