Reviewing client relationships and the impact it has on our service-based business

In our first year of operation, my main challenge was building a great team. Today, I am very proud of my growing team.  In our second year of operation and with a client base of over one hundred and growing, my operations manager and I reviewed our numbers.  Our team was consistently going above and beyond in their level of service.  It was not surprising then when an internal analysis showed that roughly fifteen percent of our clients were not profitable.

There are certainly reasons to continue to service clients who generate a net loss: future gains, building a brand, other mutual benefits etc.  What concerned me more than the losses were that the clients who were showing up on the non-profitable list were the same ones who gave my team the most grief.

We provide a unique service in our landscape, as one of the first completely virtual cloud accounting firms in Canada.  It is not surprising then that a small percentage of our clients were just not a good fit.  As a leader, it is my responsibility to ensure that my team does not burn out by servicing clients who do not see the true value in the services that we provide.  I did this by reviewing our existing client relationships and ensuring that we have a more rigorous screening process for new clients.

As a leader, it is my responsibility to ensure that my team does not burn out by servicing clients who do not see the true value in the services that we provide.

Reviewing Existing Client Relationships

The client receiving steeply discounted services

When you’re starting a new service company, more likely than not, there will be a few clients that you develop a personal rapport with due to the sheer fact that they were one of your first clients.  This happened to me.  I didn’t set clear expectations, because I was still figuring out the whole thing when they first became my clients.

It was extremely difficult to have these conversations with these clients to raise prices or discontinue services.  This is because the clients that pay the least for the services are the same clients that do not know the true value of the services being provided. It was not feasible for us to continue providing these services at steep discounts, and not only that but it was taking away from my company’s operational efficiency and taking away from clients who were paying full price for services.

…the clients that pay the least for the services are the same clients that do not know the true value of the services being provided.

The client that thinks that everything they need is urgent

Setting expectations is key here, but if that doesn’t work then steering clear is my advice.  I’ve had very emotionally driven clients that treat every request they send to us as urgent.  Having a client like this puts additional emotional strain on the team, this I think is something important that service companies need to think about.  Taking on a client like this could be the difference between your team member having more bad days at work.  While not completely unavoidable, it’s something that’s not insignificant and should be considered.

These were the two glaringly obvious red flags in our client-based that we addressed immediately.

Developing a Screening Process

Our existing client screening process was quite lenient.  If a client was opened to moving to cloud accounting and they knew how to use email for communications, they were in!  We needed to move beyond that and so we are in the process of refining our screening process to ensure a better client fit before moving forward.