Nine Reasons Why You Lose Clients – And What to Do About It
The playwright Oscar Wilde defined a gentleman as someone who “is never unintentionally rude.” Likewise, you never want to have a client relationship end unintentionally and without a sound reason.
Unfortunately, relationships often avoidably come to an end. Clients usually just vote with their feet and don’t explain to you why they are not giving you any more business. This can lead to an after-the-fact rationalization that the relationship ended due to factors entirely outside your control.
Here are nine reasons why you may lose a client.
1. A reorganization or executive turnover
Does this sound familiar? One of my clients told me: “I spent several years developing a relationship with a vice president, and then he was squeezed out in a reorganization. The new head has a relationship with a key competitor of ours, and she’s bringing them in.”
Executive turnover is higher than ever. It’s a fact of life. Get used to it. Here’s how to make the best of these situations:
- Build many-to-many relationships with all your key clients. If the relationship depends on one single executive, you are doubly exposed—the client could leave, and if you’re with a larger firm, a key member of your own team could leave!
- Make sure you are connected to a senior executive above your day-to-day client. That relationship will be worth its weight in gold when turmoil hits.
- Ensure you’re getting credit for your work; and, that the value you’ve added is appreciated broadly in the client organization.
- Work hard to get the departing executive to vouch for you and introduce you to their replacement.
2. A one-off or temporary need for your services
Sometimes, clients only have a periodic need for what you do. A college may hire a fundraising consultant only once every five or ten years, when they do a capital campaign. A corporation might only need the services of a construction company when they build a new headquarters building.
The first and most important thing you need to do is develop additional products and services that meet recurring needs. Ask yourself, “What adjacent, ongoing needs can we help the client with?” For example:
- A fundraising consultant whose bread-and-butter is capital campaigns can help a university or hospital run their annual campaign more effectively and prospect for new donors.
- An executive search firm can do talent planning, executive assessments, and leadership coaching in between periodic searches.
Second, you need to add value during the lulls between major engagements. The client needs to perceive you as a trusted advisor in good times and lean times—both when you’re collecting fees and when there’s a dry spell.
Third, if your clients only rarely use what you offer, make sure you get referrals and testimonials from every single person you do business with. In this situation, your marketing strategy must be to spread a wide net, and those references will help you enormously.
3. Client fatigue
Sometimes, a client relationship will have a few good years, and then things decline. It’s possible that the client is simply getting tired of the relationship, or that they feel they have improved internal capabilities to the point where they don’t need you anymore (or at least not as much as before). This happens with both services and products.
What can help? Treat old clients like new clients. Bring the same energy, enthusiasm, new ideas, and excitement to the 100th meeting that you brought to the first meeting with them. Also, don’t forget that you have to continually show value and a high ROI. You may think the client is comfortable with the return they are getting on your solutions, and will automatically buy more, but never take that for granted.
4. A financial crisis or profit squeeze—and a lack of budget for you
A friend of mine provided coaching services to one of the Big Four accounting firms. This client grew and grew, and eventually accounted for 75% of his revenue. In 2008, when the financial crisis hit, the client did not renew his contract. “We don’t have the budget for your coaching services anymore,” they told him. A familiar tale? Today, the twin health and economic crises have impacted suppliers across the board.
It is a lie, however, that clients don’t have the money to pay you. What they have decided is that using you is not a priority given their (invariably) limited financial resources.
The client who just told you they can’t afford to keep going with you is paying for all kinds of things at this very moment—some of which may be either a complete waste or have a low ROI. They may be spending money on unproductive initiatives, poor-performing executives, excess office space, ineffective advertising, too many photocopiers, and so on.
Your challenge is to demonstrate why your services should attract scarce budget. You do this by:
- Showing exactly how you are part of the client’s growth, profits, and innovation—not simply a cost, a kind of necessary evil. You must compellingly draw a direct line between what you do and the client’s highest-level goals.
- Regularly communicating the value and impact of your work.
- Spending sufficient face-time with executives so that you have a good understanding of what is most important to them.
5. The impact and benefits of your work are not compelling
This reason often leads to the feeling that you aren’t needed on an ongoing basis (related to reason 2) or unavailability of budget (reason 4) or even “fatigue” (reason 3). If you are delivering good quality, why would your client feel that what you’re doing isn’t relevant or compelling? Here are some possibilities:
- You have not sufficiently communicated the value you’re adding.
