There’s always something to howl about

Get them [not] to sign on the line that is dotted…

Here are a few questions.

We all know that there are clients who will cost us – either in the short or long runs – more than they’re worth in terms of value to us. What steps do you take to account for potentially needy/troublesome clients? Do you factor that into a price you charge? Do you refuse to take them? Do you take them on a contingency basis, meaning that they must do XYZ before you will be hired by them?

I’ve recently turned away several clients who I knew could pay me, but who I suspected would be too much trouble in the long run. I think one of the benefits of running your own business is that you get to decide who you want to interact with.

I’m trying to develop a graceful way to reject clients, since I don’t want to damage my reputation. And the sometimes the kind of people I reject are the kind of people who, if they had a mind to do it, could damage my reputation.


16 Comments so far

  1. Greg Swann July 27th, 2010 8:44 am

    Time-tested Realtor language: “I’d rather turn you down than let you down.”

  2. Marc Knight July 27th, 2010 9:58 am

    Great post. Our industry is all about building rapport…with the right people. This is something you learn through experience. There are a lot of ‘clients from hell’ out there and dealing with them can be quite a drag, especially when you’re trying to do your best and yet you don’t get any appreciation for it and your relationship with them appears to drag on with no end in sight. Learn to set your boundaries, stand up for yourself and find out where your point-of-no-return is.

  3. Jim Klein July 27th, 2010 11:04 am

    These are awfully interesting questions, Damon. Greg’s got it right for how you actually do it, since it leaves the communicated perspective as that of the client, which is always critical.

    It’s also a big difference between the professions and a typical business, selling products or services to the general public. For a ton of reasons, mostly mathematical, in business you either grow or eventually die. Plus, the loss of even a single customer tends to magnify…that customer has a large circle of friends, family and acquaintances.

    The best advice, which I stupidly chose to ignore, is “Don’t go into retail!” Selling to other businessmen is a whole lot more peaceful than selling to a zillion more individuals of the general public.

    But once you’ve made that fateful mistake, there can be real problems with letting any customer go…always within the bounds of reason, of course. The best resolution by far is resolving it with pricing. In your case, you might be able to price accounting for aggravation. In more standard business situations, the general pricing has to be done accounting for all sorts of exception handling, including this particular sort. Remember, if there weren’t efficient exception handling, accounted for in the pricing structure, nearly anyone could do whatever any particular business is doing. Any restaurant can buy and sell food alright, but not every one can satisfy the desires of a wide range of people.

    Also, I’ll let you in on a little secret, which might be relevant to your particular situation. Being able to please folks who are nearly impossible to please, goes /tons/ farther reputation-wise than pleasing those who are easy to please. This is obvious on its face–when a really sweet guy tells his friends how happy he was, it doesn’t mean too much to others, since he says that about everything. But when a crank who’s never happy with anything is happy with /you/, then other people really perk up and notice it. In some situations, probably yours, this can be an invaluable marketing tool. Even irrational people have some rational friends and family.

    Business-wise, with a focus on growth, the retort to any question about letting any customer go is, “Who are you going to replace him with?” Lots of businessmen say, “I don’t give a hoot; there are plenty more fish in the sea.” Every single one of them, at least in a standard business context, is doomed to become an ex-businessman, for that sea is actually finite.

  4. Damon Chetson July 27th, 2010 12:19 pm

    Thanks for the thoughtful response Jim. It gives me something to think about. That said, I don’t think the sea is finite in terms of what I could possibly do and make a good living. Since I’m in a professional business, as opposed to a retail business, I think avoiding troublesome clients is important to building a profitable business.

    My time and patience are finite, and to the extent that what I offer is my time in exchange for pay, I need to maximize the return on my time.

    If I were selling a widget, and at the end of the day, dealing with a difficult customer were simply some additional time and aggravation in order to sell that widget, then I think your analysis makes sense.

    But if I’m selling advice and representation, then that additional time can be fatal.

    Now, I could “price” the additional aggravation, but in my business, once I commit to taking on a client, it can be very difficult to end the relationship before we finish our work together. In other words, I’m in it for the long haul. That makes pricing the additional aggravation very difficult in the context of a somewhat open-ended commitment.

    And given that there are almost always other value-added uses for my time, I don’t think the concept of turning away problematic clients is on its face wrong.

