13/01/2020 | Category: Commercial Insurance

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The media loves a rogue trader story – from doorstep scammers to botch-job builders, we’ve heard them all. But what about the rogue customers stories? Why don’t we hear more of them?

Dealing with bad customers in any business is unpleasant, but it comes with the territory. Builders and other trades regularly have to deal with customers who fail to pay up, cancel big jobs at short notice or make unjustified complaints to get money off.

According to data from the Federation of Master Builders (FMB), three in four UK builders are at risk from these ‘cowboy clients’.

Having commercial insurance will protect your business against lots of risks, but it’s just as important to identify these customers and deal with them effectively. Here’s a guide to spotting potentially problem customers and what to do next…
 

How to identify rogue customers

There are a number of warning signs that indicate if someone might turn into a problem client over the course of the project. These include:

  • They don’t pay on time (or at all): Every business needs to make money, and when a customer doesn’t pay up, they can cost a small business dearly.
  • They question your pricing: This kind of customer can put you on the defensive from the start. If they’re complaining about costs before the job starts, they’re likely to be overly-demanding and undervalue your work once you’ve been hired.
  • They have ever-changing demands: It’s virtually impossible to give a customer what they want if they keep changing the goal posts.
  • They demand all your attention: It makes no sense spending all your time on one customer. Beware of the attention seekers!
  • They are dishonest: Bad customers tell lies. For example, about what has been promised, the customer service experience, and their ability to pay. They may also like to cut corners when it comes to regulations.
  • They complain to anyone who will listen: All businesses have to deal with complaints, but some customers are more intent on complaining than others.
  • They make unreasonable demands: Customers requesting excessive revisions or your instant attention are likely to cause your business problems.

If a customer is displaying one of these warning signs, it’s worth keeping an eye on them. However, if a client is displaying a number of these signs it might be time to take action.
A house made of wooden blocks on some grass

How to deal with problem customers

The above warning signs can be summed up in the following six words: arrogance, indecisiveness, dishonesty, haggling, anxiety and demanding – character traits you’d really rather avoid in customers. Here’s how to deal with them.
 

How to deal with arrogant customers

The combination of a know-it-all attitude and unrealistic expectations can make for a tricky situation. If a client doesn’t trust you and threatens to take action against you, your best option is to pacify them. According to advice from the Better Business Bureau, this means apologising for any inconvenience, using empathetic language and sticking to the facts.
 

How to deal with indecisive customers

Indecisive people might be the polar opposite of arrogant people, but they can be just as tricky to deal with. They know what they don’t want but don’t know what they do want. The key to dealing with indecisive customers is making sure that communication is active and comes from both parties. To actively communicate with customers, you need to be proactive and clear about your chosen means of communication.
 

How to deal with dishonest customers

If a client is intent on avoiding certain regulations or not applying for a particular permit as a way to save money or speed up a project, that’s probably your cue to walk away. However, it is also your responsibility to educate clients about the consequences of such actions. A contractual agreement which sets out a client’s obligations (including any required permits) can avoid potential legal hassles if the client attempts to implicate you down the line.
 

How to deal with continually haggling customers

It’s OK for customers to quibble over costs in order to seek discounts, but it’s not OK when customers become extreme hagglers. One way to deal with these kind of problem customers is to set a discount policy, which offers a percentage off the total project costs and avoids lengthy quibbling discussions. Make sure to record detailed estimates, contracts and pay schedules to avoid confusion down the line.
 

How to deal with anxious clients

Anxious customers are usually consumed with horror stories from the TV or past experiences. If they have had previous bad experiences with tradespeople, ask if it was a one-off (if it’s a series of bad experiences, they could be a problem customer). Reassure them they are in capable hands and share positive customer reviews to build trust.
 

How to deal with demanding customers

A few contract revisions are fine. A stream of contract revisions is not. Every contractor knows to expect some changes – changing the materials being used or the position of a window is generally not an issue. But it is important that those changes are more than just a verbal agreement. Be sure to document changes and get the customer to acknowledge that changes further down the line may incur additional costs.
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How to avoid problems before they arise

Sometimes you have to rely on your gut instinct when it comes to customers. After all, you don’t lose money on jobs you don’t take.

However, if you are still unsure, there some simple questions you can ask yourself before agreeing to do a job:

  1. What is the value of keeping this customer? Or put another way, what are the consequences of losing this customer?
  2. Can you have a transparent and honest conversation with the customer? Are you on the same page?
  3. If the customer is a bad fit for your business can you refer them to someone else?

