How to maintain a client roster that sparks joy.
Published in Modern Steel Construction.
There are amazing clients, decent clients, and all-out bad clients.
As the end of this year approaches, while you’re likely taking a hard look at your business strategy, it’s also a good time to carefully assess your client base. Enter a riff off the KonMari method.
The KonMari method—Marie Kondo’s approach to life change through massive de-cluttering—resurfaced this year, thanks to her Netflix series Tidying Up with Marie Kondo. In brief, Kondo places special emphasis on selecting items to keep rather than items to discard. Further, she insists those keep-worthy items must spark joy, or alternatively, spark an appreciation for their usefulness. It’s no surprise that people are applying relevant KonMari lessons to aspects beyond their home: relationships, office environments, and their social media outlets. I propose applying it to your client list as well.
While there’s no surefire rule of thumb for the number of clients to divest annually, suffice to say that many AEC firm leaders have learned that bad clients are a detriment to a firm’s overall health and prosperity. While this is true in all economic climates, it’s especially true in stable economies, where firms have more confidence in dismissing their difficult clients.
Good or Bad Fit
What makes an existing client a good fit versus a bad fit? It’s up to individual firms to decide. My suggestion is to bring together business, marketing, and human resources to identify and prioritize your firm’s criteria. Just a few loosely organized examples could include:
Business strategy and health.
- Brings profitability (obviously!), measured both by percentage of profit margin as well as actual dollar amount.
- Offers repeat business opportunities, with low (or no) marketing costs to secure those projects.
- Keeps valuable staff busy and on payroll.
- Fits with strategic vision and goals.
- Maintains balance by helping to attain the right composition of large and small clients that your firm can service.
Versus:
- Breaks even or loses money, repeatedly.
- Prioritizes low price over results, quality, and experience.
- Provokes scope creep.
- Slow to pay.
Marketing:
- Expands foothold within market sector (education; commercial; etc.) and/or project type (new construction; renovation; etc.).
- Offers entry into a new strategically identified sector.
- Provides brand name exposure if client is high-profile.
- Builds relationships with external business partners on the project team.
Versus:
- Doesn’t add depth or breadth to portfolio.
- Resides within a market sector no longer desired.
- Distracts from efforts towards other client pursuits (opportunity costs).
Human Resources:
- Provides joy to the project team members—if stimulated by intrigue, challenge, opportunity, innovation.
- Interacts with respect and honesty.
- Maintains their end of the agreement during every step of the project.
Versus:
- Causes burnout, frustration, low esteem.
- Communicates poorly, or is unresponsive, negligent, even negative.
Making It happen
In the KonMari method, Kondo encourages a proper “thank you for your service” before saying goodbye to a material object. Divesting a client takes it to a higher level, requiring human-to-human respect, consideration, and clarity. Occasionally, such as in the public sector, you may be able to simply stop submitting proposals for new projects. But in most cases, it will require a direct, honest conversation between the project manager (or principal in charge) and the client contact. A few tips:
- Of course, complete any project(s) still under contract. Collect outstanding monies.
- Break the news by voice—either in-person or phone. Follow up in writing for complete clarity.
- Offer an explanation to the level of detail you feel most comfortable. It could be as simple as: “In creating our strategic business plan, we realize that we need to make changes in our client roster. As such, we will no longer be able to serve your organization.”
- If possible, craft your message to appeal to the soon-to-be-former-client’s own self-interest. “This move makes good sense for you too, as it’s best for you to work with a provider that is equipped to handle your unique needs.”
- Be clear on the expectations and next steps, such as the final service your firm will provide, wrapping up loose ends, transferring information, etc.
- If you have a solid relationship with the client contact, you can also informally (by voice) offer names of service providers that could be a better fit for their goals, project types, personalities, business model, etc.
If your firm already makes a practice of assessing and shedding bad clients on a regular basis, kudos to you. If you are new to this notion, the question is this: Are you ready to take the steps to de-clutter your client list, make room for new opportunities, and infuse joy and positive change into your business for 2020?