How to Use Psychology to Deal With Non-Paying Clients

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Important Caveat: This is not a 3 step plan to twisting your client’s arm and forcing him to spit up your well-earned money (although when you are denied your rightful, that doesn’t seem like such a bad option right?)

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These are actually 3 mind tricks that work wayyy better than the arm-twisting, name-calling and general payment related nastiness. These work on their brains and works better than most ‘rational’ approaches.

You are in a business to earn money and when it comes to being paid for your product or service, your ultimate purpose really is this:

Short term: You want a response from the client. An unresponsive client is almost always a problematic client when it comes to payments.

Medium Term: You want to get paid (hell yeah!)

Long Term: You want to keep and grow the relationship.

Just keep your eye on these goals from day one and structure your contracts, your communication and your client service approach around these goals.

Mind Hack One: Label them as Rock Stars:

I know I know this sounds like you will be reinforcing bad behavior but allow me to explain why and how this works. First of all, you don’t label them as rock stars after they prove they aren’t worthy of this honor, you do it BEFORE.  Ideally you do it for all your clients towards the start of the relationship or do it when you see the first faint signs of a difficult client and BAM, you slap them with the rock star label.

Why this works:

Labeling theory shows that behavior of individuals is influenced by the terms used to describe them. Many studies have shown that labels turn into self-fulfilling prophecies and labeling someone as smart, dumb, good at math etc. can visibly impact the performance of the individual in that area. This works exceptionally well in client servicing, when you label them as a rock star client (via email, social media shout out or even a hand-written note) they will act consistently with that label. They can’t help it!

Mind Hack Two: Have Them do you a Favor:

Ask them for a simple favor involving minimal effort from their side. You may want to ask them to write you a testimonial for your website or a simple tweet singing your praise or even a referral.

 Why this works:

Benjamin Franklin once said:

“He that has once done you a kindness will be more ready to do you another than he whom you yourself have obliged.”

This concept was tested in numerous psychological studies and they all concluded the same thing:  If someone does a favor for you, they are likely to rationalize that you must have been worth doing the favor for. So when the times comes for them to pay, the same thinking comes into play with the client thinking: “Hmmmmm . . . I can’t really deny her right if I like this person this much, can I? If I have to pay one person, I should pay her first. . .”

Mind Hack Three: Set up a Solid Payment Funnel

Throughout your client communication cycle (from contract signing to final pay-off), there should be a parallel payment funnel running. What does this mean? That you will be bringing up the payment conversation multiple times during the client communication and not just at the time of the invoice. See the below graphic for specific details on how that would work:

 

How to Deal with Non-Paying Clients

Why this Works:

Firstly and most importantly, you have primed the clients’ brain to have these money conversations. An invoice is always a rude shock but if the money cues have been sent ahead of the invoice, the brain is actually anticipating the invoice and should therefore force your client to deal with it.

Bonus Tip One: How to deal with specific Client Excuses

Excuse: I don’t have the money right now

Response: Offer installments

Excuse: I don’t have the money. Period.

Response: Empathy followed by legal and contractual ramifications

Excuse: I am not happy with your work

Response: Ask for specific examples and check to see if they fall within your scope. If they do, agree on specific delivery parameters and if they don’t, bring up legal ramifications.

Excuse: I want more changes/ extra work etc.

Response: Refer to the contract for scoping boundaries

Bonus Tip Two:

Your engagement contract or terms of service should spell out at a  minimum the following:

 

    • The timelines for approval

 

    • Scoping boundaries

 

    • Clear demarcation of what’s included in scope and what’s not

 

    • Payment terms and legal ramifications such as late payment charges, penalties etc.

 

    • Indemnity clauses

 

Or for a simpler solution, get Your own Pocket Lawyer

 

The bottom line is this:

Human beings make most decisions emotionally first and then use rational methods to justify those decisions. This means that if you want to minimize any payment related issues with your clients, you need to give them emotional as well as rational context. There would still be people who would avoid payments on purpose but the tricks above should be able to get through to more than 90% of your clients.

Good luck and let me know if you found this of use in the comments below.

Want to REALLY nail this persuasion thing? Get your paws on the Non-Icky Persuasion Toolkit. Why…it’s free!

 

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