By Chris Basom
Since May of 2009 I’ve been actively engaged in meeting and talking with tax professionals from all over the country about the operation of their tax practice. A handful of issues come up in every discussion. Among them is the reluctance (or flat inability) to throw away clients.
It got me to wondering – why can’t “we” seem to do it? About the same time in 2009 a television show premiered on A&E called Hoarders – it was the most watched series premiere in A&E Network history, watched by 2.5 million viewers. It went on to enjoy six seasons before being sold off to another network.
Interestingly, somewhere between 2-5% of the American population suffers some symptoms of hoarding. Hoarding is commonly defined as: the persistent difficulty discarding or parting with possessions, regardless of their actual value.
It fascinated me to find out that hoarders were identified as “perfectionists” (in a way) who suffered from a fear of making a wrong decision.
It didn’t take long to connect the dots. Tax professionals (by and large) had persistent difficulty parting with clients regardless of their actual value. Tax professionals (for the most part) are perfectionists who labor over issues working to make sure they make a good decision.
When it comes to firing clients, we exhibit some serious “hoarding” behavior.
While hosting a recent webinar on the subject, one attendee suggested that this was due to his fear of losing the revenue. Another pointed out that her difficulty of getting new clients resulted in her reluctance to give one away. And a third said that she just raised their fee each year until they “went away on their own, so she didn’t have to do it”.
None of this behavior served the tax pro, but it wasn’t easy to “just say no”.
Whatever the rationale, it isn’t healthy for you or your practice to keep clients who you know you should fire.
Ask yourself some simple questions:
- Do you have clients on your roster you don’t look forward to seeing?
- Do you sometimes see a phone message from or an upcoming appointment with certain clients and secretly hope they won’t pick-up or show-up?
- Do these same clients require more time and energy than they are “worth” to you?
If you answered “yes” to any of these questions, then you need to let some clients go.
The truth is that 80% of your problem client behavior comes from 20% of your clients. And that difficulty isn’t just your stress – it is also your staff’s stress. There are too many axioms to quote on this subject for it not to be true (one bad apple, the baby with the bathwater, etc.) – you need to do something.
I’m not saying fire 20% of your clients… but I’ll bet 80% of those problems come from 20% of those same clients – and you may need to fire 4% of your roster (20% of your 20%).
Now ask yourself:
- Do I have a way to identify the clients I should fire?
- Do I have a method for firing them?
- Do I have a process for replacing them?
If you answered “no” to any of these questions, then I think we know the problem – if you don’t have a way to do it, you won’t.
It’s that simple.
And the truth is that in meeting after meeting, webinar after webinar, poll after poll, our fellow professionals (and ourselves) don’t proactively solve this problem.
Typically, we become inattentive to a problem client in hopes that they will get upset and leave. We do this passively, maybe even unaware that we’re doing it.
Sometimes we just start overcharging them in hopes that they will get upset and leave. Sometimes we finally snap and mistreat them (justifiably in our minds) in hopes that they will punish us back by leaving. They will eventually go – but not until the damage is done.
The damage I’m referring to is the residue left behind on your staff and yourself. And typically, difficult clients relish the opportunity to be more difficult as they leave.
The fact is that any result that was passively achieved is not satisfying and doesn’t allow either party the respect and dignity to move on. If you bump into that client in the future – there is unfinished business. They may end up at a company you are trying to do business with – or know people important to you socially, etc. My Grandma Bessie always said “It’s a long life (she lived to 87) and you never know who you’ll end up back in bed with.”
I’m lucky enough to work in a densely populated area where these chance conflicts are rare – but what if you’re not? And isn’t life easier if that risk of conflict doesn’t exist?
Let’s do what we can to go that way. Let’s professionally end bad relationships in a way that allows you to see that former client at a soccer game or in church without struggle. Let me show you the way we handle this in my practice.
The process is really very simple (not easy):
- Identify the clients that must go
- Sever the relationship officially
- Hold your ground
Identifying Clients That Must Go
The first step is knowing who has to go. But the “zero period” to this school day is to quit bringing clients into your practice that don’t fit to begin with.
