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Ending a client relationship without burning bridges

Will Hill, MBA  Product Manager — Tax Professionals Advisory, Thomson Reuters

Will Hill, MBA  Product Manager — Tax Professionals Advisory, Thomson Reuters

There are a variety of reasons why a client relationship should or does come to an end. Sometimes firms don't pay enough attention to how they play a role in that ending and making sure they end well.

In this episode of Pulse of The Practice, “Ending Client Relationships Well”, the discussion is around what to do if there comes a time when a client may no longer be a good fit with your firm. What happens when there are clients that really aren’t a match anymore unless they engage differently with your firm?

What can you learn from ending a client relationship?

Ending a client relationship can offer some valuable lessons, but why might such a relationship conclude? A client relationship might need to end if the client’s business has transitioned. Perhaps they’ve outgrown the size of where you would really prefer to them to be. Maybe they’ve sold their business or become an individual-only client. If a client isn’t operating the way that you expect them to, it can cause frustration with the staff or create negative service levels, causing your margins to take a hit. But If a relationship ends professionally, it can at least be a learning opportunity.

Ending a client relationship gracefully is, if nothing else, a good way to continue to hone and shape your firm. One of the things you can do to learn from the experience when ending client relationships is have an exit interview. Take the opportunity to get a better understanding and see if there is something that your firm could do differently. There are potentially a lot of good lessons you can learn from the reason why they are considering leaving. Nine out of ten times, it’s some level of miscommunication that causes a rift with a client, or it’s possible that you just you weren’t seeing eye to eye.

More often than not problems can arise around a misunderstanding of the value of your services. Perhaps the client doesn’t really understand what you’re doing for them. In any case, there’s a lot to learn about why a client decides they’re going to transition to another firm. Remember that when you take on a new client, they are potentially ending their relationship somewhere else, so the question is: why?

One client loss could also potentially impact your service to three others from referrals, so you have to keep that in mind when ending a client relationship. You’ve got to be able to elevate that relationship to another level or be prepared to let it go. Consider what your staff goes through… if you have a client that none of your staff wants to talk to, you need to pay attention to that because you could lose a good staff person for that reason as well. In today’s day and age, social media, word of mouth, and referrals are everything. If you’re going to send a client out the door, you’ve got to be careful how you do that, but you shouldn’t be prisoner to it.

Give clients recommendations as a good business practice

One approach you can take when facing a client possibly leaving your firm is be more proactive.  Don’t give up to easily and see if you can salvage the relationship by leveling up their service. This might sound counter-intuitive, but if the client is unhappy, try to discern if there something else, some level of service that will satisfy them? This is something to consider before giving up on the client relationship. It’s important to explain what your firm’s direction is, and if you were grading your clients an A to D, could that D relationship become an A relationship? Do you have to change the scope of what you’re doing? What could you do to strengthen the client relationship instead of end it? Sometimes you can keep clients that you thought weren’t a good fit anymore because your firm takes a different position. It is possible to save the relationship, but you may have to consider changing the nature of that relationship.

You might say to the client, if you just need someone to prepare your taxes, do this task. You can give them that recommendation to say this is more or less the skill sets that you’re looking for in the next person who’s going to serve you. In any case, if you do decide to end the client relationship, it is good business to provide recommendations for them as they go forward. You can offer them a couple of firms they may want to go talk to that might be a better fit.

Ending a client relationship on a positive note

When ending a client relationship, focus on ending things well so you don’t burn bridges or obstruct future referrals. The accounting business is often largely word of mouth and offering your departing client some options allows you to feel good about the conclusion of the relationship.

Paul Miller talks about it like this, “In general, no one likes ultimatums. So, let’s say we have a relationship with a client for 10 years and I sit down and say, ‘this is the way it is going forward.’ What you could do to soften that is to say, ‘hey, this is a direction we’re going as a firm. This is really where we need our clientele to be. We no longer feel like we can best serve you. So what we’re going to do is complete your 2018 tax preparation, but beginning in 2020, this is what we need to do going forward.’”

If you are going to end a client relationship, be sure to give them some runway so it’s not a big surprise. If they decide to leave sooner, at least you’re not leaving them in a lurch. Don’t wait until April 1st, because It’s important to give your clients some options. Just treat clients well regardless of the reason for the ending of the relationship. The vast majority of people are going to understand your position if you’re transparent and honest with them.

If your staff members are feeling discomfort with a particular client’s interactions, chances are the client is uncomfortable too. While we don’t want to think about clients walking out the door, sometimes it is the right thing to do for both the firm and the client, and it’s important to do it well.

 

Listen to the “Ending Client Relationships Well” episode of the Pulse of the Practice podcast on your preferred platform (Google PlayApple, SpotifyStitcher) or here.

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