When Good Clients Go Bad

31st December 2014

Andy Erskine

There is a seeming trend recently across the service industry to lay the blame for failed relationships or contracts directly at the clients feet, with a plethora of excuses being uttered from the supplier management team exclaiming how bad a client they were, how they simply didn't get what the supplier was offering or worse how they never liked the supplier or individual manager anyway. This is frankly ridiculous and sadly reflects an industry trend where there is seemingly a belief amongst suppliers that there is little value in developing long-term relationships with clients.

 

If the client didn't like a particular solution or didn't understand what was being offered to them at the point of sale you wouldn't have been awarded the business and the opportunity to form a relationship. All of the excuses, complaints and disgruntlement heard within the supplier base is generated by the supplier base not the client.

 

The reality is that almost exclusively when a client goes bad, it is that the supplier failed to either deliver against the promises made at the point of sale, in the failed delivery of promises or simply failed to engage with the client. It is this fundamental breakdown in the supplier/client relationship that creates tension and ultimately places pressure on the supplier to deliver in the face of perceived or actual failures that leads to a loss of trust and a break down in the relationship. Again I reiterate the point that this isn't the fault of the client, it is a supplier led failure.

 

I recently read an article recently that extols the virtue of "firing bad clients". Whilst this may seem like a relatively quick way of removing a demanding or difficult client, it fails to take account of the investment that you as a supplier will have already invested in the the contract or the cost of identifying, attracting their interest, tendering and then mobilizing new business to replace what you are throwing away. This cost typically accounts for between 15% and 30% of the first years contract value and is unlikely to be an investment that your Finance Director will look favorably on writing off. A better approach might actually be to continue to make investment in the relationship accepting that you might not actually be delivering correctly anyway. This may however require an adjustment to ego or indeed ego's…

 

Firing a client does nothing other than reduce the number of clients you have!

 

Client supplier relationships don't just disappear overnight. Relationships are destroyed through sustained failure to deliver upon expectations. These failures typically fall into two distinct categories:

 

  •     Tangible Failures
  •     Perceived Failures

 

Tangible Failures are measurable and clearly indicate where a service is failing to deliver against defined KPI'S or SLA. Whilst there might be a disagreement about the measurement, the failure can be addressed through investment in resource by any of the parties involved. Continued poor performance against an agreed KPI or SLA is sloppy at best but ultimately addressable. Where there is a sustained failure and it is clear to the client that the failures aren't being addressed either correctly or to the satisfaction of both parties it automatically leads to the generation of Perceived Failures.

 

Perceived Failures are much more difficult to address and are normally reflective of a situation where the relationship has become so poor that any action by either party is considered to be incorrect or intolerable by the other. In other words all of the trust between the partners has dissolved and the focus is now squarely on catching the other party out rather than actually resolving the issue and getting back to Business as Usual. Experience shows that even addressing the failures at root level and achieving a Business as Usual condition, the breakdown in the relationship caused by a sustained perceived failure is extremely difficult to recover from, as the belief is that the condition will return. It is perception not fact that kills the relationship.

 

Having been in a client contractor relationship that has worked itself through both stages of failure which led to a "firing the client" situation, I can assure you that fixing the tangible failures before they became deep rooted would have been the better and far more cost effective solution for both parties. Ultimately ego's on both sides prevented either of us from moving out of the perceived failure state into business as usual as neither party trusted the other to make the solutions implemented to stick although the reality was this had already happened. At a point where there seemed no sensible commercial way out of the loop, I took the opportunity and "fired the client" and have regretted it ever since.

 

Hindsight is a wonderful thing in that it allows you the leisure of time consider your actions or indeed inaction and the potential outcomes that would have resulted had ego's not taken over. Instead I "fired" a client who not only was our largest client at the time but also a client that had given the business entry into a new and more profitable market. Worse still was the realization that not only would I never recover the investment embedded in the contract but also that I had been penalized through SLA failures that were within my control to change quite easily had I simply engaged with the client fully, listened to what they were actually saying and then acted upon what was important to them rather than me. As I said, hindsight is a wonderful thing!

 

The cold reality is that it is often the clients that challenge and stretch you as an individual as well as an organization that we all should be embracing as ultimately it is these clients that will provide you with the greatest opportunity to grow and develop. Yes they may be unforgiving of failure but working with them as full partners in the development and delivery of a new, innovative or simply different service delivery model is an opportunity not a curse.

 

I have had the luxury of working with some fantastic clients that have helped both the organization and me as an individual develop and grow. These clients have actively worked with me to help shape the service that they needed, stretching established service delivery models to become highly effective and focused solutions that truly added value. The learning experience provided through engaging with these often challenging and difficult clients, developing an understanding of their specific requirements even when it was counter intuitive to my own thinking has been invaluable and personally very rewarding.

 

The challenge for the supplier when working within this type of relationship is to develop a full and honest understanding of the client requirement, working together to ensure that every member of the delivery team understands the systems, processes, rules etc. This sharing of knowledge and information is absolutely key as managers have a tendency to try and hold new knowledge to them believing that this knowledge gives them an advantage over everyone else. All holding knowledge to yourself does is make you the single point of failure in the relationship. The real power comes from sharing the knowledge and developing a highly effective team that delivers in an environment where others would likely fail.

 

The services industry has changed rapidly in recent years partly as a result of recession but also as a consequence of a much more competent client base who understand how services should be delivered in the same way that the service provider does. This is a fundamental shift from the historic procurement routes where a service partner was brought in to provide a technical capability or specialist competency that a client organization could neither afford nor support. Technical skills have been developed within client management team in an effort to retain and develop good people during an extended period of cost control where salary costs have been controlled very tightly. This has changed the dynamic of the client-supplier relationship dramatically with the client approaching the service delivery model from a technical perspective where the power and technical competence of the supplier is diminished within the relationship. Suppliers who don't recognize this shift are missing an opportunity to take advantage of these new experts and learn new methods of delivery. Simply throwing up a wall and telling the client that there ideas are wrong is automatically going to compromise the relationship and create disengagement. It is ultimately this disengagement that starts the conflict and the perception of bad client.

 

It is critical that suppliers develop open, frank and trusting relationships with their clients if they are to be successful. This includes recognizing that when a client is expressing that they are unhappy that an action needs to be taken to address the issue, not simply pay lip service to the issue and hope that it will go away – it wont! All stakeholders in the relationship need to fully understand the client requirement whether this is formally described within the contract or indeed has become an informal requirement determined by a changing requirement in the client’s core business model. Senior managers need to ensure that where they hear managers expressing dissatisfaction with regards to their clients that this is addressed immediately, again this is an imperative as nothing travels faster through contracts and organization’s than dissatisfaction. If a manager is complaining about a client relationship this will be cascaded down within the service model like a virus.

 

A much better model would be to celebrate the client relationships that have caused you to grow and develop as an individual or organization. Recognizing that without their input of time, effort and resource that you would still be where you were, delivering a service that clients are complaining about.

 

The only way that a client should ever be considered bad is if they:

 

  •     Act in a way that is unethical
  •     Act in a way that is immoral
  •     Act in a way that is illegal
  •     Act in a way that is not in the interest of the client organization
  •     Refuses to pay the bill for services delivered correctly.

 

Everything else is simply the client wanting the services that has been specified and you have promised to deliver.

 

 

AEFM Ltd

Sentinel House

Ancells Business Park

Harvest Crescent

Fleet, Hampshire

GU51 2UZ

Company No: 06950191

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