Thursday, January 26, 2012

Clients Who Give You Grief

I have worked with more than one hundred clients in my years as a consultant and trainer, including corporations both in the United States and abroad, government agencies at the federal, state, and local levels, and individuals. I've sold my products to hundreds more customers worldwide. Nearly all of these clients and customers have been easy and trouble-free to work with. But a few have caused headaches. In this post, I relate some of the kinds of problems I've encountered so you can be alert for those in your own consulting work. Please share your own client horror stories by commenting on this post.

Getting Stiffed: I know several consultants who have been stiffed by one or two of their clients—they simply never paid the consultant for services rendered. Fortunately, this has not yet happened to me. I've come close a couple of times, though. For instance, I once did a two-week European seminar tour at the request of a tool vendor. Afterward, I could not get them to pay me. It wasn't a trivial amount of money, either. Finally, I received a check. The check required the signatures of not one but two of the company's managers, yet no one had signed the check! I'd had it. I called the company’s president, and a new check for the full amount—signed, no less—arrived the next day. It just shouldn't be that hard to get paid for work you've done.

On two occasions, people did not pay for products they had ordered from me. They ignored the invoice and would not respond to my e-mails. As it happens, both of these customers were outside the United States. As a result of those experiences, I changed my billing policy. I will no longer ship a product to a purchaser outside the US along with an invoice. Instead, I must receive payment before shipping the product. It's a shame that a very few people make life more difficult for everyone through their actions.

Firing a Client: When I worked at Kodak before I went independent, I helped plan our annual software engineering conference one year. We had a particular speaker in mind for a keynote presentation, a very well known figure in a particular area of software development. However, one of the planning committee members reported that that consultant had had some bad experience with Kodak, and he was no longer willing to work at the company. No one knew exactly what the details of the problem were.

At the time, my reaction was, “How arrogant!” When I became a consultant myself, though, I realized that some clients simply aren’t worth the trouble. I’ve had a very few clients that I won’t work for any more for various reasons: sluggish payment policies; too many problems encountered with contracting or invoicing (like invoices that disappear simply because one particular individual changed jobs); incredibly slow or erratic decision-making; or other reasons. Obviously, if you need the income and the opportunity presents itself, you’ll probably just bite your tongue and tolerate difficult clients. But if you have the luxury of having enough work, sometimes it makes sense to say, “Thanks, but no thanks” when certain clients call.

One of my consultant friends tried for nearly eighteen months to receive a payment from a very large technology company, to no avail. Ultimately, they offered to pay him a discounted rate within 30 days, or the entire balance at some indeterminate future date. Totally fed up, my friend contacted the office of the president of this huge company. Amazingly, they paid him right away! Wouldn’t have been easier just to pay the bill as promised? My friend refused to do any further work with that client. Ironically, I’ve had so many problems with that same household-name company that years ago I decided not to sell them any more of my services or even products. They just aren’t worth it.

Problems with clients sometimes lead to changes in your business processes. When I encountered a couple of clients who took far longer than was reasonable to pay me, I established a new policy for new clients. Rather than invoicing a client after a training seminar for the speaking fee plus travel and lodging expenses, I began quoting an all-inclusive fee, sending an invoice in advance, and requesting that payment be delivered at the time of the seminar. Nearly all of my clients accepted this policy. I relax the policy when I have a sustained and successful relationship with a client or in other special circumstances, like when I wish to defer income into the next calendar year. Otherwise, though, the seminar begins when I have my check.

Some other consultants request payment of a portion of their fee in advance, which they retain if the client cancels the event. I've never done that, although I do include a cancellation fee in my speaking agreement. I've only had to invoice clients for the cancellation fee about four times. Ironically, those invoices have always been paid more promptly than my regular invoices. Go figure.

Questionable Ethics: I use a simple consulting agreement to outline the specifics of each client engagement. A prospective client once asked me to state in the agreement that I would be performing a certain kind of work, because that’s what they had funding for. In reality, though, I would be doing something different after I arrived on site. My client told me that if the agreement stated what I would really be doing, his management wouldn’t approve it.

This struck me as unethical. What if a senior manager discovered that I was doing something other than what had been approved and funded? Not only would I probably not get paid, I wouldn’t be hired by that company again, and my professional reputation could be damaged. I suppose I could even get sued. So I declined this invitation and never dealt with that company again. There are a lot of gray areas when it comes to integrity. But if someone clearly asks you to lie about work that you do, that’s pretty black-and-white.

A Poor Fit: The notion of being scrupulously ethical in professional dealings applies to consultants as well as to clients, of course. While I was at Kodak early in my software development career, my team needed to bring in a database consultant from a major vendor for some short-term help. I spoke to the prospective consultant and asked how much experience he had in the particular area that was giving us headaches. "I haven't done that before," he replied, "but I can learn along with you." No, I'm sorry, that answer is incorrect, but thanks for playing. It seemed unethical for him to request that we pay $1200 a day for him to learn alongside us. We found a different consultant.

As a consultant, it's important to know your capabilities and limitations. Once in a while, I receive an inquiry from a prospective client who is looking for help in an area in which I lack expertise. I never offer a proposal in such a case because I know there are better people available. I'm always happy to refer a client to another consultant who’s a better fit for their needs, and I'm grateful when other consultants point clients towards me. Incidentally, I neither ask nor pay finder’s fees for these sorts of referrals. I figure that if everybody is willing to help match up prospective clients with the right consultants, then everybody's back gets scratched; it all averages out in the end.

