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Run Like Fire From These 3 Bad Client Types

September 29, 2011 1 Comment

run like fire from bad clientsNearly everyone has had at least one–the bad client you wish you’d never met.

And when you think back later, it’s funny how many warning signs you realize you skipped by in your eagerness to get them to sign on the dotted line.

In fact, I recently culled my 8 years as a copywriter and marketing consultant to identify a bunch of red flags for prospects to run from. Here are a few:

The Second Guesser

You’ll feel you’re on the witness stand when you’re talking to the Second Guesser. Because he’ll make you justify everything–from every recommendation to your prices and many things in between.

And just when you think he’s got it, he’ll come back and argue the point again.

Sure, you can tell yourself it’ll get better once he hires you but that won’t happen. This guy is a grade-A control freak who will never value your expertise–so get prepared for an ongoing battle if you sign him up!

Ms. Bad Luck

Ms. Bad Luck can’t wait to complain to you about how awful all her previous service providers were–although she’ll do it under the guise of just letting you know what she doesn’t want you to do.

Now, I do like knowing if someone has worked with another copywriter or consultant before and how it went.

But I almost always have to ask the question and prospects are usually reluctant to say anything negative.  If they do, it’s very matter of fact, then they quickly move on.

Ms. Bad Luck though is quite the opposite. You might also notice mentions of a new assistant (or others around her) because she tends goes through people like dogs go through an open box of treats.

Seriously, there’s no way anyone could be THAT unlucky when it comes to hiring help. And there’s only one common thread to all the tales of hiring woe…her.

Bottom line–no matter how happy she seems with you right now, it’s only a matter of time before the honeymoon ends and you’re hiding in the dog house with everyone else.

Mr. Gray Area

This is the prospective client who trips your “hinky” meter. It could be because…

  • He’s evasive when you ask questions
  • What he sells sounds too good to be true
  • Or maybe you can’t explain it, but you just get a bad vibe

Do yourself a favor and follow Nancy Reagan’s advice to “just say no.”

If you’re struggling with the idea of turning down work, turn to the Internet and see what you can find.  But honestly, if you have to check whether he’s scamming people, you’re probably not a good fit–even if he isn’t.

Believe me, I’ve been there. I researched a prospect once and found out his too-good-to-be-true-sounding financial offering was indeed technically legal (though I still wasn’t convinced it would work as well as he said).

But I needed the money and he was a referral…and I ignored my uneasy feeling.

So I shouldn’t have been surprised when he tried to skip out on making the final payment.

But I learned two important lessons:

  • People who are comfortable playing fast and loose with their customers will have no qualms about reneging on your contract.
  • Even if you can’t put your finger on what’s wrong, we subconsciously pick up cues from people. So always listen to your gut about people.

In short, save yourself a lot of time, money and frustration by learning to suss out the bad clients before they become clients–and then run for the hills.

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Motivate Your Customers with a Referral Program

June 17, 2011 Leave a Comment

A referral program is a powerful way to motivate customers to send business your way. First, because the referrer has usually already pre-sold their friend or colleague on using you–so it tends to be a much easier to close the deal.

And of course, the person doing the referring is likely to use you again too if you make the person they refer happy.

Referral programs are a lot like affiliate programs in that they give someone (although not necessarily a customer) a commission for sending sales your way. And the sheer fact that the affiliate is recommending your product to their readers boosts sales, because they have a relationship with that person and trust their suggestions.

And like affiliate programs, referral programs work best when BOTH the referring and prospective customer receive an incentive.

After all, it’s natural to hope that happy customers will naturally send people your way, and some will. But with referrals, it take a little more effort than just sending someone a link to click on.

On top of that, most people are busy and have a million other things on their mind. So, showing that you’ll appreciate their efforts will go a long way in jogging their memory.

It also helps to give them an incentive to pass along so they feel like they’re doing their friend a favor–instead of just badgering them to talk to you.

AND…if the person being referred gets an incentive, it’ll be much easier for you to track who sent them, since they’ll have to give you that information or show a card they were given to get it. (You won’t believe how many people forget to say they were referred unless prompted!)

Of course, that brings up the question…What do you offer them?

Choosing Referral Program Incentives

The good news is incentives don’t have to cost a lot. Sure, you can give items that you’ll have to buy–such as…

  • Restaurant gift cards
  • T-shirts
  • Having cookies delivered to their office
  • A leather portfolio for note-taking

Costco offers discounted gift cards to a variety of places or you may be able to find items with bulk pricing or clearance discounts that you can use. I recently suggested a martial arts school give away gloves to new students. It’s something they can easily get a wholesale price for and gives students one less thing to worry about when they sign up.

