And How to Ensure You Don’t End Up Another Commodity
By Garrett Sutton, Esq.
Do you have a definable wow factor?
Or do your clients just price-check your services against the competition with no sense of loyalty? How likely are your customers to leave you?
The difference between being viewed as a commodity and viewed as a resource where your skill, judgement, critical thinking or quality are valued could be a deciding factor in your business’s survival. Do you know how your clients see you? What relationship have you built with them?
The corner gas station offers a commodity. It is entirely a transaction-based relationship. The gas station owners only care if your credit card clears and you can pump fuel. They don’t care if you have an opinion on the transaction. Similarly, you expect fuel at the advertised price, and maybe a clean restroom. If your needs aren’t met, you go elsewhere.
1. Know If Your Businesses Can Afford to Be A Commodity
Does the gas station example apply to your business? Or do you offer something more? Is your business a resource bringing unique and valuable ideas to the table? Consultants, professionals, and other providers of skill-based services should always maintain themselves as a resource business. Businesses that allow their customers to view them as merely a commodity provider attract the wrong type of clients. If too many clients fail to see what is valuable about your business, your income may become volatile and price sensitive.
2. Know When Clients View You as a Commodity
A consultant friend recently described such a client to me.
This person did three actions that are clear indications of not valuing the relationship with the consultant:
- demanded to be seen right away when there was no real urgency,
- demanded immediate appointments when there was no compelling issue at stake,
- and insisted on work being performed according to arbitrary deadlines.
You can treat a gas station in such a manner. Fill up whenever you want. But my friend offers much more than a transaction. And he doesn’t take on clients who fail to appreciate that his skills and judgement constitute a resource.
3. Notice if the Client Makes Use of Your Services
If a client hires you to provide a service, such as advising or consulting, but doesn’t take the actions you recommend, the client is a flight risk. It doesn’t matter if they pay the bill. If they don’t allow you to provide the service you offer, they’re not getting value from you. If they’re not getting value from you, they’re not likely to stay your customer. There’s another reason not to accept too many of those easy paychecks. Additionally, if you’re not providing value, that could hurt your brand. Perceptions of you as an ineffective consultant or business could hurt your ability to win the clients you really want.
4. Don’t Fall into the New Business Trap
New business owners fall into the trap of taking whatever walks in the door. They think the most important things are to establish a client base. But in time, they learn an important truth: not every client is a good client. And too many bad clients can cost you dearly.
5. Develop a Sense of Your Own Value
The client who treats you as a commodity when you offer a resource is not a good client. They will compare your prices to the provider down the street – like in our gas station example. In fact, your skill and judgement may warrant twice what the other provider quoted. Know this and let it be your North Star. You must be guided by this awareness. A good working relationship with a client relies on you contributing your unique skills. Otherwise, you are simply an order-taker.
6. Know When to Pass on a Client
When the commodity-minded client makes a transaction-based argument, just send them down the street to the other provider. The longer you tolerate commodity clients, the more of them you will attract. The sooner you assert your value as a resource, the sooner you will attract the clients who matter most.
7. Recognize that Bad Clients Have a Cost
The Pareto Principle (also known as the 80–20 rule) applies to clients. The principle states that, for many events, roughly 80% of the effects come from 20% of the causes. Most press coverage highlights the outcome that 80% of a company’s profits will come from 20% of its customers. But the Pareto’s principle also applies to the negative aspects of doing business: 80% of a company’s problems will come from 20% of its customers. This cost can be in time, stress level, or refunds and discounts for claimed wrongs. A much better policy is to actively seek out good clients and the healthy relationships you want rather than passively waiting for inquires. If you are intentional about the kind of clients you want, you will take a more active versus passive role in shaping your future.
8. Use Your Unique Skill Set to Build a Strong Business for the Long Term
While appeasing clients and giving them what they want may be an easy way to earn a living in the short-term, it’s a formula for disaster in the long run. The client is usually too close to their problem to correctly diagnose the root causes. If you simply agree to help implement the client’s preconceived solution, you are not helping the client or your career. You will not be a resource and you won’t be making a difference. Instead, you must bring your own expertise, objectivity, and outside perspective to the table. You must help the client go back and address the real challenges, some of which they are too immersed in to identify. In this manner, you become a strategic resource, to everyone’s benefit.
Learn the Listening Technique Needed to Spot Toxic Clients
“Toxic Client: Knowing And Avoiding Problem Customers,” by corporate lawyer Garrett Sutton, equips business owners with the knowledge to detect and avoid toxic clients before they poison the business. The book distills what Sutton has learned from advising owners on corporate legal structures – where he has heard some of the horror stories first-hand – into case studies that illustrate the do’s and don’ts of dealing with toxic customers.