Eight Reasons Why You Lose Clients – And What To Do About It

The playwright Oscar Wilde defined a gentleman as someone who “is never unintentionally rude.” Likewise, you never want to have a good client relationship end unintentionally and without a sound reason.

Unfortunately, relationships often avoidably come to an end. Clients usually just vote with their feet and don’t carefully explain to you why they are not giving you any more business. This can lead to an after-the-fact rationalization that the relationship ended due to factors entirely outside your control.

Here are eight reasons why you may lose a client, and steps you can take to correct each situation.

1. A reorganization or executive turnover

Does this sound familiar? One of my clients told me: “I spent several years developing a relationship with a vice president, and then he was squeezed out in a reorganization. The new head has a relationship with a key competitor of ours, and we’ve heard he may bring them in.”

Executive turnover is higher than ever. It’s a fact of life. Get used to it. Here’s how to make the best of these situations:

Build many-to-many relationships with all your key clients. If the relationship depends on one single executive, you are doubly exposed—the client could leave, and your own relationship manager could leave!

Make sure you are connected to a senior executive above your day-to-day client. That relationship will be worth its weight in gold when turmoil hits.

Ensure you’re getting credit for your work and the value you’ve added is appreciated broadly in the client organization.

Work hard to get the departing executive to vouch for you and introduce you to their replacement (of course, if you’ve built a good relationship with them to begin with, this shouldn’t be a problem!).

2. A one-off or temporary need for your services.

Sometimes, clients only have a periodic need for what you do. A college may hire a fundraising consultant only once every five or ten years, when they do a capital campaign. A corporation might only need the services of a construction company when they build a new headquarters building.

The first and most important thing you need to do is develop additional products and services that meet recurring needs. Ask yourself, “What adjacent, ongoing needs can we help the client with?” For example:

A fund raising consultant can help a university run their annual campaign more effectively

A construction company can help clients manage their facilities and do sustainability audits

An executive search firm can do talent planning, executive assessments, and leadership coaching in-between periodic searches.

Second, you need to add value in-between major engagements. The client needs to perceive you as a trusted advisor in good times and lean times—when you’re collecting fees and when there’s a dry spell.

Are you calling on all your past clients each year, and adding value by sending them insightful pieces of thought leadership that addresses their most challenging issues?

Third, if your clients only rarely use what you offer, make sure you get referrals and testimonials from every single person you do business with. Your marketing strategy must be to spread a wide net, and those references will help you enormously.

3. A financial crisis or profit squeeze—and a lack of budget for you.

A friend of mine provided coaching services to one of the Big Four accounting firms. This client grew and grew, and eventually accounted for 75% of his revenue. In 2008, when the financial crisis hit, the client did not renew his contract. “We don’t have the budget for your coaching services anymore,” they told him. A familiar tale?

It is a lie, however, that clients don’t have the money to pay you. What they have decided is that using you is not a priority given their (invariably) limited financial resources.

The client who just told you they can’t afford to keep going with you is paying for all kinds of things at this very moment—some of which may be either a complete waste or have a low ROI. They may be spending money on unproductive initiatives, poor-performing executives, excess office space, ineffective advertising, too many photocopiers, and so on.

They may also be spending more on your competition. How often have you heard there is a “freeze” on all management consultants, for example, only to discover that someone is still doing millions of dollars of work for the client? Note: That firm usually has very strong relationships with key senior executives—relationships which sustain them through the lean times.

Your challenge is demonstrate why your services should attract scarce budget. You do this by:

Showing exactly how you are part of the client’s growth, profits, and innovation—not simply a cost, a necessary evil. You must compellingly draw a direct line between what you do and the client’s highest-level goals

Relentlessly communicating the value and impact of your work.

Spending sufficient face-time with executives so that you have a good understanding of what is most important to them.

Another client of mine was told that, due to spending cutbacks, every supplier in their market was being cut by 20%. He analyzed the client’s total spend, and came up with a plan that would save them 30%–if the client consolidated all of their business with his firm. He won the deal, and dramatically grew his business with this client, even though the pie was shrinking!

4. The impact and benefits of your work are not compelling

This reason often leads to the feeling that you aren’t needed on an ongoing basis (reason 2) or unavailability of budget (reason 3). If you are delivering good quality, why would your client feel that what you’re doing isn’t relevant or compelling? Here are some possibilities:

You have not sufficiently communicated the value you’re adding

You are working at too low a level in the organization and your product or service is basically hidden from view

You have not shown the client how you are helping them achieve their most important goals or priorities

Your work is acceptable but not perceived as “a cut above.” You’re not wowing the client in any way.

The client perceives your products or services as solving a relatively insignificant problem.

Your first step must be to diagnose why the client doesn’t see you as a compelling and important provider. Then, you can take action. For example:

Can you do a better job of quantifying the benefits of your work?

Can you get some of the managers who know you and like you to vouch for you with senior management?

Can you make yourself useful in more meaningful ways to the client, either by evolving your service offering or raising your client service levels to “knock their socks off” levels?