But you can also give away items you don’t have to hand over cash for–such as…

  • A percentage off
  • Bonus service
  • Special training sessions
  • Other products you already sell (and have on hand)

For both customers and prospects, the key is to find something they actually want that you can reasonably offer. But for prospects, keep in mind that it should also:

  • Be special–something the prospect can’t get from one of your ads or your website, so the customer feels like they really do have something of value to offer
  • Include a deadline–so the prospect is prompted to take action now instead of procrastinate

Have you used a referral program for your business? If so, what did you offer and how did it work?

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Pricing Strategies for Your Services Wrap-Up

May 18, 2010 1 Comment

In this series about hourly rates and pricing strategies for freelancers or small businesses, we’ve looked at:

 

9 Reasons to Stop Charging Hourly Rates

4 Reasons Why Hourly Rates are Bad for Clients Too

Charge What You Deserve–Project Fees & Flat Fees

Packaging Your Services

Should You Be Paid for Performance?

 

But now you may be wondering…Are hourly rates ever a good idea?

The answer is yes—hourly rates can be a good approach when there are too many unknowns about a project.  For example, if the prospect is being very vague or you haven’t done anything similar before.

In cases like that, where the time required and/or extra expenses you’ll incur are far too difficult to predict, charging an hourly rate may be the safest approach for you.

But most of the time, you’ll find it much easier and more profitable to use one of the other pricing strategies above.

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Pricing Strategies — Performance Pay and Retainers

May 17, 2010 Leave a Comment

There are two final alternative to charging hourly rates–performance pay and retainers. Like the name implies, performance pay means a good chunk of your income is based on the results you achieve–whether it’s called a commission, royalty or some other name.

In theory, it’s a great idea—the more the client benefits from your work, the more you make. But it’s much more complex than project fees or package pricing.

Pros of the Performance Pay Approach

  • Earning far more than you would have made with a flat fee if your work hits a home run for the client
  • Signing on clients who may not otherwise be able to afford you
  • Definitely getting results you can use for future testimonials (since it can be so hard to get them otherwise)

Cons

  • Possibly doing a lot of work for very little money if the project bombs
  • Others killing your results because they’re not doing what they’re supposed to do (unless you have full control of the project)
  • Relying on the client to compensate you accurately unless you have direct access to the results
  • Getting a smaller upfront payment than with a flat fee arrangement
  • Estimating is exponentially more difficult, since you’re trying to predict earning potential

In my opinion, the cons of the performance pay approach far outweigh the pros unless you’re working with someone who has a proven track record (although no one is failure-proof) and who you’d trust with your first born. Of course, it’s still smart to “trust, but verify” as they say.

Retainers are arrangements where a client pays you a set amount every month for specific services.

Pros of the Retainer Approach:

  • Receiving steady income throughout the year
  • Getting paid whether or not the client uses you
  • Becoming more of an advisor to the client, instead of “just” a writer/designer/coach or whatnot
  • Having little to no learning curve with the projects each month, so they should take less time than the same project with a new client
  • No surprises at invoice time since both of you know how much they’ll be paying from the start
  • No estimating, once the initial contract terms are set

Cons:

  • Clients who feel entitled to all of your time and/or expect you to jump the moment they need you
  • Some clients will demand detailed records of your time spent
  • Having to “eat” the extra hours if you underestimate the time it’ll take for all included projects
  • Needing to sharpen your skills at defining the scope of the project so it’s crystal clear what is and isn’t included and you avoid the sting of “scope creep”
  • Renegotiating the contract terms ( and your compensation) every year
  • Being “locked in” to working with that client may be a problem if you suddenly need extended time off or decide to move your business in a different direction

Personally, I’ve always felt the cons outweigh the benefits of the retainer approach because you’re essentially at the client’s beck and call…making it hard to plan your time and putting you at risk of doing more work than you originally expected.

However, it can work in a situation where you’re doing the same exact projects month after month…and you’re good about drawing the boundaries when necessary.

Finally, we’ll look at whether hourly rates are ever a good idea.

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Pricing Strategies — Service Packages for More Income

May 13, 2010 Leave a Comment

package rates for self-employed

Service packages take the flat fee pricing strategy a little further and up the perceived value by combining your service with other relevant services and/or products–usually for a bit of a discount.

Packages also allow you to give prospects several options to choose from instead of just one–which means they’re much more likely to buy because you’ve doubled or tripled the odds of finding one that suits their budget.