Clients Who Go Dark: I once had a client who brought me in twice, both to deliver some training classes and to do some consulting. The events all went well, the manager who brought me in seemed happy with the results, and he wanted to set up another engagement soon. After I returned home, I sent him a speaking agreement for the dates he had requested. No reply. I e-mailed him several more times to follow up. No answer. I phoned and left voice mails. No response. This client literally never contacted me again. I don’t know what the problem was, but I would have appreciated it had he simply told me they were no longer interested in my services. This would have saved me the time and trouble of repeatedly attempting to contact him, which I was doing at his request, after all. Weird.

Actually, I did “hear” from him a few years later. I received a flood of virus e-mails apparently coming from his e-mail address. Somehow, that seemed fitting.

(If you found this article helpful, please consider making a donation to the Norm Kerth Benefit Fund to help a consultant who has been disabled since 1999 with a traumatic brain injury from a car accident. You can read Norm's story or donate here. Thanks!)

6 comments:

  1. Very enjoyable and valuable insights in this post. As a partner in a consulting firm dating back 23 years, I'm smiling and can relate to some of the behaviors you've encountered.

    Thx for sharing.

    Bill Deibler

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  2. Coincidentally, just "fired" another consulting client. So far I have been lucky, never having trouble being paid for my services, but I definitely have cases of one of the problems you mention: poor fit.

    Usually with me this is how it happens: I'm hired to do A (typically determine and document requirements for a complex software projects, or design the user experience for a web application). Then when I finish the work the client wants to renew the contract for me to work on B or C (services ranging from managing a dev or QA team to performing marketing activities).

    Earlier in my career, I felt I couldn't say no, leaving a client with an unmet need, but now I just offer to help them find the right type of professional, and don't feel guilty anymore for refusing to perform services that were never part of the original agreement we had, and don't fit my area of expertise or interests.

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  3. Hi Karl,

    Good to learn from your experiences. I'm new to consulting so I really appreciate your guidance on my recent experience. I recently had a client (Company A) who didn't pay an invoice for a speaking engagement that I did on their behalf at a company (I'll call Company B) interested in learning how to align BA skills and work with the companies move to more Agile practices.

    After 5 months and several phone calls and emails I had almost given up and was preparing to write off the work as bad debt (due to non-payment of the invoice) until someone in their billing department contacted me (Company A). Company A's billing department is now telling me "sorry but we forgot to have you sign a non-compete agreement before we had you speak, and so we can't pay you until you sign the agreement."

    What would you do Karl? Would you sign the after the fact required non-compete agreement even though Company B was not Company A's client at the time? Or should I sign the agreement, possibly lose out on work with Company B, in order to pacify Company A and get paid. By the way, the invoice was heavily discounted (my rookie mistake for not charging a fair rate for my time to interview, prepare and deliver the talk) so the money is not really the issue as much as maintaining good client relations and possibly securing a new client in Company B.

    Thanks in advance Karl,
    Jeanette

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  4. Hi Jeanette -- Bummer. Personally, I would never sign a non-compete agreement with any client. I'm happy to sign nondisclosure agreements, but I would never permit one company to dictate who I could or could not work for, or what presentations I could and could not deliver (except if the presentation was specifically a work made for hire for a particular client). Also, in this case it is Company A's problem, because they did not think to present you with the non-compete agreement prior to the presentation. It is not your problem that they failed to follow their procedures (thereby not giving you an opportunity to negotiate if you didn't like their request) and are attempting to impose their restrictive policy on you ex post facto.

    If this were me, I would decline to sign the non-compete agreement, refer to the terms of the original agreement you executed with Company A (which I hope you have in written form!), and demand payment immediately from Company A. And I would send this response to the president of Company A, considering how long you have waited and how much you've tried to get them to pay you. But that's just me :-)

    Karl

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  5. In the mid 1990s, one of my clients involved me in a limited-scope custom software project, and he was very happy with the results. He decided to fund an enterprise database solution, beginning with a customer modle. I was to help develop the requirements and the software.

    The client asked his staff of half a dozen or so to come in on a Saturday morning for the initial requirements development session. They did, and early on in the meeting, the client sort of took over the conversation and started describing the database table structure that I was to create. Gently at first, I reminded him that even though solution ideas can imply requirements, I wasn't comfortable with bypassing the requirements process and having him tell me how to design the software. I'd made that clear in the consulting agreement, plus my approach made sense too. Besides, there was a logical flaw in the client's proposed design, so I wasn't happy to accept it for that reason too.

    I calmly explained my concerns at both the relationship and the technical levels, but the client (who was also the company president, CEO, founder and manager of the company) became more and more agitated, and insisted that we do it his way, politically and technically. I continued to politely refuse. Eventually, his staff said "we were marginally OK with donating our Saturday morning for a requirements session, but not to sit here and watch you two argue, so we're leaving." That ended the project.

    More than fifteen years later, my phone rang. That same client, now wiser, wanted to hire someone who would with integrity and courage give him straight answers to difficult questions. He rehired me and so far this year he's already spent several thousand dollars on my involvement in his latest project.

    As always, he's getting candid answers, and this time around, he is very appreciative.

    So, sometimes letting a client go, for the right reasons, has a happy ending.

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  6. Andre, thanks for sharing this story. It's interesting that the difficult client remembered your integrity and courage after all that time. I think we always regret giving in to unreasonable people if it means violating our personal standards or ethics.... Karl

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