Many years ago, when we first embarked on transitioning the firm from “bands to brands”, I asked Ken Roman, the former CEO of Ogilvy and Mather, to lunch.  My hope was that Ken would share with me some of the guiding principles of O&M during the legendary days of David Ogilvy. 

One of the first things that Ken said to me was: 

“David Ogilvy always used to say that an agency is only as good as its clients. Choose your clients wisely, as ultimately you will be defined not by the work that you do, but by the clients that you keep”

The other day I was reminded by Ken’s advice when I commented to my colleague Howie Kleinberg that in the ten years of doing business, we currently have the best roster of clients in the firm’s history. 

But like any agency, over the years we’ve had our fair share of good clients and bad clients. That said, we’ve been able to keep the amount of bad clients to an absolute minimum. One of the reasons for this comes from the following principle:

It’s impossible to do good work for a bad client.

If you ask someone to define a good client, they’re likely to say – “That’s easy. Good clients are the ones that pay you the most” 

But in reality, just because a client pays well doesn’t make them a good client.  In fact, good clients are often the most demanding clients we have. But they’re demanding in a constructive way. While asking for more, they continue to raise the bar and this forces us to do our best work.   

One thing is for sure, if a potential client defines you as a “vendor” rather than a partner agency, it’s pretty much guaranteed that that client is going to be a shitty client. 

So what are the qualities of a good client?   Here’s my list:

Good clients are decisive.

You know who the decision makers are and they make it clear to you what the criteria is for their decisions.

Good clients aren’t complacent.

Their standards are high and they won’t settle for mediocre results. Each and every time they want to improve on the campaign that came before the current one.

Good clients are good communicators.

They give good timely feedback, acknowledge the hard work of others, and share the successes with everyone involved. They consider the partner agency as part of their team.

Good clients are open to new ideas and willing to experiment and take some risks.

They’re good listeners who are curious and are constantly wanting to learn more.   

Good clients have clear goals and strong branding that guides the direction of the company

Their strategies are clearly defined by the CEO and everyone is working off the same page.

So who are some of our best clients:  American Express, Starwood Hotels, USA Network, The History Channel, STA Travel, A&E…

Why?

Because they demonstrate all of the qualities outlined above. And they pay on time.

three warning signs of a bad client.

“I need to do this as cheap as possible”
“I need it yesterday”
“Our current web designer won’t call us back”

“That first year, all you’re trying to do is get people to buy into your services,” says Johnson, whose only other employee was his wife, Kim, who handled accounting. “You take on a lot of questionable clients because you’re just looking for [ways] to pay the bills, so there’s no bad client. Any work is good.”

Of course, that’s not exactly true. Johnson got out of the house and set up shop at local cafés. Terralever began to grow. Johnson took on a partner – Andy Richter, who was experienced in interactive marketing, technology integration and branding – nabbed more clients, hired more employees and moved the company into its own workplace. And he revisited the idea of “no bad clients.”

Getting Choosy

Johnson was working with a small local company that “didn’t have a lot of focus. It was always difficult to get in contact with the executives and get direction, and ultimately it was hard to get paid for the work we did,” Johnson says. “Collecting money isn’t billable, tracking down executives isn’t billable, delayed projects cost us money. Nobody enjoyed working on it.”

What should have been a two-month project turned into a four-month mess, and Terralever collected less than half its fee. That’s when it hit Johnson that he didn’t have to work with such clients or subject his employees to corporate headaches. He could just say no.

“The minute we made the switch from a mentality of desperation to taking more control of our destiny and choosing the kind of work we’d [accept], we transformed [what] we were doing.”

Saying no isn’t hard. Early on, Johnson tries to identify which clients are worth it and which aren’t. “It’s always delicate,” he says. “You don’t want to come off as arrogant or disrespectful. We just say, ‘This isn’t a good fit for what we’re doing, and we’re going to bow out of the opportunity.’ Generally, every time we do it, it goes well.” And they’re also happy to refer those clients to smaller tech shops.

Getting Happy

Terralever has seen 100 percent growth in each of the last two years. Johnson attributes his company’s success to being selective and keeping in mind the “overall happiness factor.

