Losing Clients: How To Avoid It & Handle it Well

Alex Panagis

Hey – I'm Alex, the founder of ScaleMath. Undeniably obsessed with helping our clients grow their businesses.

@alexjpanagis

Nobody likes losing clients just like nobody likes losing money.

But in business, getting emotional about a specific client is the worst thing you can do.

At the end of the day, in an agency, your goal is to help a business by delivering an incredible amount of value in results that they wouldn’t be able to get on their own.

Please do leave a comment if you disagree, because this is how we look at things here but we’d obviously love to know if you think about it differently. ?

If you didn’t deliver the incredible amount of value (in results or output) and lose a client, then you may as well stop reading this article and start focusing on changing that. Improve what you offer and make sure that it does solve a problem as well as help companies.

If you do the above and still lost a client, the first thing to remember is not to lose confidence in your work. The first thing we did when we lost one of our first clients is realizing how much the former client will eventually regret their decision to stop working with us. We knew that the work we did for them while we were working together drove absolutely incredible results (this is not to brag, we really do mean over 1000% ROI) because we had and still have the data to support that.

And the second thing is, remembering that as an agency losing a client that wasn’t able to understand the value of the services provided or was taking their business in a direction that we as a company didn’t support (or didn’t want to support) puts you in the perfect position. Here’s why:

Their business is not your business.

If a company’s founder starts making decisions that we know are going to drive their business into the ground, agencies should realize that they are able to do fantastic work, so why on earth would they want to do it for a company like that? Whether we terminate the relationship with a client because of misaligned values or questionable practices or they do eventually because they notice the resistance from our end to support their decisions and misaligned practices across the board, it’s an equal opportunity to find a truly great company to work with.

The type of client you can (once again) actually be proud of and your agency enjoys working with.

The key takeaway is to remember that at the end of the day all of the work that you’re doing for a business isn’t building an asset of your own. You end up with nothing but your monthly retainer. It’s really easy to forget because agencies that care will inevitably get emotionally invested in the success of a business and there’s nothing wrong with that as long as you remember that it isn’t going to all be yours.

Start with Why

1. Is there a specific reason?

Ask yourself: Are you able to attribute the reason that you lost a client to something specific?

For example, Chris Castillo – the admin of a Facebook group called Supercharge Your Web Agency shared a story in which he described the end of the relationship with one of his very first clients.

After delivering incredible results for this business over a trial period of 3 months, the company still decided not to work with Chris.

Why? Easy, not because he was any less capable than the other agency. Simply because it was less convenient for them to go to work with multiple people outside of their organization for different aspects of their marketing strategy.

This is a perfect example of why you should never jump to conclusions about why a client has decided to move on. Sure, Chris could have easily made the decision to capture the additional revenue by just offering additional services to this one client, but he made the right decision and chose not to.

Focusing on what you’re good at is a great value to have, and shouldn’t be something that you sacrifice or consider sacrificing when losing a client. This is mainly because it will hurt you in the long-term.

You’ll have less capacity to take on other clients that solely want the services that you’re fully prepared to provide and will end up spreading yourself thin.

So whether you’re on the verge of losing a client and are reading this article to find out what you can do to keep them or you’ve already just lost a client, ask yourself whether you’re able to attribute the reason that you’re in this situation to something specific.

And then, ask yourself another question: Is there something that you can do about it and want to do about it?

2. Did they voice their concerns?

Ask yourself: Could you see this coming? Were there any warning signs?

In most cases, a client won’t suddenly – from one day to the next – say that they would like to terminate their relationship with your agency.

There are usually tons of warning signs, however, sometimes more obvious than others.

If you start to see the friction develop in your relationship with a client, it may be a pivotal moment for your business. Here at ScaleMath, for example, we once had a client who wanted to partially “buy into” our agency. Of course, this was a nice surprise for us but we were also not at all in a position where we wanted to give up control, sell a percentage of our shares or welcome a partner.

At the point when we made it clear to them that this is something that we’d unfortunately not be interested in doing together, we knew that our days with them were likely numbered.

Could we have done something to keep this client?

Yes, easily.

But, in this case, the better question is did we want to?

