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How to deal with difficult clients (and avoid them!)

CLIENT RELATIONSHIPS 10 mins 22 Nov 2022 by Joshua Lance
 

Bill Gates once said, “Your most unhappy customers are your greatest source of learning”. And knowing how many times I’ve wanted to throw my PC out a window, I suspect Bill’s done a lot of learning over the years.

Difficult clients are part of doing business. Often they’re difficult because they’re unhappy with part of the service, product or customer experience. Sometimes, they could simply have a personality clash with a member of your team or their behavior doesn’t align with your company values – or your team’s culture. Maybe their expectations are unrealistic.

When you’re faced with a difficult client in your service business, it can be hard to know what to do next. As Ignition’s 2022 State of client engagement report shows, awkward client situations, and the awkward client conversations that invariably follow, are all too common in the professional services industry. Below we walk through the steps you can take to resolve challenges you have with a difficult client and how to know when to cut ties.

How do I identify difficult clients?

Difficult clients take many forms. They may be constantly declaring every little thing an emergency or calling you out of hours to discuss seemingly pointless details. They may even cause your staff to suffer increased stress as a result of their out-of-scope requests. Or they may simply be a poor fit for your company.

Unhappy clients can be a drain on employees and resources. They can contribute to staff turnover, stress-related health problems, enjoyment of your work, and poor reviews of your business.

One or two difficult clients are common in business, but as with most things in life, prevention is better than a cure. Try to catch a souring relationship early on to turn things around before it gets out of hand.

Here are some generalized types of difficult client behavior that you may encounter:

  • ‘Let me confirm with the team and get back to you’: These clients can’t make a decision without consulting with someone in their office. They often require regular follow-ups and every request takes longer than is necessary to get the information you need.

  • ‘That isn’t how I was told it should be done’: They think they know your business better than you do and they tell you everything you’re doing wrong, until you wonder why they’re bothering to hire you in the first place.

  • ‘That shouldn’t take you long to do’: They declare that everything is simple and easy and you won’t have any trouble, while asking for customized details and complex systems.

  • Everything is an emergency and ‘I needed it yesterday’: They have no concept of the fact you have other clients and expect you to bend the space-time continuum to meet their impossible deadlines.

  • ‘Can I get a discount? I saw the same service offered cheaper elsewhere’: This client scrutinizes every detail of your invoice and tries to get as much free work as possible.

  • The verbally abusive client: This client yells at members of your team and berates you over seemingly minor issues. These types of clients may not be salvageable. If the abusive cycle doesn’t end, cut them loose.

The article continues after this video.


8 Steps to dealing with difficult clients

No matter how your client is being ‘difficult’, the steps to managing them are still the same. Here’s how to calm the waters of a turbulent client relationship.

1. Stay calm, no matter how upset the client gets

Even if a client is screaming at you down the phone or making a scene in the office, you’ve got to remain cool, calm and collected. If you stoop to their level of hostility, you put your reputation on the line and could escalate the situation. You will get your point across much clearer with a calm voice and demeanor. This can be really challenging to do in heated situations. Take a couple of deep breaths before responding to these types of clients.

According to the psychology of human interaction, people will often mirror the emotional signals you emit. When you’re angry, it’s possible to get an angry rise out of someone else. But if you’re able to remain calm, you can often encourage them to be calm as well and mirror your tone, volume and attitude.

2. Listen and empathize with your client and their concerns

Often, a difficult client feels as though the process has run away from them, and they want to be heard. Simply taking the time to listen to their problems with curiosity and empathy could be all that’s needed to solve the issue.

Make sure your client understands that you’re focused on the problem. Ask follow-up questions and repeat their statements back to them to acknowledge that you’ve heard and understood their concerns correctly.

When a client feels their questions or concerns aren’t being dealt with appropriately, they often fall into using language such as ‘everything’s wrong’ or ‘nothing’s working’. Asking open-ended questions will provide clarity on the issue at hand so you can get to the root of the problem together. Through active listening and asking questions to identify the specifics of the problem you’ll be able to shift the focus towards finding a solution (and calm them down in the process).

3. Deliver a prompt reply

As soon as a client raises an issue, make it a priority to get it resolved. When you do this, you validate the client. You don’t need to accept blame or even say sorry at this stage, but you are building good communication from the start.

Try this email template to help you establish and acknowledge that you want to fix the issues:

Dear [client name],

Thank you for your email listing your concerns about this project. I think there may have been some misunderstanding around the original brief and the project’s outcomes.

I’d like to call you this week to discuss before we proceed any further. Would [insert a time] tomorrow suit you?

Sincerely,

Your name

4. Figure out what happened

Identify the problem. Often, client problems arise when they have expectations that are out of alignment with the service you deliver, or when a communication issue has made them believe one thing, when actually the opposite is true.

Talk to the relevant parties in your office, and check your records. Find out where things may have gone wrong and how you could improve processes or communication in the future.

5. Offer a solution

Again, this isn’t about admitting you’re wrong, but about finding a way to solve the problem for the client without losing your cool in the process.

If you’re in the wrong, admit it upfront and show the client how you’ll make amends, and get their project back on track.

