Every leader believes they have great client relationships. And many are counting on their long-term deep relationships with clients to help make it through whatever economic conditions are coming. With uncertainty in the future and an unstable environment no one has been through before, banking too much on your clients as your core strength in the coming months and years could be risky. How do you know if your client relationships will stand the test of time and possible economic chaos? 

While many firms do have excellent relationships with their clients, I often see several underlying problems that are uncovered with deeper scrutinyDeveloping a strategy to strengthen client loyalty can mean the difference between financial excellence and survival or failure. 

Many A&E firms have a lot of clients – often 100 or more. To have great relationships with all of these clients is difficult. Client retention requires consistent planning and attentionThe majority of firms don’t have an intentional client retention plan that is measured and well executed.  

So what makes a great client relationship? Often clients are ranked by revenue. This is not an effective metric for measuring success with clients. Often the clients with the highest revenue are the ones least beneficial to the business. 

Here are five indications of a flawed client relationship that can have long-term detrimental effects on financial results, employee retention and growth of an A&E firm: 

1. Your client is using your firm to finance their projects

If you have a client that consistently takes a long time to pay or constantly disputes your invoices, you don’t have a solid relationship. Good clients pay on time and trust you.

2. Your client consistently asks you to lower your rates or fees without decreasing the scope

Good clients negotiate fairly and understand the value of your work. They appreciate that your team is more experienced and that you pay your people well. 

3. You are losing money on every project

When you have a great client relationship, your client wants you to stay in business and financially strong. When you have a great client relationship your client does not select their consultants primarily on price but rather on value and getting the job done the way they expect. Good clients want you to make a profit so you can continue to reliably deliver quality projects. 

4. Your client expects changes for free

Everyone knows that if the scope or schedule changes, it will cost more. Great clients don’t take advantage of their consultants by refusing to approve change orders and expecting changes for free. 

5. Great clients are not overly demanding

There will be circumstances where your client will need work done quickly and want immediate response from your team. If this happens occasionally it is a great opportunity to demonstrate your exceptional service. However, great clients are reasonable and don’t expect unrealistic turnaround time or consistently requiring your team stop working on other clients’ projects to meet their tight or changing schedules.

6. Relationships are not deep

Often client relationships are between one or two people in each organization. If someone at your firm or at your client’s organization should leave, would you still have a strong relationship? Great relationships are deep, both within your company and with many people in your clients’ organizations. Look for ways to expand relationships vertically and horizontally with your clients to provide additional stability and possibly provide other avenues for more opportunities.

Just getting a lot of work from a client is not enough. If 25%-50% of your work is coming from a client with one or more of the above examples, you may not really have a great client relationship. Very often it is difficult to address these situations because of long history and project managers that avoid conflict. 

“Letting bad clients go can be tricky, even when the relationship has been troublesome. This is where a careful, well thought-out, client-specific strategy is critical. Go slow but go forward.” 

-Frank Lippert, FSMPS, CPSM, GO Strategies, LLC 

Ultimately you need to figure out if there are ways to address these issues or cut ties with these types of clients. By identifying the traits of your ideal clients, you can move towards being more intentional and building stronger relationships with your really great clients. This will allow you to focus on establishing criteria for selecting new clients to pursue and work with. 

The Find the Lost Dollars program will transform the mindset and behavior of your team so they are able to deliver more profitable projects and will be more confident having difficult conversations with clients. Ultimately your firm’s success and survival is dependent on the clients you choose to work with. Selecting great clients that truly value your work will ensure higher profits, happier employees and ultimately a better place to work. 

Cash is King Webinar

Managing Cash Flow in a Down Economy

Date: Wednesday, August 19th, 12:00pm ET

The average days to collect cash in the AEC industry is between 60 to 120 days. In this web training we will examine the complete project lifecycle to understand how cash flow can be increased when the economy is uncertain. Participants will gain valuable tips to improve cash flow by improving timesheet practices, reducing the billing cycle, and improving client relationships and collection practices.

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