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Profit & Growth Tips for Digital Agencies

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How to Prevent Your Agency from Taking on Bad Customers

Posted by Nicolas Jacobeus on Jun 14, 2016

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Good customer relationships are the lifeblood of your agency. But take on a bad-fit customer, and that customer can quickly become a drain on your agency resources, taking up time, energy and money that could be better utilised elsewhere.

So today I’m looking at how to recognise customers who are a bad-fit, before you even start working together.

1) Understand What a Bad Customer Looks Like

You can assess the quality of your customers based on the following criteria:

  • Culture fit – do they share your values, are your goals aligned, and do they value you as a partner?
  • Profitability – is your working relationship profitable, or are they draining so much time and resource that you’re actually losing money from working with them?
  • Type of work – is the work you do for this customer aligned with your team’s strengths? Is it work your team enjoys?
  • Working relationship – does the customer value the work you’re doing, or do you end up doing a load of last-minute revisions, and battling against projects constantly suffering with scope creep?
  • Impact on team – does working with this customer drain morale? Do your employees come off a call with this client energised or angry?

Understanding what a good and bad customer for your agency looks like is the first step in preventing your agency working with too many bad-fit customers. By assessing your existing customers, you can identify trends in types of work or types of customers that are a good or bad fit, and use that to develop your lead qualification process.

2) Develop a Lead Qualification Process

It’s important that you qualify potential customers as a good or poor fit for working with you. This initial qualification process is a good way to get a feel for the customer’s values and way of working, too, so you can start to evaluate whether they are compatible with your agency. You also need a clear understanding of the scope of their project, so you can identify whether it’s a good fit for your agency team’s skills.

With a defined lead qualification process in place, you will be able to identify poor-fit customers before you even start working with them.

3) Don’t be Afraid to Say ‘No’

Once you’ve identified a customer as a poor fit, you can’t be afraid to say ‘no’ to them.

It can be difficult to walk away from potential customers, especially if you’ve got cashflow problems or are a bit short on work. However, taking on a poor-fit customer, especially when you’ve already identified them as such, will cause you more problems than benefits in the long run. The short-term boost to your revenue might be tempting, but you need to very carefully weigh up the income against the cost in terms of staff time, morale and resources.

4) Review Your Marketing Activity

If you’re getting lots of leads coming in that aren’t a good fit for your agency’s services or values, there’s probably a reason. So it’s time to evaluate your marketing activity.

The best place to start is your website. Does the messaging on your website align with your service offering, the way you work and your agency’s key capabilities and values? It may be that you’ve recently taken on new employees and expanded your agency skillset so you can specialise in a different area, but your website hasn’t been updated to reflect that.

If you get the messaging on your website and social media right, so it’s truly reflective of your capabilities, service offering and values, you should find that you attract a larger proportion of good-fit lead, and fewer bad-fit ones.

5) Learn from Your Bad Customers

It’s inevitable that, from time to time, you’ll end up working with customers who are a bad fit for your agency. Perhaps at first they seemed like a good fit, but once you started working together you realised they were difficult to work with, draining your time and energy, and undervaluing your work.

If this happens, it’s important to learn from the experience. When did you first become aware of irreconcilable problems when working with this customer? Is there anything you could have done to improve the relationship and get it back on track?

When you stop working with this customer (at the end of a fixed retainer period or once your project comes to an end), it can be helpful to conduct a retrospective to evaluate the changing relationship, and documenting these findings so you can learn from it when taking on new customers.

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