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19 September, 2011

How to Deal with Difficult Customers on Price – 5 Steps

Quality service and products are key to build a lasting business.  But do you find yourself spending lots of time on  handling difficult customers that always hassle you on price, or keep trying to get more and more out of the price they’ve paid?

You know the kind – no matter how good a job you do, there’s something more that needs to be done, and always at a price less than what you’re asking. They always have something to nitpick, keep changing direction, and never seem to get what they want. And they always want those extras for nothing.

Yet something inside you keeps urging you to keep on – maybe it’s the interesting project, maybe it’s just because you think you can turn them around, and turn them into a raving fan.

You ask yourself – is this what it takes to deliver real value in today’s economy? Am I too nice?

I’ve been to those places too.  But I’m getting better at not falling into the same trap over and over.  It’s progress, and mostly just progress in one’s own mind.  Here’s what I do

How to Handle Difficult Customers Step 1 – Get your mindset right

Whether you’re just starting out or been ambling along for a while, at some point you have to get serious about your own business.  You have to be more serious about your business than they are about theirs.

How to Deal with Difficult Customers Step 2 – It’s not about You

Customers that are all about “me” are not just having a go at you personally.  You might be an easier target, but chances are high they play these games with everyone.  Don’t play the hero thinking you can turn them around.

If you genuinely have mucked up and made the customer unhappy – *own it and fix it!*  Do what it takes to make that customer happy.

If you know you’ve done a good job,  it’s not about you.  But it could be about how you explained it – more on that later.

How to Deal with Difficult Customers Step 3 – My take on discounting

Pretend you work for a hard nosed boss that refuses to let you give on price or product, because ultimately you do.  The bank doesn’t let you bargain mortgage payments, the phone company doesn’t let you haggle for a discount your phone bill, and the car financier doesn’t come take the bumper off so you can make a smaller payment.

You know yourself whether you’re charging market rate or above. If above, you’ve studied your competition, and you have a clear reason why you are worth more.

Tips for handling discount requests:

  1. Laugh – yep, laugh.  Takes courage to do this the first time, but it lets them know their idea is laughable.  And be nice about it.  Imagine you’re in their shoes – they just want the best deal they can get.  Who doesn’t? You can follow that up with:
  2. What would you like me to take away from my product/service to better fit your budget?Negotiate from there – and if you’ve put your best recommendation for a package, explain why that package is best for them.   Explain why anything taken away will give lesser results/less quality/more risk.  It’s also worth mentioning that anything taken out now costs more later. If they say “nothing – I just want you to drop your price” you can respond with
  3. I do not inflate my prices just so I can discount them.  I’ve worked my pricing out carefully so I can give you the best deal first up.   That is a business model that works, but not my chosen one.

If they’re still pushing, step back.  Danger Will Robinson, danger! Say you’ll need to think about it and get back to them.  Then do give it some very serious thought – will this difficult customer (or possible customer)  likely end up costing you?  Remember your time is a cost to your business – does your gut tell you this prospective customer will take valuable time away from “good” customers?

Then get back to them with your well thought out reasons why won’t deal.  You could say “After a considered and careful review of your situation, I don’t believe I am the best choice for what you are after.”   You might choose to refer them to someone you know, it’s always a nice touch for them. But only if you think it won’t end up in tears there too.  Wish them all the best and move on!

How to Deal with Difficult Customers Step 4 – The After Dinner Mint

Just say No.

They can have what they’re asking for (if it’s fair and reasonable), but not for free.  Remember you warned them things they add in later cost more?  Stick to it.  No-one stays in business long that gives away their products / services.

But those requests, even from difficult customers can be opportunities for you to see your services from a different view.  Perhaps you could make a more complete package by including X, perhaps you can make a next logical step out of X, perhaps X should have come first?

How to Deal with Difficult Customers – Step 5 – Stop them before they start

Most importantly, look at how you are marketing your small business.  Look carefully at your written description of an ideal customer (you do have one, don’t you?).  Look at your messaging – are you mentioning price a lot and accidentally placing your prospective customers in that mindset?  Or are you focusing on value, quality, expertise,  and so on.

And do look at your pricing.  Just because you could charge X 5 years ago, doesn’t make it right for today.  Customers are more savvy and skeptical than ever before.  They shop around more.  They too are feeling the pinch.

It’s a brave but essential skill to have – the skill of saying “no” and of walking away.  Learning to deal with difficult customers gracefully allows them to move onto their next prey, and allows you to move into relationships with customers who are profitable, value you and your work, and most importantly are fun.

If you have a nightmare story or tip on how to deal with difficult customers on price,  please share!