    Now, perhaps I’m too quick to turn away clients. Or perhaps I’m too slow to turn them away. But figuring that out is all about fine-tuning.

    So I wonder whether your approach works for any client-based business.

  5. Cynthia Hoskins July 27th, 2010 6:07 pm

    This is a great question and something agents here on the Big Island of Hawaii face often, especially when we get inquiries from people who live on the mainland (or in another country) who may very much want to move to Hawaii but are in no position to realistically consider the move.

    There comes a point in my conversations with people who haven’t visited yet when I have to ask the questions “Are you truly willing to buy sight unseen? Or are you planning a visit in the near future?” How much time I can invest in that client after that conversation very much rests on the answer. I’ve found that I an having this conversation earlier in my relationships with new contacts as the years pass.

    Appreciate the earlier discussion in the comments. Hearing new perspectives on the question is informative, though I’ve found it is often good to go with instincts when those instincts are honed by experience.

  6. Tim Shepard July 27th, 2010 7:47 pm

    Great topic and something that all of us in business for ourselves have to deal with frequently.

    In college, my econ professors always spoke of economic costs. I came to understand the true meaning of that phrase much more clearly after less than a year selling real estate than I ever did in my previous 10 years as a company man (salaried employee).

    Fortunately, I have always generated a ton of leads and very quickly figured out how to weed out the majority of the bad apples from the beginning. However, a few still get through and that’s where I struggle.

    What happens after you spend time developing quality relationships with a prospect and then realize you are wasting time? How do you end those?

    These are relationships that you are trying to end, not future business that you are turning down. One liners won’t work…it’s more complicated than that.

  7. Jim Klein July 27th, 2010 9:38 pm

    The thing is, Tim, “ending relationships” does translate to “future business that you are turning down”…at least some. Now it’s admittedly debatable whether that’s worthwhile or not, but that’s still what it is.

    Cynthia, I agree with what you wrote but I don’t think those people really fall into the class of customers or clients. “Shoppers forever,” at best!

    I agree, Damon, that my comments don’t directly relate to professions in many cases. Still, the one about “pleasing the unpleasable” does…maybe especially in law. People that know me, know my opinion of the law and by extension many lawyers, so if I say I know a marvelous lawyer, they perk up. Coming from me, it sounds like an oxymoron!

    It’s not altogether rare that a single case can make a huge difference in a lawyer’s career—those kinds of cases often take an odd road to meet the lawyer they do. But you know all that, and everything’s just a judgement call anyway. Ultimately the right thing to do is that which more readily accomplishes what you’re after.

  8. Robert F. July 28th, 2010 7:36 am

    It is much better to turn the client from hell (CFH) down, rather than let him/her add stress to your life that causes you to perform worse elsewhere.

  9. Jim Klein July 28th, 2010 7:53 am

    I agree in the way you mean, Robert, but what if that same client were to “cause” you to perform better? That’s the meta-point of this blog, I’m sure, that it’s a physical impossibility for the client to do either.

    Speaking of meta-points, this goes to an apparent (apparent!) contradiction between production and ataraxia. Your suggestion clearly enhances ataraxia on its face, and I’m all for that, but it remains in question as to whether or not it actually increases production…at least in the long run. Me, I go to an even higher moral principle—“Can’t we have both?”

  10. Sue July 28th, 2010 7:30 pm

    Well this is an easy one if you own your own business – just tell them you are really busy with clients at the moment and would not be able to provide them with the service they deserve – then flick them over to your worst competitor!

  11. Jim Klein July 28th, 2010 8:39 pm

    You’re exactly half right, Sue. Show me a restaurant that does that, and I’ll show you some property that will be for rent soon. Again, this is “within the bounds of reason” and there’s no morality involved because any business owner should do whatever he decides is in his own self-interest.

    There are two basic kinds of businesses. The one seeks to maximize profit per unit without regard to the number of units; the other seeks to maximize profit by increasing the number of units sold profitably. The dream former business might be building ten million dollar homes—not a lot of traffic, but very, very nice margins. The dream latter business would be the straw concession for McDonald’s—not even a penny a unit, but an awful lot of units.

    Most professionals are the former; virtually every business listed on the exchanges is the latter. While the business’s sole purpose is enhancing the life of its owner(s), its sole function is providing value to customers. This is unidirectional—the function achieves the purpose. I sense a bit of inversion here, whereby the purpose is supplanting the function. I’ll grant you that nobody can afford to waste time–that may be the greatest sin of all–but if you’re seeking to grow a business, the very notion of “turning away business” is nearly a cardinal sin.

