Client relationships

As many of you, I like to pride myself on maintaining good client relationships. However, I always keep a polite barrier and realize how fickle these relationships can be.

How do you handle the client who considers you "like family" only to tell you his new wife thinks you suck because she always got huge refunds now that she is married , they have to pay. Husband is self employed with lots of 1099 income and limited deductions. I thought of the politeness I showed his family , jumping through hoops and speaking to lenders on his behalf, etc. I really think I need to fix my internal policies about how much "free time" I give away because it isn't always appreciated.

Do you have an acceptable rate of churn you have for clients? One can argue it's good to have clients leave every few years and get new ones(assuming you can land new ones with relative ease). The longer they stay , the more comfortable they are calling you up, discussing various issues in their life, etc. Not too long ago, I had to explain to a long standing client that I cannot drive a few states away and perform legal work ( I am not a lawyer) for his elderly relative. I do his taxes for basically free as he is semi retired and has no money. I know he interprets things as I work for free (because I almost do for him) so he thought I could go help his relative for free as well. This is my fault. In his defense, he did offer to buy me lunch

Please don't interpret this as a cynical post. Instead, I am am merely looking at this from a cost benefit analysis.
How many of you talk to a client for a few minutes about an issue, then send out engagement and start billing in 15 minute increments? Being very rigid can be a turn off but makes for a much more profitable/ efficient practice.

Thanks for the feedback !

As I valued my time more, I found my clients did as well. Some turnover will happen, it’s healthy. As I keep doing this, I’m convinced it’s healthy to take 10% of your revenue each year and allocate cuts. Not by lowest revenue clients, but those you dislike working with the most and who don’t respect normal boundaries.

How do you handle the client who considers you "like family" only to tell you his new wife thinks you suck because she always got huge refunds now that she is married , they have to pay.

Every tax season I run into these types of issues with what I consider "less informed or stupid" clients. I don't take it personally BUT I do make it a point to explain that the refund is based on more than one factor and a change in filing status is one of them. I also make it a point to tell the problematic clients, that I follow the law and if they feel they can get a better refund elsewhere they are welcome to it

I have disengaged from many self-employed taxpayers who wanted me to do stuff that I would consider highly unethical or unlawful. One real estate broker had her housekeeper and nanny on the company books!

"I do his taxes for basically free as he is semi retired and has no money."

I have several of those clients. I learned pretty quickly to show them the real price and then discount them x%. Avoids some of the "friends" jumping on expecting that price.

Thanks all for the feedback and sound guidance !

I do not bill for everything. There are plenty of e-mails or phone calls that are not billed because I am not going to keep track a few minutes per client. If it is more substantial, I do charge but also depends on client. A lawyer is a client and we often exchange advice without billing if it is something that does not require research.

"I do his taxes for basically free as he is semi retired and has no money."

I have several of those clients. I learned pretty quickly to show them the real price and then discount them x%. Avoids some of the "friends" jumping on expecting that price.

IME that doesn't work because their friends and family expect the same discounts.

I have a social media group just for my clients. I knew i had at least two veterans when I posted a 30% discount for them. One client, who is so cheap his sister calls him stiffy, who has been receiving huge discounts when hubby did his returns and then me, had the nerve to ask what discount does a twenty year client get? My response to him was that he gets a bigger discount than the veterans. He didn't say anything after that.

How do you handle the client who considers you "like family" only to tell you his new wife thinks you suck because she always got huge refunds now that she is married

I keep it simple, but I educate them in a light and funny way that shows them. Like: "no one is taking taxes out of the husband's check. Remember you first job when you were wondering why your paycheck was so small? Well no one is taking those out of your husband's checks, so he owes at the end of the year instead" Etc.

Do you have an acceptable rate of churn you have for clients?

At first, I resisted losing clients at any cost. Now, when a cheaper and high maintenance client goes away, I've learned to be relived. I even fire them (in advance) or literally quadruple their price (in advance).

Raising prices doesn't always work, because now they will resent you, expect more, and perhaps they can't afford it. So if I suspect that it's not a good match, I just explain that my firm is moving on to more complex situations, and that our prices are no longer appropriate for them - then I give them links to firms that ARE appropriate for them.

There is a saying in the industry, "you will make about what your average client makes". If you have aspirations of making $300,000 per year, start by slowly getting rid of (most) of your clients that make less than $100,000 (for retired clients, it's more about net worth).

Get rid of the PITAs first. Keep the one's you really like if you don't mind it holding you back a bit. It's not ALL about the money (though it's mostly about the money)

I can't tell you how many very attractive women have come to me with their tax documents, needing returns and many time representation or lending or business entity organization, estate issues, divorce planning, and on and on.
The more beautiful (pageant quality) they are, the more they feel and express the sentiment that "I'm doing you
a favor consulting you, you should be paying me"...Yes really.
Now, when I feel I'm getting "played" I ask for a shocking advance payment (to retain me),
like 10-grand, to keep listening to her seemingly endless drivel, while they never pick up the check.

Do you have an acceptable rate of churn you have for clients?

I try to fire my worst and second worst clients every November or December, if I haven't already earlier in the year. Usually this doesn't cost me material gross revenue. Doing so puts a little wind back in my sails and reinvigorates me. For obvious reasons.

How do you handle the client who considers you "like family" only to tell you his new wife thinks you suck because she always got huge refunds now that she is married , they have to pay.

Stepping out of my tax shoes...AT WORST usually when someone tells you this in any conversation...."my wife thinks this about you"...it's usually "I think this about you but I'm not confrontational enough or tactful enough to figure out a way to tell you this is how I feel."

At best, you have a genuine client who isn't discrete/tactful and doesn't know how to talk to others.

FWIW.

I can't tell you how many very attractive women have come to me with their tax documents, needing returns and many time representation or lending or business entity organization, estate issues, divorce planning, and on and on.

You lucky dog

I get stuck with the ugly ones