Have you ever wondered whether working for a particular client was really worth your time and effort? I bet you have. At some stage we all do. We toss up on the good and bad of working for this particular client. The good being instant gratification of income to pay the bills and the bad investing far too much time in return for pay.
Being in a situation like this can be enough to wonder what we did wrong during the initial negotiations. Did we perhaps under quote ourselves for fear of not landing the job, only to find that we would have been better off without it anyway?
Who was Pareto
The Italian economist Vilfredo Federico Damaso Pareto discovered a simple formula back in the early 1900’s that allows business owners to determine whether they are on the right track or not. The Pareto formula describes the unequal distribution of wealth in society and how it is acquired by a minority of the population.
The 80/20 Pareto law means that 20% of people control 80 % of the world’s wealth.
While the Pareto law refers to money and income, the Pareto distribution is applicable in many other types of observable phenomena, such as scientific, social and geophysical studies.
The Pareto law and effective business practice
As business owners we can eliminate a lot of unnecessary clutter that ties us down and hinders us from moving ahead by applying the Pareto law. A term frequently used in MLM is the 80/20 rule which in effect means to spend 80% or your time and energies with 20% of your team.
Applying this law to your business is a requirement if you are serious about not wanting to waste time with the wrong people or tasks.
Of all the tasks we perform each and every day, only 20% really matter if we are totally honest with ourselves. Those 20% are actually responsible for 80% of our results.
“80 percent of output is produced by 20 percent of input.” by
As you can see, it pays to look at this in order to become more effective at creating cash-flow.
How to determine on whether to sack a client with Pareto’s help
Ok, so we are not supposed to sack clients. After all they are our livelihood. While this sounds great in theory I disagree. I really don’t see the value of sticking with a difficult client just to get a bit of work.
I rather spend my time - and my energies working with clients that don’t behave like obnoxious, needy little pricks and move on. For lack of knowing, we don’t see this when we first start working with a client.
It is also hard to see which clients are producing the most income for us (and no, it isn’t always the one who pays best!).
So how can we determine whether working with someone really is beneficial for us?
Easy, head over to Freelance Switch and use their very own Pareto calculator.
By calculating data of at least 8 existing clients you will soon see on which client is most valuable to you and which ones can be sacked (especially if they annoy you).
The exercise will churn out some interesting information that might actually surprise you.
Doing this calculation will soon allow you to see whether your hunch has been right and help you to let go of your worrisome client in peace.
I’d love to know what you do, when a client annoys you to the brink of a nervous breakdown. Do you have some secret ninja method to get rid of him/her, or are you simply melting back into the ether’s of the Internet.
Monika
If you're new here, you may want to subscribe to my RSS Feed. Thanks for visiting! And please feel free to comment. Top commenter's will go into my weekly Link Love Pot
French-Canadians are notorious for passionate personalities (read: hot tempers and knee-jerk reactions). I’ve had to work on curbing instant flaming reactions extremely diligently for most of my life.
One aspect of me that helps is that I can see both sides of a situation - no matter how pissed off I am. The client has his or her point of view, and it’s valid in that it’s that person’s beliefs.
So, I take a deep breath. I walk away. I think things over and I look at both sides. I consider all the options. Then I decide what I will do and what I won’t, and I politely, quietly, calmly and diplomatically set that forth in an email. I often ask Harry to read the draft and tell me if it’s too heated still.
And I make sure that when I hit send, whatever I’ve written will help the client and I move on to a resolution that pleases us both and that is productive and positive.
@ James: you are correct. The first option would be to talk things over and try to find a solution for all involved. Unfortunately with some people this ain’t working, no matter how hard we try.
Luckily for me I’ve only had to do this once so far, but in the bigger scheme of things it is a bit like getting a divorce. (Or maybe not, LOL) Not that I would know how these work anyway.
I’m also working on that curbing bit myself.
Excellent article, as always Monika.
Knock on wood, but I’ve only every had one client really fall into this category.
I’m ashamed to admit how I handled it, frankly. I subbed out the work at cost and never worked for that client again. Not one of my better business decisions, but at the time it seemed better to delivery a less-than-spectacular product than to dump the client.
Not something I’d recommend doing. I don’t know that it has ever cost me work, but it bugs me knowing there is a client out there who probably has something not nice to say about me.
Do this more than once and you run the risk of ruining your brand.
@ Bob: You are brave to admit this. I agree though with what you are saying. Tarnishing ones reputation like that isn’t a good idea.
In the end it is good that we can all learn from our mistakes and help each other avoid making them to some extent.
It’s the one client blunder I most regret. It’s been a long time ago, in Internet years. I was young and needed the money.
To be certain, the deliverable wasn’t horrible and did meet client specs. It just wasn’t up to my usual caliber of work. I tell myself that it’s possible the client found the work acceptable. I never heard otherwise, but it does gnaw at me from time to time.
@ Bob: That happens when you are an honest to good person. Your conscience creeps up on you for doing silly things. Don’t worry though, it happens to all of us.
