I don't know about your industry, but in marketing communications, the recent market volatility has triggered a tsunami of client churn and fishing expeditions for prospects that I haven't seen in years.
I think it's happening for three reasons:
1. The C word. Commitment can be a scary thing when businesses everywhere are shutting down stores and plants while downsizing thousands of employees.
2. Ignorance. Lots of customers and prospects don't know exactly what to expect of your business or how to measure success.
3. Know-it-alls. Others consider themselves experts in your field but, lacking their own resources, hire you and then proceed to second-guess your every move until they fire you, or vice versa.
Here's a list of tips you can follow to avoid toxic prospects, minimize churn-and-burn with new clients, and deepen relationships with those whose business you truly treasure.
1. Vet it or forget it.
While it's impossible to identify what I call "the serial client," it's relatively easy to check a potential client's past record in trade journals. Burger King, for example, has had a long-standing practice of switching agencies faster than it flips its Whoppers. Conduct some due diligence on the prospect's previous relationships with vendors and suppliers, and you'll avoid becoming the latest victim.
2. Show me the dollars.
The fintech sector may be white hot at the moment, but that doesn't mean the plethora of firms springing up to service it are all on the up-and-up.
In fact, some have been so poorly funded that they've told us they'd be counting on our publicity to generate their sales which would, in turn, enable them to continue paying us. To which I've responded, "Yeah, I think we're going to have to pass on that scenario."
And don't fall for the old line: "We want a partner who's willing to put skin in the game." The epidermis you save will be your own.
3. Get it in writing.
As I noted earlier, some churn-and-burn clients simply won't understand your value add and, as a result, will set unreasonable expectations in their own minds. Do NOT begin any relationship without both parties agreeing on the desired end result(s). And put it in writing.
Falling prey to misaligned expectations can be akin to going on a blind date: You're in search of Mr. Right, whereas he's just looking to add another notch to his belt.
4. Beware the board members.
Before signing a letter of agreement, take time to scrutinize your prospective client's board members or advisory council. If one, or more, happen to work in your industry, apply the brakes.
Board members who know your business can be sharks. They tend to whisper in the CEO's ear, and often suggest you're bungling the business and should be replaced (with a firm of their liking, of course).
5. Short the stock.
Make sure you fully understand a new client's end game before engaging. Many will tell you they're in search of a long-term, mutually rewarding strategic partnership. Once you're on board, however, some will change that tune entirely and ask you to do as much as you can to help them complete a hasty exit strategy. If so, say good-bye to anticipated billings and so long to a long-term relationship.
6. Management turmoil.
We're often approached by a newly hired CMO who works for a company that's just completely changed its senior management team.
Again, conduct your due diligence before diving in. Is the prospect just another variation on United Airlines, which has had five CEOs in three years? If so, walk away.
Frequent management turnover should be a road sign that more speed bumps are just around the corner. Take the first exit and find another, more stable client.
While I think these guidelines will help you avoid hopping into bed with the wrong customer, it is by no means foolproof.
For every serial client my firm has knowingly avoided, we've still fallen prey to the poseur looking for a one-night stand.