    Of course, most professionals aren’t really seeking to grow a business, and that’s cool. The presumption is that his/her time will be full in any case, and so it should be as profitable as possible. That’s alright, but it’s not growing a business. I wonder what the Redfin folks might have to say about any of this.

  12. Mack Linan July 29th, 2010 11:30 pm

    Great post, I think that we all (at least at some point in our careers) deal with having to take a serious look at who we do and do not take on as clients.

    As for being able to graciously turn someone down? I offer this… I am actually not taking any clients in that area, but I would love to refer you to my associate “????”. Of course, this only works to save your reputation if you know an aspiring young professional who is willing to work way too hard and put up with way too much just to get a foot hold in the business. Trust me, you won’t have to look far.

    I clearly remember what it was like being just a year or so into the real estate industry. I took any lead I could get because I was hungry! I did not have much of a sphere of influence so when another agent in my office would hand me a referral I would treat it like gold. It may have been scraps to them, but to me it was opportunity.

    That being said, my advice would be to keep an eye on your younger (not just age-wise) agents. They can come in handy when you do not have time or the stomach for that demanding prospect.

  13. Jason Brown July 30th, 2010 7:12 am

    Many buyers expect you to answer all of their questions, without the need to answer any of your questions. You have to remind them it’s a two way street. I had one email the other day where the “buyer” ignored my questions about whether they were Pre-Approved or had a home they must sell first, before buying a home. I politely asked a second time and was told they were buying a home but due to my inappropriate questioning they would not be using my services. Made me laugh and I felt fortunate that they wouldn’t be “using my services”.

  14. Dan Connolly July 30th, 2010 12:43 pm

    Sorry to be late to the discussion, but I have a couple of points. While I know that figuring out who to work with is an important skill, there are a couple of things to remember. Point one: If you like the license, you want to treat all clients equally, or you may find yourself on the wrong end of a discrimination lawsuit. Point two: If you try to weed out clients based on whether you think you are going to make enough money to justify the work involved you may be throwing out the baby with the bathwater. I had a client who took a long time to buy his first house which was 65,000. The second one was 119,000, the third was 189,000 and the fourth was 650,000. The sale of his first house was 89,900, the sale of the second was 169,000 the sale of the third was 350,000 and the last one, they are still living in that one. Add up all of those transactions and ask yourself if spending a lot of time helping them find the 69K house was worth it!

  15. Jim Klein July 30th, 2010 2:10 pm

    Thanks for the story, Dan, and it goes to my point. In my case, my two largest accounts (by far, there’s not even a close third) were both gotten because I was the only guy crazy enough to put up with their extreme challenges early-on. And in both cases, I had no idea where they would lead. It was just my “hunger” as a struggling businessman, wanting every drop I could get. In one case, it resulted in downright cost on my part, which nearly anyone would call insane. But as it turned out, it wasn’t.

    To me, it relates to the cliche, “Don’t judge a book by its cover.” There are a few car salesmen out there who missed perhaps the best account of their careers because I don’t look or act the part. “Best accounts” are usually “weird accounts,” and it’s often impossible to tell up front.

    It’s different for professionals, I admit. But as far as pure business is concerned, if you’re there to sell, IMO it’s a mistake not to sell.

  16. Teri August 1st, 2010 5:54 am

    I recently referred out a potential client because of some of his side comments and my gut feeling. He now has the name and number of an experienced *male* colleague if he’s serious about buying a house. No sale is worth the amount of unease and degradation I would have had to put up with just for this transaction.

    In this case, I told this potential client that to get the best representation in this transaction, he needed his own representation and as the listing agent, I can’t provide that. All of that is true and I’m very comfortable with my decision.

    If it’s about the house, this guy cannot complain as the Realtor I referred him to is ethical and more experienced than I am and I would be comfortable referring my family to him. But if this guy just wanted to chat me up, or worse, and we don’t yet have an offer in writing so I suspect it was, I made a very smart move. Go with your gut, Damon.

    “I want what is best for any potential client, so for that reason I’ve developed a referral network of lawyers that I trust and would send my own mother to. We each have shown strengths in specific areas, and here’s the lawyer that I think could best help you” or some such thing.