And, to that, the answer would be no. We knew this wasn’t a time for us to appear vulnerable, and thankfully we actually weren’t and our business was not at all reliant on this one client, so we had options.

It’s easy to sugarcoat losing a client by sharing stories about my personal experiences or those from others where we really did a great job of positioning ourselves well to the point where we were able to freely make decisions without sacrificing our businesses.

Just like Chris was able to say no to offering additional services because he wanted to focus on providing a select few services but excelling at those, we were also able to say no to a proposal.

So, what do you do when your options aren’t open?

To be quite blunt, when your options aren’t open, it can seem devastating.

You’ll have to make a decision that will help you keep this client and your business in the short-term, but will limit you in the future. It’s very difficult, if not impossible for me to write a blanket statement that applies to every single business and how they should deal with losing a client.

As a matter of fact, in my opinion, that would be irresponsible.

However, after all, this section of this article is all about keeping a pulse on your relationship with your client and making sure that you’re on top of what’s going through their minds. If you’re able to do this and don’t lose touch with them – not only are things like this less likely to happen because they’re more likely to enjoy working with you but you’re also going to be far more likely to be able to do something about it. If you realize that your relationship with a client is about to end in 1-2 months (optimistically speaking) then you know that you have to dedicate some additional time and resources into looking to replacing the lost revenue.

It’s also worth mentioning, that the clients that agencies tend to lose are also the most problematic. This is a sad truth, but you all know what I’m talking about:

  • The clients that aren’t capable of seeing the value you provide (this can be your own fault, but oftentimes even if you do make an effort they’ll still fail to understand).
  • The clients that are demanding and expect you to answer emails far more quickly, make irrational decisions and work endless hours. Again, this comes down to undervaluing you as an asset and your agency’s time. No, I’m not going to personally take on an extra 30 hours of work per month without charging more, this is the textbook definition of scope creep.
  • The clients that – quite frankly – don’t give a shit about your business and fail to realize that your success benefits them in many ways.

The last type of client is a tricky one, especially because sometimes clients find it hard to see that supporting your agency as a business is something that directly helps them.

By making you work for less, or expecting you to do work outside of the original scope, not only is that client not allowing your agency to excel, they’re actually extremely short-sighted. These kinds of clients also fail to understand that taking them from point A to point B may have been easy with your agency’s help and with a smaller budget, but taking them to point C isn’t going to be possible without an increase in budget.

The best clients will realize that if you grow as their business grows, it’s the ideal situation.

You as an agency can take them to a position where you’re capable of charging more, delivering even better results and you’re both extremely happy.

However, sometimes this growth happens independently and at varying rates.

When this happens, the client will either outgrow you or your agency will outgrow the client.

The client will either move on to a larger agency with more capacity since they have a bigger budget or you’ll drop the client in pursuit of being able to onboard clients with a bigger budget.

3. Is it something that was out of your control?

Ask yourself: Ok, if you saw this coming, could you have done anything about it?

So you saw this coming, but was it really out of your control? If your business was really relying on the revenue from a specific client, which is obviously not an ideal scenario, is there something that you could have done about it?

The earlier examples that Chris and I gave, are situations where we weren’t willing to make a compromise mainly because we didn’t have to. We knew we didn’t really need that one client and weren’t willing to make what is a bad long-term decision just for the short-term revenue.

However, one could argue this situation is ideal. I’d say it wasn’t ideal because in both cases, we’d still have preferred to work with our clients, but it’s certainly easy to say. So if you are relying on a client, look out for warning signs and start weighing out what decision you’ll make if you’re faced with scenarios like the ones that we were put in.

Would you just offer extra service to keep the client? or Would you bring on a client as a partner in your agency?

You’ll never know what situation you’ll be presented with but you should always keep a pulse on your business so making decisions like this shouldn’t require much deliberation.

Managing Expectations

While there is certainly a lot that goes into managing expectations and this heavily depends on the agreement you’ve made with the client during the onboarding process, it, unfortunately, doesn’t stop there.

Consistently managing expectations and not allowing for scope creep (as we’ve covered earlier) to take place early on is crucial. As once it happens, it will become an expectation.

