We work hard to find and retain clients, but sometimes it's clear the relationship isn't working. Neither side likes to admit defeat, but at times it's best to cut your losses and move on.
I recently had a frustrating experience with a high-end software provider. We recently licensed its product to help with our client presentations. It sounded like a great product at first, but after six months of trial and error, I knew it would never be a good fit for our firm. Technical issues kept coming up, and some of the data was incorrect. Bottom line: We never really used the software, but we were locked into a 12-month subscription. I was hoping to end the contract early so we wouldn't have to keep paying for a product we never used. No such luck.
First, I contacted the client service rep and said, "Hey, I know we have a one-year subscription, but this software just isn't right for our firm. I'm sure it's a great fit for others, but not for us. I want to end my contract. As you can see, we've never used it."
I was expecting they'd meet me in the middle, but instead, they wouldn't budge. They essentially said, "You agreed to a 12-month subscription. You have to pay us for another six months."
So, I escalated my dissatisfaction to the company's leadership team and explained the issues we were having with their software. Same response. "Here's our deal on contracts," they stated. "If you sign, you have to pay in full no matter what."
Four possible outcomes when a contract goes wrong
There are four possible outcomes when clients or customers want to get out of a contract. You might want to consider your firm's policy if a client wants out:
1. No flexibility. If clients or customers can't get out of their contract with you prematurely, that may be helpful for your short-term cash flow. But every time you send your monthly bill or invoice, you just remind them how irritated they are about continuing to pay for something they don't use or like. If you have clients under contract who want to leave, remember this: Unhappy clients do not walk away and pay silently. They share their story with anyone who will listen about their bad experience with you (i.e., this article in a national publication is an example). The negative association with your brand is usually more costly than the value of that contract.
2. Ending fine (neutral goodbye). Suppose instead the service provider says to the client: "Sorry, it didn't work out for you. We're going to end your contract today." How does that make the client feel? Probably neutral. They didn't get any value out of the software, but they avoided having to pay for the final six months of the contract, which they would never use.
3. Power of goodwill. In this scenario, the service provider says: "Hey, we're really sorry this didn't work out for you. We're going to give you a month back just as a show of goodwill. We'd love to have you back whenever you want to take another look." So now the customer or client is feeling somewhat better. It costs the company one-twelfth of an annual contract cost but extends an olive branch to the customer.
4. Create a raving fan. Wait...create a raving fan from someone who canceled their contract? Absolutely. Most firms think that a raving fan must be a current customer or client who's ecstatic about your offering and willing to share their experience with others. But raving fans don't have to be current clients. For example, suppose the service provider said: "We're so sorry our software didn't work out for you. We will refund your entire year since you've never used it. Further, we'll give you one month free if you decide to come back and try us again someday because we'd love to work with you." Now, the former client or customer feels great. They'll tell everyone what a great organization you are and that you stand behind your product or service. That's incredible advertising and doesn't cost much at all.
For more on ways to go above and beyond expectations to keep clients happy, see my article
As you can imagine, the software provider I referenced above did not provide me with a Key Lime experience. And that will cost them far more than if they had offered option No.2 or No. 3 above. I'm sure No. 4 would have been too much of a stretch. I'm going out of my way to write an article about how bad my experience was and how foolish their refund policy is.
The longer you keep a dissatisfied client locked into your services, the angrier they'll get, and the more people they'll tell about their disappointing experience with you. You've worked hard to build your reputation as a trusted advisor to your clients. Do you really want to be lumped in with the cable provider, local utility or rental car company? Of course not.
Even if a client is not telling you how dissatisfied they are, you can usually tell if they're not a good fit. Take the bold step of asking them if they'd like to get out of their contract. Cutting them loose is an opportunity to create a raving fan for your firm (see Option No. 4) above. The long-term boost to your brand equity will be worth far more than the short-term loss of revenue.
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