Not all clients are a pleasure to work with. Some are demanding and high maintenance. Others don’t respond to requests for information or pay invoices on time. These are what we call “toxic clients.” And they are likely doing more harm than good to you and your staff.
Here are three ways toxic clients could be sabotaging your firm:
Your net profits take a dive.
In theory, the more chargeable hours you can bill, the more revenue you can collect. But when dealing with a toxic client, this is rarely the case. Because these clients are more difficult, your staff members are probably spending more time on their projects. But these are also the clients who are more likely to complain about your fees. And this can cause your firm’s average realization rate—and subsequently your net profits—to go down the tube.
Your staff is experiencing burnout.
No one likes to deal with a toxic client. Making difficult and unrewarding client interactions part of your staff members’ routines can cause an epidemic of burnout throughout your firm. What’s more, telling staff members to “just deal with it” in regard to a toxic client sends the message that the firm doesn’t value their happiness. Sure, customer service should be the Holy Grail, but not at the expense of your talent.
Your firm doesn’t have the capacity to grow.
Being busy isn’t a good thing if you’re busy with the wrong type of clients. If your client roster is full of toxic ones, it’s likely you won’t have the bandwidth to pursue the clients with whom you really want to work. This could prevent your firm from being able to focus on new opportunities or niches. In other words, getting caught up with toxic clients could stunt your firm’s growth.
Don’t let toxic clients drag you down!
Toxic clients are more than an annoyance. Continuing to work with them can cause major headaches for your firm. But here’s the thing: you don’t have to keep them on your client roster. There are measures you can take to cull toxic clients and prevent your firm from feeling their effects. And what better time to detox than the start of a new year? If you’d like to learn more about these, please give me a call.
Stay tuned for more on toxic clients…
In next month’s blog post, I’ll be sharing how a simple client ranking system can keep you firm from losing money, time, and—most important—its most valuable team members.