Whenever we try and approach a company that fits our profile and would make sense for us to work with, we ask ourselves the following questions:

  • Are we trying to sell them on something that they don’t need?
    We make a point of never doing this and are extremely transparent & honest with both clients and prospects. If we think that there is someone more suitable to do something for a business, we’ll point them in that direction and simply won’t accept their business.
  • Should they invest their marketing budget elsewhere?
    Seriously, put yourself in their position and ask this question – if you would own their business, would you choose to work with your agency?

Whether it’s the client’s inability to see your value or a personality clash that brings your relationship with the client to an end, the one thing you should never lose your client over is your inability to effectively manage their expectations.

This can come in a variety of forms:

  • How often and how quickly will you be capable of responding to their questions and emails?
  • Will you be at their disposal 24/7?
  • And how quickly can they see results?

The list is endless, so, in this case, we really could go on forever.

Amit from Amit Digital Marketing shared a story in which he emphasizes that it’s not only important to manage their expectations once you’ve already closed them as a client, the process has to start before. In this scenario, Amit’s agency signed a client and then lost them shortly after once it became apparent that they valued metrics over relevance. It came to a point where his agency had built 1-2 links and they already wanted to stop.

The takeaway: He wasn’t adamant that he wouldn’t be using metrics as a focal point. Again take note ?, their values weren’t fully aligned so this also isn’t the type of client that Amit wants to work with.

In addition to this, there are often warning signs when working with your client so you should always listen to your gut. Amit’s agency once also signed up someone who he knew was going to be extremely difficult and unnecessarily picky from the start. He foresaw the entire situation but pushed on and signed up the client anyway. Eventually and inevitably they lost this client because they were checking every single email the agency was sending as a part of outreach campaigns. Then, there came the day when the first negative response to an outreach email came back (with something along the lines of “I’m not a fan of this content…”) and the client completely lost it saying that their reputation was at risk because of them.

Sidenote: In case you’ve never been involved in email outreach in some way or another, this is very common. You’re building relationships with other site owners and sometimes an email can land in the inbox of someone that’s not just having a rough day but jealous of what you’re accomplishing. This has happened to me personally in the past as well – yep, there are some really petty people out there ?

In hindsight, Amit says he should have seen the warning signs and steered clear from working with this client from the beginning. Sometimes things are out of your control and your client’s personality may clash with yours…

A similar experience that we can learn from is one from Aditya Sheth from Venngage:

One of the biggest mistakes as a freelancer/agency you will probably make is not clearly outlining the problem and not having a strongly defined scope. The mistake I made with one of my earliest clients was trying to do too much with only 8 hours per week that I had committed to him because of not having defined the scope well, I failed to deliver the right results and lost the client in the process.  

I told the client that I will improve their retention but this is a poor example of scoping. A good example of a tightly defined scope is, “I will increase retention by 10% by running experiments using email and mobile push notification channels”.  

A tight scope gives you a clear focus to work within the limited hours you have and also communicate a clear deliverable/result you will deliver to your client. Ruthless focus is the key to succeeding as a freelancer/agency”.

Of course, always trying to do as much research and qualification as possible before onboarding a client is important, but – to some extent – you can never truly know if your agency and your client are a good fit until you start working together.

Lessons You Can Learn from Losing a Client

1. Never lose focus on your own business

Don’t treat your own business as a secondary focus.

If you run an agency you likely already know this but there are truly two types of work:

  1. Working on your business
  2. Working in your business

Working on your business involves doing things to find new clients, positioning yourself and perhaps even things like building a personal brand, as well as producing content for your own website or YouTube channel.

On the other hand, working in your business involves everything to do with client work. So everything from the actual work that your agency is offering/doing to communicating with clients, billing, and continuously managing expectations, hiring/coaching employees as well as measuring what’s working so you can make suitable recommendations.

It’s easy to focus on #2 and work in your business day in and day out because, after all, it is what pays the bills and therefore does feel like the most important type of work that you have to do on a daily basis. Obviously the goal with this type of work is to continue satisfying clients so that you avoid losing them.

That being said, I’d argue that working on your business is equally if not more important than working in your business. At the end of the day, if you take the time to produce content, and position yourself as an authority – you’ll actually end up solving a number of problems.

Existing will trust you a lot more and start treating you accordingly rather than some low-level employee.