- You are working at too low a level in the organization and your product or service is basically hidden from view.
- You have not shown the client how you are helping them achieve their most important goals or priorities.
- Your work is acceptable but not perceived as “a cut above.” You’re not wowing the client in any way.
- The client perceives your products or services as solving a relatively insignificant problem.
6. Quality or delivery issues
Remember that “quality” is a function of three things:
First, actual quality. Have you provided—by objective standards—a truly high-quality service or product?
Second, expected quality. You can do a great job but have a very disappointed client if your solution does not meet their expectations, no matter how unreasonable you think they are.
Third, perceived quality. Why do people think the relatively unappetizing Patagonian Toothfish is wonderful? Because restaurants call it Chilean Sea Bass and dress it up with all sorts of fancy cooking methods, sauces, and side dishes.
To help bolster your client’s verdict on the quality of your work, think about these strategies:
- Put real, meaningful quality control mechanisms into place. Get formal client feedback several times a year.
- Carefully agree on expectations at the beginning of a project or engagement.
- Enhance your client’s perception of the quality and effectiveness of your work. One good way to do this is to create transparency around your process, so that your client sees all of your hard work and effort. A second way is to share the difficulty of what you’re doing—in other words, make sure your client understands the challenges you’ve overcome to deliver for them and the special requirements of the engagement. A third approach is to ensure your client gets positive feedback from their employees.
7. Poor personal chemistry
Likeability is one of the four key qualities that nearly all client executives seek in a vendor or service provider (the other three are delivery, trust, and value). I’ve heard this over and over again. One of my own clients, for example, fired a very smart and experienced consultant because he was arrogant and condescending with everyone below the c-suite.
You can enhance personal chemistry through some very simple steps. Sometimes, a relationship that starts off on the wrong foot can thrive when one side makes some sensible adjustments to their behavior. For example:
- Are you being a good listener? Do you listen carefully, affirm, and ask thoughtful follow-up questions?
- Have you shown your immediate, work-with client that you can be trusted to support them and their goals—as opposed to politicking and going behind their back to their boss?
- Have you taken the time to understand how your client would like to structure and manage the relationship and how they like to communicate.
8. A decline in trust
To understand how this can happen, let’s first reexamine what builds trust with clients. Very simply, professional trust is based on:
- Competence: You have to consistently deliver against expectations.
- Integrity: You have to demonstrate honesty but also reliability, consistency, and discretion.
- Perception of intent, or agenda focus: You have to show you are deeply concerned about your client’s agenda and not just promoting yours—that you’re looking out for their interests at all times.
Several other factors influence a client’s willingness to trust. These include their perception of the risk of trusting you, and the amount of face time they’ve had with you. You rarely trust someone you haven’t spent time with!
Usually, I think a decline in trust is precipitated by a feeling that you no longer care as much as you used to and the work you’re doing is not as sharp as it was.
This is probably the reason many relationships end—professional and personal. One side takes the other for granted. Or, both simply stop caring the way they did at the beginning of the relationship.
Complacency is the enemy of the successful professional. You enjoy your work, you have good clients, and you make good money. So why try harder? It happens all the time. You stop pushing, and you start—well, coasting. When that happens it’s time to shake yourself up.
The solution to factor three, above, works here also: Treat old clients like brand new clients.
Conclusion: Review your client base
Each year, look at your client list. Ask yourself these questions:
- Which clients keep you up at night, and which ones get you up in the morning because you’re excited about the work?
- Which clients are at risk of leaving you for some of the nine reasons outlined in this article?
- Do you have a valuable client towards whom you are getting complacent? Why is that happening?
- What would a competitor do to go after your clients and take some of their business away from you?
Keep in mind these nine reasons why clients can leave you. Sometimes it’s inevitable that a relationship ends, but there’s a lot you can do to counter each of these challenges:
- A reorganization or executive turnover
- A one-off or temporary need for your services
- Client fatigue
- A financial crisis or profit squeeze—and a lack of budget for you
- The impact and benefits of your work is not compelling
- Quality or delivery issues
- Poor personal chemistry
- A decline in trust
All the best,
If you’d like to learn more strategies to grow your client relationships and revenue, get a copy of my new book, It Starts with Clients: Your 100-Day Plan to Build Lifelong Relationships and Revenue. It gives you the precise strategies–and action steps–needed to master 14 essential client development challenges and grow your client base in any market conditions. You can buy it here, and also join my 100-Day Client Growth Challenge.