“Our team members are all type-A – strong, intelligent people,” he says. “They don’t enjoy working on projects that are going to be a failure.”

Terralever targets marketing departments at big companies to build ambitious Web sites for product launches and entering new markets. The idea for the company came from a rift Johnson saw often at his old job: small and under-funded IT departments – which were resistant to change – duking it out with marketing departments that were by nature experimental and innovative. Terralever bypasses the rift and, often with more technical expertise than an internal IT department, connects directly with marketing.

“We get to come up with creative solutions and do neat things,” Johnson says.

Those “neat things” pay. After learning to just say no to certain clients, Terralever now employs 19 people – and reported $2 million in gross revenue for 2006.

Source: startupnation.com

1. Don’t discount your prices. Somehow giving clients a break seems like a good idea from time to time, but in my experience the clients who pay the most and don’t try to get discounts are always the best clients to work with, hands down, and not just because the profit margins are larger. They are genuinely different in personality. Sometimes you’re tempted to discount your prices because you want a certain client gracing your client list, or because of the promise of more work to come. If you have to discount your prices to land a client, it’s probably a bad sign. The project will probably go awry and while you may get their name on your client list, chances are you’ll never get more work from them. Think about what discounting your prices says about you. It’s like saying “We are so desperate to have you as a client that we’re willing to make no profit on this job.” Who would you rather work with? An agency that says that or one that says “We’re so good we don’t need your stinkin’ account because we’ve got tons of work.” I’d choose the snobbish agency any day. If they’re snobbish but busy then people must like the results enough to look past their other personality flaws.

2. Don’t agree to hourly agreements that have a cap. “We want to work hourly on this, but with a cap.” In other words, “We want to have our cake and eat it too.” Don’t let clients do this to you. It’s either a fixed bid or it’s hourly, one or the other.

3. Don’t allow scope creep without compensation. “We just have a few small changes we’d like to make, I’m sure they’re just small things…” Yeah, right. The next thing you know you’re doing 2-3 times as much work as you planned on, which means your profits are gone and you’re actually paying the client for the privilege of working with them. Tell clients up front that if they’re on a fixed bid then that means any changes in the scope of the project will mean a change order and additional charges. If it’s hourly then you’re fine, as long as you didn’t agree to that cap.

4. Don’t “partner” with clients. “We’re looking for a firm to partner with on a project.” Or in other words, “We don’t have any money and want you to do free work. On top of that, we have such a lack of confidence in our idea that we’re willing to give away 20% of our company to you rather than pay you $20K.” Don’t fall for this–partnerships rarely, if ever, work out. More likely, you’ll end up doing a bunch of work for no compensation, and then your partner/client will decided they’re not interested in the idea anymore and quit, leaving you with nothing of value.

5. Don’t do comp work. “We’d like you to do a few screens of our website so that we can make a decision which firm to go with.” Oh, you mean you want us to do 75% of the entire project with no guarantee we’ll get paid a dime? Plus you want us to do it with little or none of the planning and preparation we usually do with our clients which means it’s not going to be our best work? In the words of Principal Skinner “Why don’t I just go spit in a cup and drink it?” I’ve done free, or comped work, in order to try to land jobs 20+ times, and I’m not sure I’ve ever landed one of those jobs. In addition, I’ve seen our clients end up with websites that look suspiciously like the comp work we did more than once. If you want to know whether we’ll do good work look at what we’ve done for our past clients.

6. You can’t understand what they’re talking about. Have you ever had a client come in and talk to you for an hour and a half, and at the end you don’t have any clue what they’re saying? I used to assume they were really smart and I just didn’t get it, but now I see that they were the ones without a clue and that they had bad ideas. If you get involved with this type of client chances are you won’t understand their requirements, you’ll produce something that doesn’t meet their expectations, and you’ll have an unhappy client on your hands. Good clients express their objectives clearly so that anyone can understand.

7. They talk a lot. Anyone who can’t explain themselves in a few minutes is trouble.

8. They’re spending their own money. It’s not their fault, but a client who is spending their own money is likely to be pretty touchy about it. Go for the corporate dollars.