More potential clients will be waiting patiently at your doorstep so that when you lose a client you can pick the ones you want to work with most, and the list really goes on. Now, tell me – doesn’t that sound nice?

3. Keep building your funnel

Always set aside time each week to drum up new business. Even if this just means taking a referral partner to lunch or asking a current client for a recommendation. Getting new work takes time, so you need to start well before you lose any business.

The differences between agencies that can scale and those that can’t is sales. Unfortunately, it has nothing to do with the practical ability to deliver results, your team or even you as a person.

This is something that took me a while to realize and I was quite disappointed when I did.

After all, take a look at the successful agencies doing something similar to what you’re doing – are they doing it better? My best guess is no, because that’s the answer for us at least.

So, what’s their competitive edge?

Simple: They’re able to sign contracts that you’re struggling to get without breaking a sweat.

And that’s why one of the most valuable skills a founder can have remains to be sales. Yes, even in 2020. You don’t need to be the world’s best SEO.

And nope, not even the best marketer. You can build a great team for that.

What you do need to be able to do is present your value, find potential clients and close deals.

On the bright side, if this hasn’t convinced you yet, there is one other advantage to mastering the ability to find clients. You’ll never have issues with scaling. If you’re able to “easily” close new clients, you’ve solved all of your scaling problems because you’ll have enough cashflow to throw at experimentation and hiring new team members.

That is, until you master it, and can then stabilize and focus on improving profitability.

4. Never rely on a single or handful of clients

In reality, this one is quite obvious but it’s easy to forget when you get caught up servicing existing and seemingly happy clients.

In no situation is it ever ok to rely on a handful or even a single client that if that client were to leave it could put your business at risk. And no client should occupy more than 50% of your total revenue.

This may not be the case for you but one of the main reasons I really love running my own business is that no one person has control over me. Growing up I was almost always and only around people who weren’t employers, they were employees (sometimes not at the best of companies).

The result: they constantly had bags under their eyes and feared that their employer wouldn’t renew their contracts.

If this is how you feel with clients, then you may as well be an employee so make sure that you never get into this position and if you do, do everything in your power to avoid staying in it.

5. Never burn bridges

There have been plenty of times when someone I’ve worked with leaves for a new company.

If we’ve left things on a good note, we’ve found that they will always eventually come back wanting to work with us again. In most cases, though usually once they do if the relationship ended in spite or unprofessionalism from their end then this is not something that we will agree to.

However, that doesn’t mean you block them on social media and talk bad about them to other people, that’s just unprofessional. You can still wish them a happy birthday, happy holidays, etc, even if they don’t wish it back, they’re the ones making themself look childish, not you and that’s the way it should be. Though it is worth mentioning that my rule of thumb for all kinds of messaging is if I’m actively ignored once (i.e. I know for sure that they’ve read my message and deliberately didn’t reply), they are officially dead to me. ?

Be professional and it will pay off.

6. Be positive but lose the emotion

Really, all of the above points boil down to these two: Keep a positive attitude and don’t make rash decisions based on your emotions. Indeed, losing business means some extra time to reflect and make your business even better.

At the end of the day, the kind of client you end up losing or aren’t able to retain is typically (if not always) going to be the type of client that you already don’t want to work with anymore. Be honest with yourself, how happy were you when you no longer had to deal with that one client you lost? Well, I can, for sure, tell you we were over the moon to lose the client that inspired this article. That may sound stupid, and out of context, it is.

Let’s cut this section short by saying that – as is likely the case for many of you – we had an incredibly good relationship together at the beginning but it deteriorated very quickly after they started making poor decisions and asked us about a joint venture, etc.

Conclusion: So Alex, I just lost a client – what’s next?

Ah, so you’ve reached the end of this article and don’t know what to do next. Well, first of all, it goes without saying that I’m very grateful that you stayed to the end and are reading this very sentence.

As a matter of fact, I have something that I recommend anyone who just lost a client or is on the verge of losing a client should check out right now:

Join the ScaleMath SEO & Marketing Facebook Group today and start learning with like-minded individuals in your industry. It’s completely free to join and it would be a pleasure to have you there – fellow members are waiting and actually looking forward to helping you.

Have something you’d like to add? I’d love to know what you think ? so please feel free to leave a comment below! ?

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