Can you tie what you do–even if it impacts a small part of the client’s business–to something larger and more important? For example: one of my clients is in the executive relocation business. Traditionally, it’s a relatively small expenditure for corporations, and the job is given to a junior manager who is expected to get it done as cheaply as possible. My client redefined themselves as being in the business of enabling the mobile workforce, not just “relocation.” They started showing clients how what they do can be an important enabler of talent development across their clients’ organizations. This has created a unique differentiation within their industry and raised their relevance with clients.

5. Quality or delivery issues

This is a bigger problem in some markets than others. The more moving parts there are to your solution, and the more technology is involved, the greater the chance of a quality failure.

Remember that “quality” is a function of three things:

First, actual quality. Have you provided—by objective standards—a truly high-quality service or product?

Second, expected quality. You can do a great job but have a very disappointed client if your solution does not meet their expectations, no matter how unreasonable you think they are.

Third, perceived quality. Why do people think the relatively unappetizing Patagonian Toothfish (well, at least to my taste!) is wonderful? Because restaurants call it Chilean Sea Bass and dress it up with all sorts of fancy cooking methods, sauces, and side dishes.

To help bolster your client’s verdict on the quality of your work, think about these strategies:

Put real, meaningful quality control mechanisms into place. These can include different levels of controls—for example, at the relationship manager level as well as at the senior management level. Ask your team members what they think. Get formal client feedback several times a year.

Carefully agree expectations at the beginning of a project or engagement. Focus on agreeing outcomes and objectives, not deliverables. A deliverable is a quarterly meeting, whereas an outcome is improved response times when customers call.

Enhance your client’s perception of the quality and effectiveness of your work. One good way to do this is to create transparency around your process, so that your client sees all of your hard work and effort. A second way is to share the difficulty of what you’re doing—in other words, make sure your client understands the challenges you’ve overcome to deliver for them and the special requirements of the engagement. A third approach is to ensure your client gets positive feedback from their employees. This may not happen naturally. If someone tells you how helpful you or your firm have been, ask them (humbly) to share that comment with their boss.

6. Poor personal chemistry

Likeability is one of the four key qualities that nearly all client executives seek in a vendor or service provider (the other three are delivery, trust, and value). I’ve heard this over and over again. One of my own clients, for example, fired a very smart and experienced consultant because he was arrogant and condescending with everyone below the c-suite.

If you work with a firm, you have the possible option of bringing in a new relationship manager or account executive when a lack of personal chemistry threatens the relationship. But why wait until that happens? You can enhance personal chemistry through some very simple steps. Sometimes, a relationship that starts off on the wrong foot can thrive when one side makes some sensible adjustments to their behavior. For example:

Are you being a good listener? Do you listen carefully, affirm, and ask thoughtful follow-up questions?

Have you shown your immediate, work-with client that you can be trusted to support them and their goals—as opposed to politicking and going behind their back to their boss?

Have you taken the time to understand how your client would like to structure and manage the relationship and how they like to communicate?

7. A decline in trust

To understand how this can happen, let’s first reexamine what builds trust with clients. Very simply, professional trust is based on:

Competence: You have to consistently deliver against expectations

Integrity: You have to demonstrate honesty but also reliability, consistency, and discretion.

Perception of intent, or agenda focus: You have to show you are deeply concerned about your client’s agenda, not yours—that you’re looking out for their interests at all times.

Several other factors influence a client’s willingness to trust. These include their perception of the risk of trusting you, and the amount of face time they’ve had with you. You rarely trust someone you haven’t spent time with!

Usually, I think a decline in trust is precipitated by a feeling that you no longer care as much as you used to and the work you’re doing is not as sharp as it was.

Part of the solution to this is to schedule a regular “agenda setting” conversation that is focused on the client’s overall business and on how the relationship is doing rather than a project update.

8. Complacency

This is probably the reason many relationships end—professional and personal. One side takes the other for granted. Or, both simply stop caring the way they did at the beginning of the relationship.

At a broader level, complacency is the enemy of the successful professional. You enjoy your work, you have good clients, and you make good money. So why try harder? It happens all the time. You stop pushing, and you start—well, coasting. When that happens it’s time to shake yourself up.

Each year, look at your client list. Ask yourself these questions:

Which clients keep you up at night, and which ones get you up in the morning because you’re excited about the work?

Which clients are at risk of leaving you for some of the eight reasons outlined in this article?

Do you have a valuable client towards whom you are getting complacent? Why is that happening?

What would a competitor do to go after your clients and take some of their business away from you?

This year, are you taking your practice to the next level—or at least, markedly improving it in several respects? What’s your plan to do that?

In conclusion: Be intentional about holding on to those client relationships that provide strong mutual benefit and which are engaging and motivating for you.

Keep in mind these eight reasons why clients can leave. Sometimes it’s inevitable that a relationship ends, but there’s a lot you can do to counter each of these challenges:

1. A reorganization or executive turnover
2. A one-off or temporary need for your services.
3. A financial crisis or profit squeeze—and a lack of budget for you.
4. The impact and benefits of your work is not compelling
5. Quality or delivery issues
6. Poor personal chemistry
7. A decline in trust
8. Complacency