The source of most of your stress from clients is coming from people you let onto the bus who you knew shouldn’t have been given a ticket. A different discussion for another time.
To determine who has to go, you will need to “rate” you clients. I suggest a system similar to rating stocks – by assigning a Buy, Sell, or Hold designation.
- A Buy client is one that you would like more of.
- A Sell is a client that you want to get rid of.
- A Hold is a client you want to keep because you see future promise.
Here is a worksheet to help with this process.
For this exercise we’ll only focus attention on the “Sell” clients.
Review the Sell clients and consider why they are a Sell. By that I mean ask yourself – “is it me, or them?” If you haven’t properly trained and guided this client, and it’s possible to do so you may want to reassess the decision. If it’s them – they are overly demanding, unrealistic, non-payers, non-compliers, etc. then make ready for the firings!
Severing the Relationship Officially
Like any break-up, one side knows it’s coming and the other is “surprised”. It’s important to do this in writing. And by that I mean an official letter – not an email.
The key points to this communication are:
- Be definitive – you are terminating the professional relationship.
- Be timely – give them time to find new representation before a deadline.
- Be vague – don’t enumerate your reasons for firing them, only gives them issues to argue.
- Be decisive – no wiggle room, it’s not a threat.
Successful termination communication isn’t argumentative or accusatory. It is couched so that it’s “in everyone’s best interest” and is not judgmental. No one failed here – the relationship just isn’t working.
It is important to note that this be done systematically, at regular intervals – not emotionally and irrationally.
I hold two “review” meetings each year: one in early May (when everyone is back from post-4/15 R&R), and again in late October after the 10/15 filing deadline.
These are times when the pain from difficult clients is still fresh. Given a couple months, the perceived need for revenue may overwhelm the memory of struggle and we are all less likely to act. Action is the point – send your letters.
Holding Your Ground
Clients will react passively or aggressively to your letter. Passive response manifests in your never hearing from them again. Aggressive response manifests in a phone call to you to talk you out of it, or to get after you. Aggressive response needs to be handled by you. By that I mean you take the call – don’t leave that to a staff member or the receptionist.
You are the one breaking up, so you need to be the one to deal with the consequences. In that phone call the one who “loses it” will be the one who loses. So stay calm, stay focused, and stay on point.
Side note: If you’re a movie buff, you’ll probably remember John Malkovich’s artful use of this tactic in the #bestmoviebreakupever! I’m hoping a calmer response for you. :)
The point is, both of you aren’t being served by this current relationship, and you both deserve better. The point is, the client would be more successful working with someone else. The point is that we won’t be representing you anymore. Here are some ways to say that.
Holding your ground doesn’t require you to explain details, or “tell me what I did wrong”. Holding your ground simply requires you to repeat what you’ve already said – “we can’t represent you going forward, please find another tax professional to assist you.”
“Unintended Consequences” (aka, the Benefits)
I have found that the short, medium and long term results of firing clients are good for everyone.
Your client is benefited in a number of ways. If you are not helping each other – or marginally helping each other – then your client will benefit because they now have the chance to find a better fit for their needs. More often than not, they will. Imagine how much more they can gain from a relationship that nurtures them as opposed to the dysfunctional one you had with them.
Your staff is benefitted as well. They were the ones suffering the brunt of your difficult client’s behavior. They were first up for the phone call, office greeting, etc. Firing difficult clients tells your staff that you value them enough to “protect” them from that behavior.
You benefit in many ways. Done right you don’t suffer any lasting ill-will from the client. If and when you cross paths in the future you will benefit from the increased respect your ex-client has for you by virtue of how you handled the situation. Your staff will see that you are committed to building a better business for everyone involved. And you will have more time to work with your “Buy” clients, and to develop your “Hold” clients because you aren’t wasting time with “Sell” clients. Your stress level will go down, and your happy factor will increase.