9. They’ve had a lot of bad experiences with past firms. This is a major red flag. It’s one thing if a client says they just had a bad experience and they explain it and it makes sense, but when a client tells you they’ve worked with five firms on this project previously and every one of them is a crooked and thieving, watch out, because you’re going to be next on their list no matter what you do.

10. You’ve got a bad feeling. Sometimes you just get a bad feeling about a client and you can’t pinpoint it, all you know is that if you didn’t need the money you wouldn’t work with them. Trust your gut, it’s usually right, especially when it says it wants a burrito from Gualberto’s.

Source: donloper.com

Fire A Bad Client?

Do you know what makes a good customer for your company? I’ll bet you do. You know whether your company is better with the Fortune 500 or the Inc. 500. You know what product lines your operations service best and where the quality is the highest. You know what industries are willing to pay a premium for your level of customer care. You probably even know which customers are likely to have a long and profitable relationship with you and which are just looking for the lowest bidder for this quarter’s supplies.

On the other hand, you know how to identify bad customers, too.

The poor fits, the bad credit risks, and the demanding QA departments. The ones that ask for expensive prototypes with little probability of a significant purchase. Unfortunately, we book these either because they are easy sales or because we don’t have enough good business ready to close. As a result, we waste valuable personal time and company resources on clients that will never show a significant return on the investment.

Open up your customer list right now and identify three clients that you know, in your heart of hearts, are bad fits for your company. Take this list to your sales manager and operations director and see if they agree. Now comes the hard part. Fire the bad clients!

I was facilitating a discussion at one of my clients last week when this very issue came up. It became clear that too many scarce engineering resources were being spent on projects that would never pay back the investment. As we outlined a typical ‘bad client’, the room erupted in a chorus of “I know which client that is!” We all agreed that this project had to be ended for the good of the company and, in fact, for the good of the client who would eventually be under-served. I asked, “Who’s going to call the client and tell them the bad news?” Without hesitation the most senior representative in the room raised his hand. Without one complaint Isaac said, “It’s my client. I’ll call them.”

We can’t focus on the winners until we shed the losers. Help your company win by understanding what makes a good client. Be willing to turn down bad business even when it means a big commission. Help your company win by following Isaac’s example. It’s your client. Make the call.

Now go find some good business for your company!

Source: eyesonsales.com – by Steve Waterhouse

1. Don’t discount your prices. Somehow giving clients a break seems like a good idea from time to time, but in my experience the clients who pay the most and don’t try to get discounts are always the best clients to work with, hands down, and not just because the profit margins are larger. They are genuinely different in personality. Sometimes you’re tempted to discount your prices because you want a certain client gracing your client list, or because of the promise of more work to come. If you have to discount your prices to land a client, it’s probably a bad sign. The project will probably go awry and while you may get their name on your client list, chances are you’ll never get more work from them. Think about what discounting your prices says about you. It’s like saying “We are so desperate to have you as a client that we’re willing to make no profit on this job.” Who would you rather work with? An agency that says that or one that says “We’re so good we don’t need your stinkin’ account because we’ve got tons of work.” I’d choose the snobbish agency any day. If they’re snobbish but busy then people must like the results enough to look past their other personality flaws.

2. Don’t agree to hourly agreements that have a cap. “We want to work hourly on this, but with a cap.” In other words, “We want to have our cake and eat it too.” Don’t let clients do this to you. It’s either a fixed bid or it’s hourly, one or the other.

3. Don’t allow scope creep without compensation. “We just have a few small changes we’d like to make, I’m sure they’re just small things…” Yeah, right. The next thing you know you’re doing 2-3 times as much work as you planned on, which means your profits are gone and you’re actually paying the client for the privilege of working with them. Tell clients up front that if they’re on a fixed bid then that means any changes in the scope of the project will mean a change order and additional charges. If it’s hourly then you’re fine, as long as you didn’t agree to that cap.

4. Don’t “partner” with clients. “We’re looking for a firm to partner with on a project.” Or in other words, “We don’t have any money and want you to do free work. On top of that, we have such a lack of confidence in our idea that we’re willing to give away 20% of our company to you rather than pay you $20K.” Don’t fall for this–partnerships rarely, if ever, work out. More likely, you’ll end up doing a bunch of work for no compensation, and then your partner/client will decided they’re not interested in the idea anymore and quit, leaving you with nothing of value.