Pros of the Service Packages Approach
  • Earning more revenue per client, as they pay more than they would have for just the service
  • Little to no learning curve with the additional projects in the package, so they should take less time than the same project with a new client
  • You become more of an advisor to them, instead of “just” a writer/designer/coach or whatnot
  • No debate over minutia like number of hours or hourly rate—just one total number, which is all they ultimately care about anyway
  • They’ll get better results by having more of a total solution to their problem, and be more likely to hire you again and recommend you to others
  • Potential to set you apart from your competitors, who offer piecemeal solutions
  • No surprises at invoice time since both of you know how much they’ll be paying from the start
  • If you spend too much time on one project in the package, you may be able to make up for it by spending less on another
  • Estimating becomes much faster and easier, especially if you develop a rate sheet for frequent projects
Cons
  • It’ll take a little more time initially to develop your packages
  • You’ll end up “eating” the extra hours if you underestimate the time it’ll take for all included projects
  • You may need to sharpen your skills at defining the scope of the project to make it crystal clear what is and isn’t included, so you avoid the sting of “scope creep”

So what should you include in your packages? Consider any add-on product or service that complements what they’re hiring you for. Especially ones that won’t take much of your time– such as an information product, critiques, access to calls you’re doing anyway and email access to you (which most will rarely take advantage of).

All of these can significantly boost the value of the package to your client without chaining you to your desk for more work.

Another tip…only offer two or three packages per service–any more than that will make them procrastinate about buying. And if you create three options, be sure to put the option you want most people to buy in the middle, because that’s the one prospects naturally gravitate toward.

Now that we’ve discussed service packages as a pricing strategy, we’ll cover two more ways to escape the dollars-for-hours noose.

Photo was taken by MarcinMoga/Lolek and posted on Flickr under a Creative Commons Attribution 2.0 Generic license.

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Pricing Strategies — Flat Fees & Project Fees

May 12, 2010 Leave a Comment

project hours, like a house under constructionPreviously, we talked about the pitfalls of hourly rates for freelancers and self-employed professionals and why your clients should hate hourly rates as well.  Now let’s talk about a popular alternative…the flat fee or project fee.

But first, I want you to think about this…If you buy a home in a new development, is the builder quoting you a price based on the hours everyone spent working on that home, plus the materials–or is he quoting a price based on what other similar homes in that area are worth?

Of course, he’s going to go with the latter  because it should cover all of his labor and other expenses and still allow him to make a profit. (Although that point may be debatable in the current real estate market!) So essentially, what he’s charging is a project fee–one price that covers the whole shebang.

You can use the same concept for pricing your services as well. And it’s a fairly simple pricing structure to transition to. If you don’t know what the true value of your services are (industry pricing guides can be quite helpful in this regard), you can start by just estimating the hours it’ll take and calculating the fee based on your hourly rate.

But then, you should add on to that “base” number to cover any expenses you expect to incur as well as premiums for rush jobs or what I call “the PITA factor”—when you suspect a client will be super high maintenance. In the end, you add it all up and present one total price to the prospect.

Pros of the Flat Fee Approach
  • No debate over minutia like the number of hours it takes or your hourly rate—just one total number, which is all they ultimately care about anyway
  • The potential to net more per hour if a project takes less time than you expected (which encourages you to be more efficient)
  • No surprises at invoice time since both of you know how much they’ll be paying from the start
  • You can adjust the project scope before you start the work if the client feels the total is too expensive
  • The price for the fifth time is the same as the first, because they’re not thinking in terms of the hours it’ll take
  • You never need to have that oh-so-fun “I’m raising my rates” conversation with current clients, simply increase the project price the next time they hire you
  • Estimating becomes much faster and easier…especially if you develop a rate sheet for frequent projects
Cons
  • You’ll end up “eating” the extra hours if you end up spending a lot more time than you expected
  • You need to define the scope of the project ahead of time to make sure it’s crystal clear what is and isn’t included, so you avoid the sting of “scope creep”
  • Occasionally, the total cost will be such a surprise they decide not to work with you. But isn’t that better than doing all that work only to have them balk at paying the full amount in the end?

Note that while you won’t be required now to track your time, you should still do so to see how close or off your estimate is and help you refine your prices for the future.

In short, if you’re still stuck trading hours for dollars like a car mechanic, moving to project fees may be the easiest first step toward getting paid based on the value of what you do–rather than the number of hours you work.

Next up is a pricing strategy that takes project fees to the next level and gives prospects more options to say “yes” to.

