How to Fire a Client and Why It’s Crucial for Your Business Success
In the world of sales, knowing when to part ways with a client can be a tough but essential decision. On the latest episode of Sales Logic, Mark Hunter and Verl Workman dive into the uncomfortable but necessary process of firing a client. Whether you’re dealing with difficult clients or realizing a poor fit, letting go of clients who drain your time and energy can be the best move for your business.
Why You Might Need to Fire a Client
Firing a client may seem counterintuitive, especially if they contribute significantly to your revenue. However, as Verl Workman explains, some clients can end up sucking the life out of your business. This can happen when:
- Trust is lacking: If you can’t develop a solid relationship built on trust, the foundation for a successful business partnership is shaky.
- Profitability is non-existent: If you’re struggling to find a profitable way to work with a client, it may be time to reevaluate the relationship.
- Unrealistic expectations: Clients who expect more than you can reasonably provide can hinder your progress.
Verl offers a simple yet powerful phrase to say to clients when parting ways: “I would rather turn you down than let you down.” This mindset focuses on protecting both your integrity and the client’s needs, ensuring that you don’t compromise your values.
The Importance of Proper Prospecting
One key reason many salespeople hold onto toxic clients is due to a lack of a solid pipeline. If you’re not prospecting enough, you may feel pressured to cling to clients who are actually doing more harm than good.
According to Mark Hunter, “the best sale you ever make is the sale you never get,” because it’s better to avoid poor-fit clients from the start. In the prospecting phase, salespeople should be interviewing clients as much as clients are interviewing them. Screening clients early can save you from major headaches down the road.
The Risk of Holding On to Toxic Clients
Verl brings up an excellent point about salespeople being afraid to fire clients because they don’t have enough clients.
In real estate, for example, when someone only completes a few deals per year, they may become overly attached to problematic clients. Without a steady flow of prospects, it’s easy to become complacent and reluctant to fire a difficult client. However, this can lead to burnout and decreased productivity.
Miranda’s Dilemma: What To Do When a Client Represents One-Third of Your Business
Miranda from St. Augustine shared a common issue: a toxic client who makes up a significant portion of her business. Verl’s advice is to focus on building a diverse pipeline. He suggests that no client should make up more than 25% of your revenue, ensuring that you are not overly dependent on any one source of income.
By creating multiple revenue streams, you can safely fire clients without fearing the loss of business.
Setting Bigger Goals: The Power of the Four Pillars of Income
Verl’s philosophy centers around creating four pillars of income. This strategy involves setting a target income and dividing it into four separate sources of revenue, each with the potential to generate 100% of your income goal.
When you focus on growing your pipeline in multiple areas, you can confidently replace any revenue lost from firing a client. By aiming for larger goals—400% more than your target—you create a buffer that makes difficult decisions like firing a client easier to navigate.
How to Have the Difficult Conversation
Once you’ve built up your pipeline and are confident in your ability to replace the client’s revenue, it’s time to have the conversation. Verl recommends approaching it with confidence and honesty. For example, you could say, “I don’t feel like I’m delivering on your needs as well as I could, and I think it’s best if we part ways.”
Sometimes, the solution is to refer the client to another colleague or business partner who may be better suited to meet their needs. This way, you maintain professionalism and keep the client in a position where they are still served well. If you’re not the right fit for them, it’s better to make the referral and walk away with a positive reputation intact.
The Benefits of Letting Go of Toxic Clients
Interestingly, many business owners find that once they let go of a toxic client, they often receive a boost in business. As Verl explains, “I’ve never done less business because I’ve let go of a toxic client.” Removing a client who drains your resources allows you to refocus your energy on prospects who align better with your values, leading to a more fulfilling and profitable business.
Is It Time for a Reset with a Client?
While firing a client is one option, sometimes a relationship just needs a reset. If the relationship is strained, it’s important to build up enough “relationship capital” to have difficult conversations. By focusing on common ground and finding ways to serve the client better, you may be able to repair the relationship and continue to work together.
Remember, firing a client can often be a liberating decision that frees up your time, energy, and mental space to focus on better opportunities. If you feel you’re clinging to a client out of fear or scarcity, it’s time to reassess your business model, prospecting strategy, and goals. By making the difficult decision to let go, you can ultimately create a more profitable and rewarding business.
Should you ever fire a client? With Guest Co-Host, Verl Workman.
Lightning Round: Top 10 Ways to Define Your Ideal Prospect
Question: Maria from St Augustine asks, “I have been in sales for years, and I think this is the MOST stressed out I have ever been. A long-time client, used to be my favorite, has become a bear. They are driving me crazy, fight me on my prices, and working with them is stressful. I think about letting them go, but they are 1/3 of my annual goal? Help?”
Book: Raving Referrals For Real Estate Agents by Verl Workman