I’ve been running a search marketing agency for 10 years now, and during that time, I’ve learned a lot of valuable lessons.
The goal of most businesses is to stay profitable and grow revenue. There are times, however, when you, as the agency or consultant, may have to choose to part ways with a client.
1. Can You Break Up With The Client?
In order to have the power to break up with a client, you need the power to terminate a contract.
So when you write your contracts, be sure that they have a termination clause and that it is clearly spelled out. Determine issues such as:
- Under what circumstances can the contract be terminated early?
- How much notice must be given by one party to the other when terminating?
- What responsibilities does each party have after notice has been given?
2. When Should You Break Up With The Client?
It’s Best For The Client
It’s not uncommon to find long-term SEO contracts throughout the industry — anywhere from six to 12 months — with no cancellation clause. But sometimes, clients have to cancel, and I’d rather not burn a bridge.
In one case, I had a client that was having difficulty staying in business due to external market pressures. The client was laying off staff at a significant rate while trying to find a solution to stop the hemorrhaging. We discussed the client’s situation, and I agreed to terminate the contract early for them.
Could I have pressured them and held them to the original contractual agreement? Absolutely. But it wasn’t the right thing to do.
We left on good terms, and I know that this former client speaks highly of our firm and recommends us to others. It was the ethical course of action to take.
It’s Not A Good Personality Fit
I once had a client be very disrespectful to my female account managers within the first two weeks of working together. The client’s tone was unacceptable. After trying to encourage the client to communicate in a more professional manner, things didn’t change.
As an agency owner and manager, I am responsible for my staff and their well-being at work. I will not tolerate disrespectful treatment of my employees.
After the first two weeks and several discussions with this client, I terminated our contract and refunded all management fees. It was clear that the client was not a good personality fit for us, and we needed to free that client to find a suitable fit.
You’re Not Profitable
One mistake I often see very small SEO firms make is not tracking profitability on a client or project basis. Often, as long as the company as a whole is profitable, there is little concern about the profitability of each client or project. However, that’s a big mistake.
Ideally, each client and each project should be a profitable venture. Otherwise, it’s like paying the client for the privilege of working for them! You’re in business to make a profit, so make it a clear goal.
One issue that often affects profitability is how a company grows and changes over time. Your operational expenses and costs grow as your firm grows and therefore can affect profit if prices don’t reflect the new expenses. This is exactly what happened to me about nine years ago.
Our first year in business, we worked in the room above our garage. Our overhead expenses were low — no rent, no parking fees and so on. But as our staff grew, we moved to an office building. Immediately our operating costs went up, naturally, as we took on expenses like rent, telecommunications and more.
However, our income on existing contracts did not grow. We have auto-renew contracts, so there is often not a need to re-sign contracts annually or re-examine pricing for a client.
At one point, though, I realized that one client in particular was still paying a very low monthly fee. In fact, the monthly fee was only 33 percent of the total cost to service that contract. I was losing money and losing it fast!
I contacted the client and we discussed the situation, business person to business person. I told him that I had no choice but to either increase his fees to cover the monthly cost or to terminate the contract.
He understood, but he chose to have me terminate the contract. We left on good terms with a referenceable client, but our firm had just begun to outgrow his budget.
The Client Is Doing Something Illegal Or Unethical
If you find out your client is doing something illegal or unethical, it is likely best to separate your firm from that client and potential association with that illegal or unethical activity.
It recently came to my attention that a client of ours was not following proper accounting practices in their non-profit organization. The group was accused of misleading donors as to how their donations were spent.
I did my research. I interviewed former employees and read many articles on the matter. In the end, I felt that if the accusations were true, then in effect, we would be inadvertently aiding in that misrepresentation by attracting new donors with current messaging in the ads. I decided it was best to terminate the relationship.
3. Only Break Up When It Is Absolutely Necessary
Ideally, breakups would never be necessary. But people change, and so do companies and their needs.
Depending on how you structure contracts and how your firm grows and changes, you may need to terminate contracts occasionally. In the 10 years and hundreds of contracts I’ve executed over that time, I’ve only terminated a client contract four times, and all were absolutely necessary situations.
As a firm, you have to decide what is acceptable and what is not, and then write your contracts to support the freedom to terminate should you need to.