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.

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.

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.