5. Don’t do comp work. “We’d like you to do a few screens of our website so that we can make a decision which firm to go with.” Oh, you mean you want us to do 75% of the entire project with no guarantee we’ll get paid a dime? Plus you want us to do it with little or none of the planning and preparation we usually do with our clients which means it’s not going to be our best work? In the words of Principal Skinner “Why don’t I just go spit in a cup and drink it?” I’ve done free, or comped work, in order to try to land jobs 20+ times, and I’m not sure I’ve ever landed one of those jobs. In addition, I’ve seen our clients end up with websites that look suspiciously like the comp work we did more than once. If you want to know whether we’ll do good work look at what we’ve done for our past clients.

6. You can’t understand what they’re talking about. Have you ever had a client come in and talk to you for an hour and a half, and at the end you don’t have any clue what they’re saying? I used to assume they were really smart and I just didn’t get it, but now I see that they were the ones without a clue and that they had bad ideas. If you get involved with this type of client chances are you won’t understand their requirements, you’ll produce something that doesn’t meet their expectations, and you’ll have an unhappy client on your hands. Good clients express their objectives clearly so that anyone can understand.

7. They talk a lot. Anyone who can’t explain themselves in a few minutes is trouble.

8. They’re spending their own money. It’s not their fault, but a client who is spending their own money is likely to be pretty touchy about it. Go for the corporate dollars.

9. They’ve had a lot of bad experiences with past firms. This is a major red flag. It’s one thing if a client says they just had a bad experience and they explain it and it makes sense, but when a client tells you they’ve worked with five firms on this project previously and every one of them is a crooked and thieving, watch out, because you’re going to be next on their list no matter what you do.

10. You’ve got a bad feeling. Sometimes you just get a bad feeling about a client and you can’t pinpoint it, all you know is that if you didn’t need the money you wouldn’t work with them. Trust your gut, it’s usually right, especially when it says it wants a burrito from Gualberto’s.

Source: donloper.com

The CEO was overjoyed: Her company had generated its biggest sale of the year, and a cashier’s check had arrived to cover the payment. Then the client called: He needed to cancel part of his order — could he get a partial refund?

The grateful entrepreneur complied, succumbing to a kind of fraud running rampant. Randall Hoth, president and CEO of the Better Business Bureau in Milwaukee, says “overpayment” scams use startlingly authentic-looking phony checks to defraud small-business owners distracted by seemingly large orders.

Source: Business Week

When I speak at design conferences I’m almost always asked this question: “How do you deal with bad clients? How do you make them get it?” My answer is always “We don’t work with bad clients.”

And I don’t use that to squirm out of an answer. I mean it. Who you work with is your choice and has a huge impact on your happiness, productivity, quality, and the future of your business.

Working with the right clients is absolutely critical. The trick is knowing when to say no. The wrong client can kill morale, force good employees out, and cost you big opportunities. Working with the right client isn’t work at all — it’s a pleasure.

Saying Yes or No to a client is a business decision just like any other business decision you have to make. Should we rent this space or that space? Should we buy this computer or that computer? Should we host on a virtual server or a dedicated server? Should I hire this person or not?

And that last point is critical: Should I hire this person or not? Just replace person with client and you’ll start to see the connection. Even though a client is really hiring you, in many ways you’re hiring them right back. You have to work with them. In many ways your future is tied to their performance. The relationship is tighter than you may think.

Would you just hire anyone because you needed help? Even someone that you can’t stand being around? Even someone that doesn’t have the skills to get the job done? If no, then why would you just take any job? Even a job you can’t stand doing. Even a job that won’t let you flex your skills. Even a job that will embarass you when it’s all over. What’s the point? To stay in business just so you can take on another job that you don’t want to take on?

So, give as much thought to the clients you work with as the people you hire and the spending decisions you make. You’ll be better off in the long run because of it. Don’t sell yourself short — you can find the clients you want and the clients that want you.

This site has been created for all the businesses and people who provide services or sell goods, to rate their clients, so others will be warned of who are they dealing with, thanks to your comments.

Please feel free to post your stories,  make your comments, and we encourage you to do so with honesty and integrity. We are here to protect ourselfs from real bad clients.