Ah, the cheapskate client. How do I loathe thee? You may know him/her well. S/he masquerades as a serious prospect and raises everyone’s hopes. S/he requests a full-on proposal with no intentions of pulling the trigger. Or the worst: s/he orders the work and signs a contract, but never pays the invoice.
While seemingly harmless at first glance, the cheapskate client is quite dangerous. The CC wastes inordinate amounts of time and resources. Heaven forbid you have team members you have to pay (graphic designers, admin help, copywriters). Dealing with a cc, you could even end up in the red.
But during a recession, everyone wants to believe in the promises of the CC, because we’re all chasing that elusive (perhaps fictitious) pot of gold. We all want to believe in good intentions and the upfront promises that (my personal favorite) this will lead to “more work later down the road.” But since the CC can end up costing you in the end, it’s better to steer clear altogether. Here are a few ways to spot them. And once you spot the CC, please run. You were warned.
They Hint About Brokeness: If you’re interviewing a potential client and they actually use the words “We don’t have a lot of money” or “We’re waiting for a grant to come in…” or worse yet, “We’re just starting out , so our budget for this is small….” please run. A lack of funds at the onset of a project probably means there will be a lack of funds when it’s time for you to get paid. And remember that blood is thicker than water: if an organization or company is financially struggling, they’re going to make sure they pay their own in-house staff before they take care of the consultants. That’s just how it is.
They Lack Experience with Consultants: If you’re talking to a potential client and they either tell you flat out or even give you the idea that they’re not used to working with consultants, do you really want to be the guinea pig on which they cut their teeth? Pass. Let them test-drive an inexperienced freelancer.
They Want the Proposal Before the Price Talk: A lot of times organizations don’t know what they want, or where they’re going with a project. Or maybe they know where they want to go but not how to get there. So they talk to you, hoping you’ll deliver them a roadmap that will show them how to get there for free. This is the worst type of CC: not only are they cheap, but they’re also manipulative and dishonest. They want to utilize the expertise of a consultant, but they don’t want to pay.
You can spot this CC a few different ways. If the potential client never asks you about price, that should be a red flag. They should at least know a ballpark range before taking any part of the discussion forward. Also, if they are adamant about you submitting a proposal before you give them an idea of what it might cost, be suspicious.
They Nickel and Dime. So you’ve actually gotten past the proposal stage, and they schedule a meeting to talk things over. They loved where you were going, but they think they can wing it a la carte. “We don’t want this, but can maybe do this. If we do half of this, and none of that, and maybe some of it in-house we can probably…” Yada yada yada. Skip it with this client. They cannot afford you and it’s just not worth the hassle.
They’ve Demonstrated Past Payment Issues. You might find yourself in a relationship with a potential client who wants you to take on a larger, more involved project. But you’re scratching your head and thinking to yourself “You can barely pay for the work I’m doing for you now…” If you’ve worked with a client in the past on small projects and they took over 30 days to pay small invoices don’t take on anything bigger. Dare I say it may behoove you to consider giving up the smaller jobs with them, too.
Because the time you’ll spend chasing down money that’s due can cost you so much money in lost productivity. Besides, even if they have shown that they will eventually pay, albeit late, who wants to hear tired excuses for why they were late? (We’ve just been so busy…”) Well guess what? We’ve all been busy. Pay your invoices.
I would add another warning sign–when you start talking about terms, and they use the words “potential.” Usually that is code for “we don’t have money now, but after you make us famous, we will have lots of money and you could get a lot then if you work for free now.” If they talk “potential,” run like hell.
Great post Amanda!
These are a few definite warning sings that entrepreneurs and consultants should be aware of immediately. I believe, in many cases, potential clients throw red flags in the proposal phase and even possibly during the initial discussion of their need for services. Could it be that because we’re so focused on retaining the client that some of these instincts of spotting them aren’t acted upon? Or perhaps we make ourselves to available to a potential client and could apply a little more selectivity in determining whether they would be a best fit?
The frustration of dealing with a cheapskate or delinquent client effects productivity, damages relationships and can possibly put you in a strain. Meanwhile, the client seems oblivious to the fire they’ve started.
OMG, Aerial! Your thoughts are so on. I was just talking to another publicist the other day about your point re: retaining bad clients to our own detriment. I think it’s a mixture of fear (we are in a recession, after all) and lack of confidence that we will find something better. Stay tuned, as I have a few more posts along these lines that will address the consultant’s fears as it relates to pricing, etc.
Too true and spot on Amanda.
Great post Amanda.
It’s often better to spend time servicing your existing clients better than chasing timewasters, but I agree that the recession is making agencies and consultants nervous. However your how to spot a cc will be as true in a recession as they are in boom time!
All very accurate. Many public relations practitioners would benefit from sales training, especially the part on qualifying clients. I found the Solution Selling methodology to be very helpful over the years.
Once you get two or three of the”bad client” signs mentioned above – time to move on to the next prospect. Remember, you don’t want to work twice for the same money – once to do the work, and then again to collect the fees.
If you have a good sales program underway, then you can “walk” from undesirable prospects – let your competition handle them.
Thank you very much for this reality check. Due to the economic times, sometimes we as practitioners may feel like we have turn the other cheek on our traditional business practices for the sake of gaining clients. But in the end.. it is not worth it. I was just in a situation where I designed a proposal, brought on additonal staff, etc., and when it was time for the client to sign the contract and pay the upfront amount…he was no where to be found!
excellent advice on how to avoid the hassle. It’s the old 20/80 rule. Where 20% of clients represent 80% of revenue, another 20% can represente 80% of wasted time, hassles, stress and so forth.