Archive for June 26th, 2012

Dear Danielle: How Do I Handle Interruption of Retained Services?

Dear Danielle:

It came up that a client with whom I’m working on a retainer basis has just alerted me that in a month he will be taking 4 to 5 weeks vacation so he will interrupt the service for that period of time.Β  We started our relationship in March, so we have been working together for three months now. How do you handle this kind of situation? Is it acceptable that he interrupts the service agreement at no cost for him? One of the clauses in our Service Agreement states that if for any reason one of the parties decides to discontinue the agreement he/I should give notice to the other party at least 30 days in advance. He is almost complying with that. But this clause was meant for the finalization of the agreement, not a temporary interruption. Should I accept this? Or should I let him know that if he interrupts the service, I might not be available when he is back at work, hence I should charge at least a minimum amount to reserve his space in my roster? Thanks in advance! β€”Mirna Bajraj, MB Asistencia Virtual

Hi, Mirna! Great question; I’ll do my best to help. πŸ™‚

This is another one of those situations where there is no right way or wrong way. It all depends on how you want to run your practice and what is acceptable (or not) for you.

Obviously, we never want to hold a client hostage if they can’t or don’t want to continue working together, whatever the reason. At the same time, and as you recognize, they need to be fair to us as well. This is the reason our contracts contain a termination clause that gives both parties simple, fair and equal recourse for ending the relationship: 30 days written notice.

But this situation differs because the client isn’t saying he wants to permanently end the relationship, he simply wants to interrupt the service. And here begins our thought process.

So, the client goes on vacation and now you have an open slot on your retained client roster. Obviously, you are not going to sit around and wait for him to return. That’s income you now need and want to replace.

This is where a conversation with the client would be in order.

By all means, be gracious about his wishes. However, it would be a service to him to clarify your policies. You may want to remind him of the termination clause of your agreement with each other (i.e., proper fair notice). You might want to let him know that you don’t offer “service interruptions” per se. If a client opts to terminate the contract (per the termination clause), then the contract is ended. You are then, obviously, going to fill that slot on your roster with another client because that’s income you need to replace.

Therefore, the client needs to understand that when they return, you may not have a spot any longer for them. And, if you did have a spot, the whole contract process, etc., would naturally need to start from scratch as if they were a new client. It may also mean that your rates and other particulars may be different when they return as well.

At this point, you may want to let the client know that to keep his spot on your roster, there would need to be a continuance of service and that means continuing to pay their monthly fee.

I like to use the analogy of insurance as an example, and this would be especially apt if you are using my Value-Based Pricing methodology.

When you pay for insurance, you aren’t paying for actual use. You are paying for the event of use. In other words, we may not need to use healthcare services every month, but that doesn’t mean we get to stop paying our insurance premiums for those months we don’t use any services. We don’t pay, our insurance is cancelled, we lose our spot (and possibly our grandfathered plan) and have to start all over again new.

Another thing comes to mind… and it’s hard to tell since this client is so new, but is a vacation really the reason they are wanting to interrupt service? Might there be some other issues going on, that with some conversation, could be solved to mutual benefit?

This is another reason it’s so worthwhile, especially in the beginning stages of our retained client relationships, that we have weekly telephone meetings. It really helps us keep our finger on the pulse of things with the client, their needs and concerns, and allows us to get to know and understand them better.

Hope this helps, Mirna πŸ™‚Β  If you have additional thoughts or questions or need further clarification, please feel free to post in the comments. This will help shed more light and help others at the same time as well.