noelward
Well-known member
The Time has Finally Come
By Noel Ward, Editor@Large
The look on the sales manager’s face makes you wonder what bomb is about to land on your desk. He just stormed into your office, dropped his briefcase on the floor and collapsed into a chair. You brace for the worst. The saga unfolds as you hear about the latest antic of a customer known for making suppliers less than happy. By the end of the sales manager’s diatribe, you think the time has finally come.
You know your team has done all it could to keep this customer happy. Maybe it’s time to cut your losses and fire the customer. It seems scary, even crazy, but it can also be a wise move. Your world might be a better place if the customer were someone else’s problem.
Still, this presents you with a business decision that cannot be made lightly. How do you introduce the customer to the door?
Some printers simply raise prices, hoping the “annoying” customer will go away. This can work, as can availability and schedule conflicts, but can be a bit like putting a band-aid on a broken clavicle. It doesn’t help and you cannot charge enough to make up for the aggravation (a cost measured in time and stress) levied by the customer. Instead, look to the real reasons of discontent. The customer costs money (basic profitability), abuses your people or insists that everything wrong is your fault. Some may have a habit of not meeting deadlines they have set. I had one admit his company—perennially guilty of understating the work required—was a terrible client. Others can be counted on to argue about quoted prices, usually after the work is done. There are some that take 90 or more days to pay, relying on their size and brand strength to stay on your client list, a standardized bookkeeping tactic that’s frustrating and cashflow wrinkling. Some of these can be heavy-handed negotiating tactics while others may be the fault of the people buying your services and unknown to leaders of the customer’s firm.
Run the numbers
Hold one thought: Customers can always be replaced, so unless you’re really on the ropes your company and people come first. End of the day, eliminating a customer and on-boarding a new one can improve the lives of your employees and even make business better.
You probably know which customers are profitable and unprofitable—the old 80/20 rule may even apply. The nature of business is that there are usually jobs and customers you sometimes lose money on. You still run off cash flow and a line of credit, so customers regularly costing you money should pay more or be shown the door.
But which ones might you be better without? Where do you draw the line? It is not always obvious and drives such internal questions as:
Are there personal relationships with a customer requiring sensitivity or careful navigation?
One clear question drives all of these: What is best for your business?
Soft Landings are a Good Thing
It’s always best to not burn bridges. You never know how, when or if you will need a customer again, even in a different relationship, so always do your best to depart on good terms. In some instances, you may be able to explain the matters at hand and offer the option of them paying more or adhering to tighter work agreements. This may offer a hint that not all is going well so you can have a cooperative discussion about solutions. The customer may even decide to leave.
Other times you may be able your use own business strategies. For example, explain that the fit is (or will) no longer there because the new equipment you are acquiring is not right for their work. This could be run lengths, finishing needs, or your having new machines intended for labels and packaging while the customer’s needs are short-run marketing collateral. Customers usually understand this.
By Noel Ward, Editor@Large
The look on the sales manager’s face makes you wonder what bomb is about to land on your desk. He just stormed into your office, dropped his briefcase on the floor and collapsed into a chair. You brace for the worst. The saga unfolds as you hear about the latest antic of a customer known for making suppliers less than happy. By the end of the sales manager’s diatribe, you think the time has finally come.
You know your team has done all it could to keep this customer happy. Maybe it’s time to cut your losses and fire the customer. It seems scary, even crazy, but it can also be a wise move. Your world might be a better place if the customer were someone else’s problem.
Still, this presents you with a business decision that cannot be made lightly. How do you introduce the customer to the door?
Some printers simply raise prices, hoping the “annoying” customer will go away. This can work, as can availability and schedule conflicts, but can be a bit like putting a band-aid on a broken clavicle. It doesn’t help and you cannot charge enough to make up for the aggravation (a cost measured in time and stress) levied by the customer. Instead, look to the real reasons of discontent. The customer costs money (basic profitability), abuses your people or insists that everything wrong is your fault. Some may have a habit of not meeting deadlines they have set. I had one admit his company—perennially guilty of understating the work required—was a terrible client. Others can be counted on to argue about quoted prices, usually after the work is done. There are some that take 90 or more days to pay, relying on their size and brand strength to stay on your client list, a standardized bookkeeping tactic that’s frustrating and cashflow wrinkling. Some of these can be heavy-handed negotiating tactics while others may be the fault of the people buying your services and unknown to leaders of the customer’s firm.
Run the numbers
Hold one thought: Customers can always be replaced, so unless you’re really on the ropes your company and people come first. End of the day, eliminating a customer and on-boarding a new one can improve the lives of your employees and even make business better.
You probably know which customers are profitable and unprofitable—the old 80/20 rule may even apply. The nature of business is that there are usually jobs and customers you sometimes lose money on. You still run off cash flow and a line of credit, so customers regularly costing you money should pay more or be shown the door.
But which ones might you be better without? Where do you draw the line? It is not always obvious and drives such internal questions as:
- Which customers are more trouble than they are worth?
- Which customers generate most and least revenue each year?
- Which are the most and least demanding of your teams?
One clear question drives all of these: What is best for your business?
Soft Landings are a Good Thing
It’s always best to not burn bridges. You never know how, when or if you will need a customer again, even in a different relationship, so always do your best to depart on good terms. In some instances, you may be able to explain the matters at hand and offer the option of them paying more or adhering to tighter work agreements. This may offer a hint that not all is going well so you can have a cooperative discussion about solutions. The customer may even decide to leave.
Other times you may be able your use own business strategies. For example, explain that the fit is (or will) no longer there because the new equipment you are acquiring is not right for their work. This could be run lengths, finishing needs, or your having new machines intended for labels and packaging while the customer’s needs are short-run marketing collateral. Customers usually understand this.
- In some cases, a customer may expect what they think of as preferential pricing. You may be able to describe that your new job submission process requires all jobs to arrive through your new electronic storefront. Software automatically quotes each job without applying preferential treatment. This may dissuade some customers. Be sure this is also made clear on your website and through your sales team to reduce arguments.
- Other approaches include changes to policies, job specifications or turnaround times. Offering a 30-day window before your new policies and procedures take effect may help you and the customer to step away more gracefully.
- It can be a good idea to recommend another supplier that matches the customer’s needs with suggestions for making a smooth transition. This can be especially helpful when info about your customer’s customers or other restricted information is involved. This can make the transition easier and less stressful. Make sure your customer has or receives all legacy files, not just PDFs.
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