Saying no to a client is hard!
Some clients are easy: they know what they want, they require minimum interactions to close, everything is fast and efficient.
With others, however, business is not as smooth. Your team spends much more time on them, you assign more people to them, and every dollar of revenue feels like a battle.
Need help handling these tough situations? Here are two types of data you can use for having a tough conversation with a client.
1. Activity Ratios
For good clients it may take you 1 or 2 interviews to make a placement. For others it may take a dozen for each placement.
The number of activities (interviews, sendouts, submissions, even calls) you need to make for each placement are your activity ratios. Calculate them for each client to see who makes you work harder for each placement.
This is what it looks like:
2. Activity-Based Costing
Slightly more advanced is calculating how much effort you make for each dollar of revenue from a client. This is a longer topic, but you can do this by:
- Assigning “weights” of effort to each activity you do (e.g. hours)
- Sum up the amount of effort for each client
- Calculate a ratio of that effort versus the revenue from each client
This is what that looks like:
Lean on the data to help you through this tough conversation. Instead of speaking in generalities and opinions, show your client the facts and ask them what they think.
If we are doing too much activity, why is that? It could be that we are bringing them the wrong candidates. If so, we need to know that and understand who is the right candidate. And it could be that the client is simply too picky. If that is the case, we need to coach them to make a decision, and potentially revisit pricing.
By channeling your inner nerd and bringing data to the table, you can start talking about your business relationship in a healthy manner. No guesses, no estimates; just the simple facts of what has been happening and whether or not it can be sustained by both parties.
Arm yourself well, and good luck!