If the client is in the wrong, then explain the situation. Be respectful but firm. If there’s pushback, point to the relevant clauses in their contract or letter of agreement. If any changes in scope have been identified, process these changes immediately and update the contract accordingly, and set clear expectations.

If a communication breakdown is to blame, then offer alternative ways to communicate so the client feels included. Give them options, for example a monthly phone call, email update or face-to-face meeting. Alternatively, they may prefer regular check-ins via your client management dashboard. Let them decide what would work best.

6. Cut your losses

According to Hootsuite Founder Ryan Holmes, a difficult client can cut into your bottom line – their demands eating into some or all of your profit.

Your reputation and integrity are more important over the long-term in these delicate situations. Fixing the problem – even if that solution comes at the loss of the client – will benefit your business in the long run.

7. Create a conflict resolution plan

Create a plan for conflict resolution with clients and arm your team with this information. This ensures your team feels comfortable approaching these situations and that there’s a consistent approach. Equip your staff with a simple, actionable plan to handle these types of situations in future.

8. Review and learn

Take a step back and evaluate what happened. Ask yourself:

  • Why did this problem arise in the first place?
  • What could we have done to prevent it?
  • What lessons have we learned that we can apply in future?
There may be simple solutions, such as clarifying communications, changing workflow processes, re-wording contracts or using a legally-vetted industry standard letter of engagement that could prevent a repeat of this situation.

When worst comes to worst... fire a difficult client

Sometimes, even if you follow the steps above, things between you and your client may not improve. Before firing your client though:

  • Check your contract or engagement letter. There should be terms for terminating the agreement in your contracts, but it’s best to check where you stand before proceeding.
  • Wind up any important work. Leaving a client in the middle of a vital project will often cause more problems than it solves and may harm your reputation. Where possible, try to complete important contracted work before proceeding with the termination.
  • Consider suggesting an alternative. You might consider suggesting another company or professional who could be a better fit for the project. But be cautious with this approach. If you’re a CPA in Australia or an accountant or other professional in the United States, there could be unintended consequences for providing referrals. These may expose you to potential liability for negligence. For accountants in England and Wales, these resources can help guide you through the referral process.

How to avoid difficult clients in the future

There are many ways to determine if a client is going to be a poor fit. One of the best ways is by understanding the Ideal Customer Profile (ICP) for your business. This can help you avoid clients who aren’t a great fit and double down on attracting ones that generate the maximum profit for your business.

Once you’ve defined your ICP, you may phase out certain services or change your pricing structure, which may result in difficult clients leaving your business naturally. If they choose to stay on board, you could insist they pay more, which will allow you to retain profitability within those services.

Here are 4 other ways you can avoid difficult clients going forward.

1. Manage client expectations

It’s easier to impress a client if you first give yourself the room to provide exceptional service. Saying ‘yes’ to every deadline, extra task and demand creates the unrealistic expectation that you’ll be able to meet those increased demands on a regular basis. The client will assume this is business as usual.

However, if you tell the client, ‘actually that’s not a possible timeframe. We could complete this by X date,’ you set their expectations from the outset. Impress by under-promising and over-delivering where it makes sense to do so.

2. Don’t compromise on your wellbeing or that of your team’s

Managing client expectations by effectively managing timelines can reduce the pressure and stress on your team that can lead to burnout.

Avoiding situations that may cause undue stress can also have a significant impact on your business’s bottom line. Gallup has reported that burnout costs $322 billion dollars globally in turnover and lost productivity because of employee burnout. Accountants and bookkeepers are already exposed to intense pressure which puts them at a higher risk of experiencing burnout. However, those who regularly have enough time to complete their work are reported to be 70% less likely to experience burnout.

Prioritizing employee wellbeing fosters trust. Employees who are treated fairly and feel respected are more resilient.

3. Consider increasing your prices

Charging additional fees for out-of-scope work and rushed deadlines could help you to manage the expectations and increased workload these clients bring. Establishing these ground rules could also prompt them to consider if the work is really that important. Setting these expectations may help to avoid any difficult conversations later on in the relationship.

4. Update your contract or engagement letter

Start on the right foot with clients. Avoid misunderstandings and miscommunications by having a clearly defined contract or engagement letter that’s been checked by a legal professional. With Ignition, your engagement letter or contract terms form part of your proposal to save you time. You can get a head start using Ignition’s legally vetted, industry standard terms, or upload your own. If you’re an accountant, you can even access engagement letter templates from selected accounting industry bodies.

If you do have to fire a client, make sure you’re protected against litigation and that all the terms and conditions are in line with your processes and obligations.

Should you end up in a similar situation with another difficult client, you want to ensure you’re able to get out of the contract with your integrity and company unscathed.

Over to you

Difficult clients can drain resources, energy, and money from your business, but the way you deal with them also provides a valuable learning experience. See how Ignition empowers you and your team to effortlessly create, edit and send online proposals, engagement letters or contract terms. Watch our demo and start ensuring you have the tools you need to effectively set and maintain client expectations.

Editor’s note: This post was originally published on February 7th 2018 and has been revamped and updated for accuracy and comprehensiveness.

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Meet the author

Joshua Lance

Head of Accounting (AMER) at Ignition and Managing Director  Lance CPA Group

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Published 22 Nov 2022 Last updated 22 Nov 2022
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