Photo taken by Brock Builders and posted on Flickr under a Creative Commons Attribution 2.0 Generic license.

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Hourly Rates are Bad for Clients Too

May 6, 2010 2 Comments

Last time, we talked about the 9 Reasons to Stop Charging Hourly Rates. But those only focused on why hourly rates are bad for YOU. Before I get into the alternatives, it’s important to consider how hourly rates are bad for your clients as well.

Because for them, hourly rates mean…

  • Surprise larger-than-expected bills. Even if you give them an estimated range for the project at the outset, clients will often focus on the smaller amount—not the larger one. Then there’s the issue of “scope creep,” where they keep changing or adding “little” things to the project that you didn’t initially expect.

While it’s good to give them an immediate heads up that these items will add to the cost, in my experience, they often suffer a bout of amnesia about those warnings when invoice time comes.

But it’s also easy to fall into the trap of not wanting to seem petty–so you don’t mention it. Then one change becomes two and soon you have a whole series of little creeps, which can quickly add up.

  • Fuzzy budgeting. Similarly, if you merely quote an hourly rate or give estimates with broad ranges, it’s a lot harder for the client to plan their spending–which may annoy them. But it can also be hazardous to your health if they tend to have cash flow issues and don’t have the money when invoice time comes.
  • The eternal running meter. I’ll never forget when my nosy accountant sent an invoice listing a 10- minute call she made to lecture me about something that wasn’t even her business. Not only did it seem ultra petty (can’t you just tack it onto something else?), it was a call she shouldn’t have made to start with!  She wasn’t my accountant much longer after that.

But the real downside to the running meter is they’re less likely to reach out to you with a question or additional comments. While your first reaction may be “Good!” I usually find that answering their questions can prevent big problems or provide helpful insight for the project.

Besides, the more they think of you as an adviser who cares about their business, the more likely they are to work with you again. And in my experience, very few clients go hog wild pestering you non-stop anyway.

  • Conflicting interests. The blunt truth is paying by the hour means the more hours you put in, the more you make. That means you have an incentive to drag projects out or add on more than necessary–neither of which is in the best interest of their project or wallet. (Not that YOU would ever do this. But that doesn’t mean they won’t be paranoid about it.)

Finally, all of the above are good points to make when a prospect asks why you don’t charge hourly rates. In fact, here’s some wording I use on my website:

For one, hourly rates lead to unhappy surprises at invoice time when the bill turns out to be much higher than the client expected. I prefer to give a project price so you know from the start how much it’s going to be.

Also, charging by the hour inherently means the longer a writer, designer or whoever can drag a project out, the more they’ll make. Which, with the wrong person, can mean your project is both expensive and late. With a project rate, if I spend more time than expected, I eat the cost. So it doesn’t pay to miss the deadline.

Other wording in my proposals and estimates:

My fees are always based upon the scope of the project, never upon units of time. This way, you’re free to contact me with a question worrying about a meter running.

Of course, you’d want to put these thoughts into your own words, but hopefully they’ll give you some place to start.

Are there any other downsides you think I missed?

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Winning Back Former Customers–Kennedy Style

November 9, 2009 Leave a Comment

When it comes to killer marketing, the Kennedy Glazer folks are usually at the top of the list. And when it comes to “lost” customers, it’s no exception.

I let my subscription to the No BS Marketing Newsletter lapse a few months ago and recently received a 6 x 9 envelope touting the No BS Insider’s Connection–a free monthly publication for former members.

Like the regular paid newsletter, it starts with the usual Dan Kennedy rant (love him, hate him–personality sells) until the final paragraph, which says:

The bell has rung. Stop stalling and get to class...oops, you can’t come with 25,000+ serious students, ‘cuz you’re a DROP OUT! Before the truant officer arrives, you can fix it and reconnect with GKIC — “The PLACE for PROSPERITY.” Just visit… (special URL). In the meantime, enjoy the Cliff-Notes version of what’s happening on campus.