Bad customers may be part of business, but by identifying them early in the process, you can deal with them effectively and make informed decisions about what jobs to take on.

It’s also wise to remember that the contractor and customer often share responsibility, which is why having the best commercial insurance tailored to your business is essential.

At Insurance Choice, we arrange policies designed with the ever-changing world of trades in mind. To find out more about commercial insurance or to get a quote, get in touch with the team today.

Frequently asked questions

How do I deal with unhappy customers?

Dealing with unhappy customers requires a blend of empathy, active listening, and effective problem-solving skills. Start by acknowledging their concerns and expressing genuine regret for any inconvenience caused.

Listen attentively to understand the root of their dissatisfaction. Once you have a clear grasp of the issue, offer a viable solution or alternative that addresses their needs. Ensure your communication remains calm and professional throughout the interaction.

Follow up to confirm that the resolution was satisfactory, and take note of any feedback to prevent future issues. By demonstrating a commitment to customer satisfaction, you can turn a negative experience into an opportunity for building long-term loyalty.

How can I improve customer loyalty?

Improving customer loyalty hinges on providing exceptional service and consistently meeting or exceeding customer expectations. Establishing a robust loyalty programme can incentivise repeat business by offering exclusive rewards or discounts.

Additionally, personalising interactions and communications ensures customers feel valued and understood. Regularly seeking feedback and acting upon it demonstrates a commitment to continuous improvement.

Ultimately, building strong relationships rooted in trust and satisfaction is key to enhancing customer loyalty.

How can I handle customer complaints?

Effectively handling customer complaints requires a structured approach that prioritises active listening and prompt resolution. Demonstrating empathy can significantly de-escalate tension and foster a sense of understanding.

Once you have fully understood the issue, offer a solution that meets the customer's needs promptly. It is essential to follow up after the resolution to ensure customer satisfaction and to prevent recurrence. By implementing these steps, you can transform a potentially negative experience into a positive one, thereby fostering customer loyalty and trust.

What do you say to a customer who doesn't want to pay?

When addressing a difficult customer who doesn't want to pay, it is essential to remain calm and professional. Begin by understanding their concerns or reasons for refusal. Politely explain the terms and conditions of the service or product provided, emphasising the value and quality they have received.

Offer to discuss any issues they might have encountered and propose viable solutions or payment plans if necessary. Ensuring transparency and maintaining a respectful tone can help in resolving the situation amicably while reinforcing the importance of fulfilling their financial obligations.

How can I increase customer satisfaction?

Firstly, ensuring high-quality service is paramount, as it directly impacts the customer's perception of value. Secondly, excellent customer service, characterised by responsiveness, empathy, and resolution efficiency, significantly enhances satisfaction levels.

Personalising the customer experience by understanding their preferences and needs also fosters positive customer relationships. Lastly, investing in staff training ensures that employees are well-equipped to provide exceptional customer service skills, which in turn elevates the overall customer experience.

How can I handle an angry customer?

Handling angry customers requires a calm and empathetic approach. Begin by actively listening to their concerns without interruption, demonstrating that you value their perspective.

Employ phrases like "I understand" to acknowledge their feelings, which can help defuse tension.

Remain professional and composed, maintaining a tone that conveys respect and patience. Apologise sincerely for any inconvenience caused, and thank them for bringing the matter to your attention. This method can transform a negative experience into a positive resolution.

How should my business handle a demanding customer?

Handling a demanding customer requires a blend of patience, professionalism, and effective communication. Firstly, ensure that your team is trained to listen actively and empathise with the customer's concerns. Recognise that difficult customers demands, while challenging, may offer valuable insights into improving your service or product. Address a customer's problem promptly and provide clear, concise responses. This approach not only appeases the demanding customer but also demonstrates your commitment to excellence.

How can I train my staff to deal with a difficult customer?

Training your staff to effectively deal with a difficult or indecisive customer involves a structured approach that combines practical skills, emotional intelligence, and clear communication strategies. Begin by providing comprehensive training programmes that focus on active listening, empathy, and conflict resolution.

Role-playing scenarios can be an invaluable tool to simulate real-life situations and prepare employees for various challenges. Additionally, ensure that staff are well-versed in company policies and empowered with the authority to make decisions that can quickly resolve issues.