Hi Monika,
First things first, thanks for a great post today. You did a great job of explaining the Pareto Principle and how to apply it to freelance work. I’ve not seen that calculator over at FSw so it is nice to know about it.
I laughed at what James said, I totally understand (I’m half Irish, half French-Canadian) so I try to think about things from “the other perspective” before I respond…
well, maybe the two sides cancel each other out!
Anyway, my own past experience with this, without me really thinking about it, was a few years back when I used to build computers for people.
I figured out who was taking up most of my time, for little value, and started pointing them at some of the local teens who would work for a song… all I had to say was “I have four kids now, and no time…”
If only I could use the Pareto Principle at work and ignore the 20 percent of the people who take up 80 percent of my time… unfortunately they are all my managers!
@ Brett: you know, you raised a great idea there. I suppose we could always outsource the work of our “not so popular clients”. Never thought about this until I saw your comment.
Managers, pfft….what do you say. Seems like you have the same problem over there as we have here, too many chiefs and not enough Indians.
I guess it is harder to use this principle when we are employed. On the other hand, if some of the employers would use it on the employees, our quality of service here in Oz would be way higher.
As of right now, Australia is screaming out for qualified professionals in just about any trade.
@ Monika: I can’t take full credit for the idea, I have to give thanks to one of my best friends who also ran a similar business - it worked for him, so I thought, “why not?”
I will always remember it though.
Yes, the problems seem universal, both for management and employees. Companies would be much more successful if they would only figure this out.
Canada is the same, as is New Zealand, with regards to need for professionals - that is part of my plan to get us to NZ, I understand they predict a shortfall of 200,000 professionals per year by 2012.
I would expect it to be even greater in Oz as you have more people, so you never know - we may end up there instead. The weather is just as nice, as are the people.
Plus, there is work available in Oz right in my exact “day job” field - it would be an easy fit for me.
@ Brett: yeah, I reckon you would have no troubles getting work ASAP in your field. Thing is, Oz is a little warmer and more muggy than NZ. Unless of course you live down south.
@ Monika, I have actually looked into it as well and I know there are many positions there I could fill. The trick of course (as you know first hand) is getting there - and all that entails. But you are living proof that it is possible, so it keeps me in focus!
Warmer & muggier I can handle, especially with all the snow in the yard. I’ll have to email you a photo…
Nice post.
If you read my recent rants about jackasses and ethics, you already know about my temper, and that I have to cool myself off before I can have the confrontation. What I say all depends on the situation. Sometimes I am more willing to fight than others. Some jobs I love for more than the money. Some clients I’d drop in a heartbeat.
@ Amy: seems like we are both a bit hotheaded at times.
All though, I do have mellowed as I got older.
Personally I try to find a solution before I go the full Pareto way too, but unfortunately this isn’t always possible and then I’m afraid it is what it is.
[…] Stop Thinking and Keep Writing @ Angela Booth’s Writing Blog […]
Monika,
Great Post,
I spent six years as a top producing Realtor in the area and one of my “secrets of sucess” was in knowing when to fire a client or better yet when to say no to taking on the business in the first place. In the Real Estate business, a house that isn’t going to sell, because a client won’t respect your level of knowledge and listen to your advice, in either cleaning up the place or pricing it, is wasting your time. Newer agents, desperate for the hope of making money, take on these clients, spend tons of money advertizing, only to have the houses go off the market never to have sold. They lost money in the deal.
20% of the Realtors sell all of the houses because they follow a few very important rules…and make their clients listen.
In any business, when you are the expert, you have to decide which clients are worth the time and expense.
Great reminder. Thanks!
@ Wendy: great comment! I appreciate you mentioning the Pareto law in action in another field and industry. This just shows that the law is as it is.
It isn’t easy to say no to people, especially if you like them or have formed some kind of bond. But sometimes it is the better for all involved and will save you a lot of time, hassles and money in the end.
Thank you for stopping by and commenting.
Hi Monika - this is an excellent post and it is so true. When I first started out in business, I was just desperate to get any clients and I think this tends to attract the bad ones in droves.
After a while, I did find that I developed an instinct for who was going to be really bad the first time i spoke to them. The trouble was - I did a lot of work for insurance companies and i had to put up with their awkward customers to get more work in the future.
Never again though - we sack clients all the time. They just don’t go on our mailing lists and if they need us, we’re just too busy to deal with them.
When are you putting your new theme up? It is absolutely excellent. You’ll definitely attract better clients with it - hopefully ones who are willing to pay decent rates too.
@ Cath: That is a very smart way of sacking clients. It isn’t upsetting for anybody and you keep the relationship somewhat intact as well.
My new Portfolio site is up (has been since last night), but it isn’t here. I just launched a new post introducing this.
[…] Use The Pareto Principle To Sack Annoying Clients […]
[…] Use The Pareto Principle To Sack Annoying Clients […]