Firing a Client: Necessary Evil or Strategic Step?

Written by Konstantin Josseliani

A lot has been said in the industry recently about firing clients that suppliers do not like for one reason or another. These reasons may vary: low rates, excessive requirements, subjective quality assessment systems and, as a result, unjustified claims, delayed payments or failure to pay, poor communication, and numerous other issues.

Everyone knows the 80/20 principle, where 20% of your clients account for 80% of your business. These key clients are, of course, given special attention, but what about the remaining 80%?

Under what circumstances is firing a client the right thing to do for business development?

Let’s take a look at the most common situations when refusing to work with a client will not only do no harm but can actually do a translation company a lot of good.

1. The Non-core Client

This fairly common situation arises when a company starts working with a client that is not part of its target audience. This may have to do with the supplier’s specialization in a particular industry, the provision of specific services or volumes, or a preference for clients operating at a certain level of maturity.

It’s clear that the most successful companies in the industry specialize in certain sectors or services. They don’t try to do it all and they don’t take any client that comes their way.

Obviously, a non-core client will not fit well into the established production process and will likely detract from projects for key clients.

The only correct way to diversify a business is to create a production infrastructure that can handle requests from non-core clients while acquiring skills and experience in new industries and market segments.

Outside the company’s area of specialization, even a large project which at first glance seems profitable and promising will end up being unprofitable because it will pull resources away from the company’s strategic goals and key clients.

This is why the first step a company should take when developing a sales strategy is to clearly define its target audience and turn down non-core clients.

2. The Client With a Subjective or Undocumented Quality Assessment System

This is another type of client that will not be productive to work with, since it will divert considerable resources and destroy employee morale at the same time. Such clients can easily be recognized by how frequently they change suppliers and their large pool of vendors, because they keep switching from one supplier to another in the hope of finding “quality.”

These clients are characterized by excessive and at the same time highly subjective requirements, which are usually undocumented. These “requirements” are set by the client’s employees or hired reviewers. In the absence of a formalized quality assessment system, the assessment itself frequently depends on the reviewer’s mood and whether or not they like the supplier. A translation of the same quality can receive completely opposite ratings, depending on the client’s subjective opinion.

Since it is clearly impossible to satisfy such a client, and bearing in mind that constant subjective quality ratings will demotivate your employees and waste their time, it makes more sense to turn clients like this down from the start.

3. The Client That Does Not Pay Well or At All

Unfortunately, these situations are not uncommon. However, they primarily apply to the international LSPs that are often the clients of local SLVs.

Clients are often quite late in making payments. On the face of it, this may not seem to be too much of a problem, but taking into account the growing number of bankruptcies, it quickly becomes clear just how much of a risk you are running if your business does not receive timely payment for the work it has completed.

Another type of non-payment situation occurs where a credit line has been opened with a supplier, i.e. the client is always in debt to the supplier to a certain extent. This approach is just as risky as non-payment because, should any problems arise for the client, the financial burden is borne by the supplier.

It’s obvious that clients that either do not pay or do not pay in full are another type of client that is harmful to a business. They should be fired without regret.

4. The Unethical Client

This situation is encountered relatively rarely, but can cause significant damage to a company. A client may violate business ethics in its interactions with the supplier’s employees. This is a major cause of staff demotivation, which can result in losing not only a client, but also a loyal team member.

It is for this reason that such situations should be avoided. You need to encourage clients to behave in an ethical fashion.

We have highlighted four types of client that make it more difficult for you to achieve your strategic goals. It’s very important that you recognize such clients quickly and fire them without regret, freeing up resources to use in satisfying the needs of your key clients.