New Research On How To Manage Toxic Clients

Two out of three agency owners, business coaches, consultants and solopreneurs tell me that their biggest pain is finding new, suitable clients. What nobody wants is a toxic customer, and they assume that toxic customers hurt profitability.

New research on toxic customers supports this notion. What is a toxic client? Think of that customer who regularly verbally harasses you on Zoom calls. The customer who always wants to grind you for a discount. The customer who is very picky and demands that the work be redone.

According to a study by Andrey Doichev, founder of Inc and Go, a company that provides business formation services, one toxic customer can cost a company an average of $4,994 per year. The research study, which surveyed 1,118 employed Americans, said three out of five employees have quit a job because they couldn’t tolerate toxic customers.

In an email exchange, Doichev shared survey results and the following advice on how to deal with toxic customers so they don’t harm your business and employees:

Develop robust contracts. “Business leaders reported that the most common reason to fire clients is when the client had unrealistic expectations and disregarded the lead’s time,” Doichev said. “For this reason, developing solid contracts is critical for any business owner as it helps set expectations for your working relationship and draw boundaries around your communication standards and expected outcomes. Pay close attention to contract changes on your customer requests, as these red flags could indicate future friction that you want your team to proactively manage.”

Keep a communications log. “After every meeting with a client, try to email together the meeting notes and next steps so everyone is clear on expectations and next steps,” Doichev said. “This also helps create a paper trail and resolve anything that could be misinterpreted. With 37% of toxic customers complaining about misunderstandings with executives, it’s no wonder that keeping a communications log is the most effective way to deal with a difficult customer.”

Stay calm. “It can be easy to get frustrated when dealing with a difficult client,” says Doichev. “Not showing that frustration is key! Leading over emotions with logic can help keep the meeting focused and prevent issues from escalating further than necessary. A few deep breaths help business leaders to re-centre and focus on the problem at hand.”

learn to say no “As a leader in any industry, it’s important to remember that the customer is paying for a service in which you are an expert,” Doichev said. “When a client approaches you with unrealistic requests, requests that detract from the value of your company’s overall work, or requests that affect the long-term results of their success, the responsibility of a leader is to say no. The best way to address this is to offer a joint solution or clarify your terms of service. Another way to say no is to explain how your work will benefit their business and what they can expect in the coming weeks. While it can feel like an awkward conversation, it’s important to pave the way for mutually acceptable expectations to move forward. Always refer to your contracts when needed.”

Conclusion: Life is too short to tolerate toxic customers. Not all earnings are worth the effort and heartburn.

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