Nobody likes to talk about being fired by a client, but it happens every once in a while to just about everyone in business.
If you've never been fired by a big client, maybe it's because you serve the general public where customers quietly hire and fire your products and services daily by deciding whether to do business with you.
Because, the fact is, at some point, someone you're working with may decide they no longer need your services, and they'll cut you loose, possibly in an abrupt, angry or awkward way.
So what can you do when a client fires your business?
1. Ask for a Referral
This may sound crazy at first, but as Mark Faust, a growth and turnaround consultant and speaker, points out, "Being fired doesn't [always] mean you failed or they didn't like your work. If you can, get testimonials and spin-off work."
Before you do that, however, ask what went wrong and if there's a way you can regain your client's business. It's possible to recover after being fired by a client, but only if you know what went wrong.
Of course, if you know that your client just wasn't pleased with your work—or you—then don't ask for a referral. Instead ...
2. Go to Their Competitors
"There's nothing unethical about going to the competition and using the work you did with the client as a reference," says Faust, who is quick to add that he isn't suggesting you do anything unethical, like sharing proprietary information. He also isn't suggesting you pretend that the executive who canned you would be happy to vouch for you. In other words, don't do anything that calls your integrity into question.
But the work you did for the company that fired you is part of your work history and experience, and if you feel your business is fully qualified to work with an ex-client's competitor, you could be shooting yourself in the foot if you don't seek out that opportunity.
"I think a lot of companies and consultants avoid going to the most obvious of places," Faust says, "the closest competitors of their former clients."
3. Conduct a Post-Game Analysis
If a referral isn't forthcoming and competitors aren't looking to hire you, at the very least, it's time for some Monday morning quarterbacking. If you don't figure out why you were fired, it could happen again.
Nick Niehaus, president of Connect Home Solutions LLC, a direct marketing startup, had two major clients drop him in the months before we spoke.
Each time a client fired him, Niehaus says his company, which has eight employees, lost 30 percent of its revenue. "That meant less hours for my employees, who work on a fully commission system, and it was a big hit in my income," Niehaus says. "For a small business, losing any client is usually a big deal, but very early in the formation of a business, it can be deadly."
Niehaus says he was too stubborn to simply give up and move on; instead, he did a post-mortem each time to figure out what happened. In the first instance, he realized his company's pricing structure didn't work. "We were focusing on charging too much for each lead," he says. "Our clients pay two separate fees for flyer delivery and leads, and our lead price is much lower."
The second time he lost another big customer he realized he hadn't educated the client well enough on how his business model works. Niehaus says, "We've switched our initial consultation to more of a coaching session for the customers who haven't worked with these kinds of leads before."
Michael Pavone also did some after-the-fact analysis when the advertising company he owns, Pavone, lost a client in 2007, which had been generating 30 percent of the company's revenue. Unlike Niehaus' company, however, the ad agency wasn't a startup—Pavone has been around since 1992, has more than 60 employees and generates around $30 million in yearly revenue. And while the major reason the company lost one of its biggest clients was due to forces outside its control, the executives at Pavone "circled the wagons and made changes," says Michael Duffield, the company's PR director.
Amy Beamer Murray, COO and a partner at Pavone, says they learned a lot of very valuable lessons from the firing. "In some ways," she says, "it was actually worth the cost in lost income."
But what if you determine the firing was unavoidable and nothing specific you or your company did? Then it's time to simply move on to your final step.
4. Accept the Loss
"Losing a customer always feels like a vote of no confidence either in me or in my business. As the only one in charge, that's hard to take," Niehaus says. "I think, as an entrepreneur, you have to know that bad stuff sometimes happens and all you can do is respond to it and address what you can."
"People have a view sometimes that the world is static, but 10 years from now, your best clients won't be your best clients," Faust adds. In fact, he recommends that every small-business owner who relies on a select number of clients for sales have a marketing plan that includes a chart showing which clients are the most profitable, which ones have the most growth potential and which ones you're most at risk of losing. Then, Faust says, you should create both a retention and replacement strategy for each client as well as a marketing plan so you're constantly trying to land new clients and revenue streams.
The faster you accept the loss and aggressively try to replace the client, the better off your business will be. Besides, it's almost inevitable that whether you're fired due to a lack of funding, an inability to give the customer what they really want or just because your client doesn't like you, you're going to lose clients—that's just the nature of the beast. But if you've planned ahead, you'll also gain new clients, too.
Or you'd better. As Pavone says, "You have to evolve or die."
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This article was originally published on August 14, 2014.