Trust Your Instincts
Toxic Clients Exhibit Universal Warning Signs
Business leaders and marketers must go beyond the traditional customer segmentation process and evaluate prospective customers as they would an employee hiring process. They must assess the individual for cultural fit and identify undesirable personality traits and mannerisms that are misaligned with their organization’s values and growth objectives.
Any client-facing role is at risk of landing a toxic client, and this extra step in profiling is critical for both business-to-consumer (B2C) and business-to-business (B2B) enterprises. Whether you have a retail or service-oriented business, profiling your ideal customer persona to factor in the “ease of doing business” will save your employees heartburn and your business resources (i.e., time, money, reputation, extra personnel, etc.).
Learn to Recognize the Signs of a Toxic Client
Would-be problem clients usually raise red flags or make you feel uneasy at the onset. If something seems “off” during an exploratory meeting, it probably is. Trust your instincts! They can prevent you from entering into a toxic business relationship with an individual (and a business) that doesn’t align with your mission, values, or company culture.
Prospective clients that have the potential to derail business as usual present common warning signs business owners and marketers must not ignore.
Examples of identifiable danger you can identify during the initial exploratory meeting include the following:
Unclear Business Goals: Unless you specialize in helping start-ups or provide business plan consulting, this is usually a red flag for indecision and/or sign that projects could easily run off-scope (i.e., scope creep in time, budget, agreed upon deliverables, etc.).
Balking at Fees or Rates: If a prospective client starts questioning your fee structure or commenting on a competitor’s quote as too pricey, know that this client is price-sensitive. Their priority may not align with your premium service or product. Don’t undercut your rates or offer a discount to win the business. Taking on a client who shows these warning signs will likely present you with payment problems in the future.
Temperament: If someone is rude or hostile, do not engage! No matter your business or profession, everyone deserves to be treated with respect. You’ve no doubt seen signs at doctor’s offices and restaurants advising patients and patrons that rude behavior will not be tolerated. Adopt this approach at your business! Your good clients - and employees - will thank you.
Gather Business Intelligence
Tools and Tactics to Avoid a Toxic Client
If your gut tells you something is wrong, and you’re the type that likes data, consider tools to defend your business against toxic clients. Businesses of all sizes should avail themselves of tools and tactics that large corporations routinely use to gather business intelligence and protect their business.
Business intelligence is “a systematic, targeted, timely, and ethical effort to collect, synthesize, and analyze information on the external operating environment to produce actionable insight. When combined with internal company information, it should give an executive as complete a picture as possible of the total decision-making environment.”*
Consider a low-cost background check tool. Tools like Forewarn offer a subscription service that allows you to perform quick criminal, financial, and identity checks with minimal information.
Perform a customer credit check. Dun & Bradstreet, a standard tool used by Chief Financial Officers (CFOs), is a more expensive tool that can provide you with a credit report for businesses.
Gather intelligence in the public domain. Check customer reviews on Google Maps and social media platforms and speak to colleagues or industry vendors to obtain informal background information.
Include an exit clause. Ensure your standard client agreements have an exit clause - for both parties. An exit clause helps manage expectations, protects both parties, and serves as a transparent reminder of the terms or conditions that result in the termination of business.
Once You’re Stuck with a Toxic Client
Once you realize you’re stuck in a toxic relationship, there is no time to waste—get out! Exiting toxic relationships cleanly requires your best judgment, documenting your communication with the client, and framing the separation as a win for the client. If you separate in this manner, your business has the opportunity to keep your reputation intact.
In addition to the toxic client warning signs presented at the onset, clients that demonstrate the below behavioral tendencies indicate a toxic person you’ve already “hired.”
Respect for boundaries: If you have communicated and established boundaries and a client doesn’t respect your work-life balance, agreed-upon timelines, or out-of-office hours, this is not a healthy working relationship.
Resistance to advice or unwillingness to collaborate: When clients don’t accept advice or recommendations at the expense of a project, it’s a sign to drop them. A bad project outcome is a reflection of your business. A risk to reputation is greater than the risk of dropping a bad client.
Lack of communication: If your client isn’t providing you with the necessary inputs at the expense of project success or frequently changes their mind on objectives, it may be time to let the client go. Protect the reputation of your business above all else.
Summary
The more bad clients you avoid or drop, the more space and resources you have to onboard good, long-term partners. They are partners because business leaders and marketers should always develop a win-win relationship with their clients. Your goal is to see your clients succeed and their businesses grow. As a result, your business will succeed and grow.
*Source: Thunderbird School of Global Management at Arizona State University
Note: The author is not affiliated with the software companies mentioned in the article.
