Spotting a rogue customer could save your business

A rogue customer might not be top of your list of concerns when you’re thinking of protecting your business. We’ve all watched the daytime TV programmes about rogue traders and we know how damaging it can be to engage an unreliable supplier, but have you thought about how damaging a rogue client could be?

For some businesses, bad customers pose as much of a threat as bad suppliers and for a few good reasons. So, how do you spot a rogue customer and what can you do about it?

A rogue customer often doesn’t pay on time and some will never pay at all

When you’re running your own micro business, cash flow becomes one of your primary considerations. Is there enough money in the bank to meet your payments this month? When is the invoice you’ve just sent likely to be paid? These are all considerations you need to think about daily and a non-paying or unreliable customer can compound your risk and stress levels.

Cashflow is one of the biggest killers of small and micro businesses. When significant invoices aren’t paid, the impact on a small business can be catastrophic.

Customers who choose to pay late, or worse, never pay at all, can cost a micro business their existence. If you’ve been working with a client who never pays on time or who has a history of not paying your peers, you should ask yourself if it’s worth doing business with that client. Are you storing problems for the future? Could this customer sink your ship if they owe you enough and choose not to pay on time?

If you normally ask clients to pay a deposit before you start a project and a prospective client doesn’t want to pay the deposit, you could be seeing a warning sign. Ask your prospect why they feel that a deposit isn’t appropriate for this project so you can try to understand their point of view. If they can’t offer a reason beyond ‘I just don’t want to’ then you could have a difficult decision to make.

Have you caught a customer lying to you?

No one is perfect. We all have memory lapses now and again and if you’re running a busy enterprise, it’s easy to forget some things. What is not acceptable is having a client lie to you and expect you to unquestioningly go along with it because they’re the customer.

If you know your customer is being less than fair with you about what you agreed, how much work you would do or even the price you gave them, then ask yourself if this is someone who is likely to pay the bill when the time comes.

If you feel that you can’t trust your client to meet their obligations in the way that you have met yours, then you need to ask if you have a working relationship that can survive. If you don’t have that relationship then maybe it’s better to let them go as a customer and move on.

Your pricing is always too expensive

Everyone likes a bargain and it’s a fundamental part of business to ensure we’re not paying more than we need to, but sometimes you need to recognise the value of services or products that you’re buying. As a supplier, if you are continually providing value for money and delivering on time and to budget, your customers should develop an appreciation of what you do and why they ask you to do it.

If however, you have a customer who always challenges your pricing and expects bigger discounts than anyone else, are they appreciating what you do for them or are they just looking to push your price into the floor?

You should know your own market and you need to be honest with yourself about whether your pricing is correct. If all of your clients complain about the price then maybe your rates are higher than others, or maybe your service level needs to be better.

If a particular client continually tries to force down your rates, then maybe they’re not the client for you. It doesn’t always mean they’re a rogue customer, but it could be that they might be better off as someone else’s customer – not yours.

They keep moving the goalposts

Customers change their minds. That’s a fact of life and one we all have to deal with, but there’s a big difference between changing what you want and constantly trying to get more done for the same amount of money. Projects managers call it scope creep. It’s when the scope of the task creeps ever-larger and it’s something you need to spot before it’s too late.

Clients that actively practice scope creep without asking you to supply a cost for the changes they make can often be doing so intentionally.

Allowing this practice to continue is bad for your business, but a rogue customer isn’t interested in that. They’re interested in what they can get for free. If you feel that your client is moving the goalposts without acknowledging that they’re doing it, or worse, expecting you to live with it at your own cost, you should ask yourself if this is a regular occurrence with that client. If it is, think about how to stop it and if that is likely to sour your relationship. Either way, you should not allow it to continue.

A rogue customer makes demands and expectations that are unreasonable

Some clients want to make sure you dedicate all your time to them, and them alone. If this is an arrangement you’ve consciously agreed to, this may be fine. A lot of very successful freelancers or contractors operate with only one or two core customers. If however, you’re feeling that a customer is pressuring you to devote all your time to them to the detriment of other client projects, this could have a very negative effect on your business in the long term.

An unscrupulous customer could be trying to dominate your workload, forcing you to release other clients and become dependent on them with a view to lowering your pricing in the long term.

Unreasonable demands take many forms though. Some clients fail to appreciate the pressure they put on you through their demands, like expecting next day or same day delivery on tasks that take time to do properly.

What can you do about a client that could be a rogue customer?

If you think one of your clients could be causing you more problems than you would like, then there are a few questions you can ask yourself to help decide whether to cut them loose.

Can you speak your mind with them?

In business, trust is everything. Can you have an honest and frank discussion with the client about the issues you face? If you feel that you can, then you might be able to discuss the issues and come to an agreement to alleviate the pain.

What will happen if you cut them loose?

If the client is a major part of business and you depend on their workload for most of your earnings, you might be in a difficult position. Take some time and write down the impacts on your business of losing them as a client. Will your business fail or could you reasonably fill the gap with new work?

If you’re turning away work already from other clients, then this decision could be an easy one to make, but you should consider it carefully and understand what it will mean for you.

Would the client be better off dealing with someone else in your network?

Always consider that your client may not be a rogue customer. It could be that you and the customer you’re considering are just not a good business fit for any number of reasons. If you have a network with contacts in your own industry, consider whether one of them would be a better supplier than you.

If you can pass the client on to another supplier who works better for them and relieves you of the problems, then maybe that’s a viable solution. It’s also a far better way to part company with a client than just leaving them with no support. That’s better for your reputation and for your former client.

 

Rogue customers don’t get a lot of attention in the business world and they can do a lot of damage to your business. It’s important to spot them and consciously consider what you can do about it and if you want to do business with them at all.