So let’s look at that one paragraph, which takes several swings at making you feel the error of your ways by…

  • Issuing a Kennedy-style rebuke, calling you a “drop out” — a phrase with all kinds of powerfully negative connotations for most people
  • Leveraging social proof (the 25,000+ serious students) to make you question whether you made a wise choice and highlight the loss of the Glazer Kennedy network
  • Reinforcing the idea that anyone who’s interested in being successful is a member of “the place for prosperity”
  • Reminding you with the “Cliff-Notes” line that you’re missing out on so much more in the regular newsletter

Two more points worth noting–the newsletter also…

  • Ties all this into the back-to-school theme he just discussed, so it flows naturally from the rest of the article without screaming “blatant promo ahead”
  • Refers you to a website specifically for former members instead of the typical sales page

The rest of the simple, 4-page black & white newsletter goes on to emphasize the pain of disconnect by including…

  • Highlights of the upcoming Info Summit (with again, a special website to sign-up)
  • Details about the last two month’s Gold CDs that you would have gotten, if you were still a member
  • A success story focused on the benefits of being a Glazer Kennedy chapter member
  • Two article snippets and several teasers for other content you’re missing out on in the regular newsletter
  • An invitation to see the sales letter exhibit for one of the articles for free at the reconnecting website

Plus there are two call out boxes driving you to the special website–with the one on the last page offering “your choice of $97 ReConnection Gifts.”

So they’ve managed to mix enough content to make it worth reading with a variety of calls to action…

While reinforcing over and over that this is just “a small taste of what members are experiencing” and that being a member = success.

How successful do you think they are?

I’d love to know how it converts…but I do know that ANY response is going to be higher than what businesses who don’t try to woo former customers back get.

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A 3-Part Strategy for Motivating Clients to Give Referrals

October 13, 2009 1 Comment

Recently, I had a Marketing Strategy Session with a chiropractor client and one of the topics was getting more referrals from past and current patients–here are a few tips I shared that could be applied to all types of businesses.

First, it’s important to know most people really do like to give referrals because it makes them feel good to be able to help a friend or family member in need.  Some folks also get a kick out of looking “connected.”  So keep that in mind so you don’t feel like you’re asking for a favor.

That said, then why don’t they refer others more often?

1. Either they forget or just don’t know how to do it. For example, if they hear someone say they need a chiropractor, they may think of you. But it’s far more likely they’ll hear someone complaining about a problem you can help them solve.

Problem is–does your client know all the problems you can solve (or what you specialize in)? And can they explain what you do to someone who’s never hired someone like you before? Often, they don’t or they can’t.

2. Incentives that feel like disincentives. Businesses also don’t always think through the psychology of the incentive they’re proposing. Here are three types to avoid:

  • The slap-in-the-face incentive. Say your client just paid you $300 for a session. Then you send them a thank you note and $100 off coupon “to give to a friend.”   If it’s something they can share with a family member it might be OK, but can you see how they might be annoyed at passing along a discount they didn’t get to someone else?
  • The not-so-special special. Another problem is sending them a certificate for a discount or gift anyone can get by going to your website. People like to feel that they’re sharing something special. It’s not special if any one with a computer can get it.
  • The token incentive. If your sessions cost $300, sending the client a discount certificate for $10 off to give away doesn’t feel very meaningful.

So you want to come up with an incentive they’re motivated to pass along…and help them figure out who to give it to.

Here’s a three-part example that makes it super-easy for that same client above to refer others to you…

  • Send the client  (yes, by USPS postal snail mail if possible)  an exclusive certificate for $100 off a friend OR family members’ first visit. It’s special and meaningful.
  • AND tell them if their referral comes in within the next 30 days, the client gets a $100 gift card of some sort (gift cards can often be purchased for less than face value but you could also do a big discount off their own future visit. ) This rewards the client and encourages them to follow-up about using the certificate.
  • AND tell them “The next time you hear someone complain about x, y, or z, tell them our [what you do in plain English] can help” in the letter that accompanies the certificate. Now they’ll be alert to people mentioning these complaints and know how to describe what you do in simple terms.

Of course, after you send out the mailing, you could send a couple emails or postcards to remind them as well.

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Copywriting Hit List — No Love for One

September 30, 2009 1 Comment

Freeze Morning (5)First of all, “One” is supposed to be a number…as in:

“One love, one life, when there’s one need in the night…” as the U2 song goes.

“One” should NEVER be used as a pronoun. Especially when you’re writing something you actually want prospects and clients to read. (Or anyone to read, for that matter. Unless it’s a group of stodgy old college professors.)

Because “one” is like dropping a thick plastic wall between you and the reader–he can still kind of see you, but you’re so fuzzy and far away now that he loses interest.

Just compare…

“One believes one should talk at the level of your readers.”

vs

“I believe you should talk at the level of your readers.”

See my point?! The first is painful to read. The second is not.

Besides, he’s looking to hire YOU. So he doesn’t care what “one” thinks, he wants to know what YOU think. And he doesn’t care what “one” should do, he wants to know what HE should do.

So tell him. And stop hiding behind the “one.” Or your phone number may end being the loneliest number of all.

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