Every business experiences this except the business without customers. The customer wants a “favor”. Can you reduce the shipping charge? Can you expedite this one time without charging me extra? Can you include the widget at no extra charge just this once? Can we have 180 day terms on this because our customer is slow payer? Can you include some extra wire or wood or sheet metal or whatever?
These “favors” fall into two categories: opportunities and annoyances. An opportunity is a chance to impress and build the relationship with a good customer. An annoyance is the incursion of added cost by a so-so customer.
I want to discuss the difference between the two and how to handle each. Most businesses try to provide good service and see all of these requests as opportunities. However, they often blow the opportunity to impress the good customer or blow margin on the so-so customer. True, all special requests are opportunities if correctly handled.
First, you have to agree that there are good customers and so-so customers. Some people would say all customers are good. Not true. The customer who doesn’t pay his bill is not a good customer. I’ve seen businesses continue to do business with customers who owe millions of dollars and are 18 months or more late in their payments. Not a good customer. The amount of business alone does not make a good customer. The big sales are often the least profitable.
Good customers are clear in their orders, pay on time and recognize your efforts to provide them with good service. So-so customers pay late, always want something extra and often change their orders. Never equally value so-so customers.
If your margins support it, feel free to allow the so-so the requested concession but require something in return. Every time you make a concession, you are teaching the so-so that you will do extra if asked. The so-so quickly learns you have the margin to do it and they will always take advantage of you.
I recommend “teaching” the so-so you are willing to help but that they need to participate in the pain of their poor planning. This takes great finesse. You must present your concession in a very positive manner but you must not permit the so-so to get 100% of their request (unless there is no cost to you). “Sure, we can expedite that. That adds $200 to the shipping cost and we’ll pick up $50 of it to help if you’ll catch up your account this week.” If they owe you thousands of dollars, you might pick up the entire [example] $200 if they will make a large payment this week. Get something from them.
This does not diminish your service in any way if done with skill. Your obligation to perform is on the original terms of sale. You can always exceed expectations. It calls for careful judgment when the customer wants “more” after agreement is reached.
It’s hard to lose a so-so. They know a good deal when they see it. Especially if they owe you money. Taking their business elsewhere doesn’t excuse what they owe you. They understand their leverage is in what they owe. Don’t let fear of not being paid force you to “give away the store”.
More importantly, be careful not to blow the opportunity with the good customer! This mistake happens as often as “over-giving” to the so-so. NOTHING wastes an opportunity to impress a good customer than saying, “okay, we’ll do it this time but next time we’ll have to charge you.” Why say that to a good customer? Most businesses punish or scold their best customers when they genuinely need a concession. The so-sos make us that way. “Yes, you’re a great customer and we’re happy to be able to this for you!” Wow! What a difference.
Rule: If you are going to grant a concession, NEVER take away from your magnanimous gift by polluting it with a scolding. NEVER. It’s better to say “no” than to make a good customer feel badly about asking for your help. The words, “okay, but just this one time” have NO place in your business.
Rule: Never give a concession to a so-so without some concession from them. Save your money for the good customers.
Shameless Promotion: I teach customer service and would be pleased to work with your business. There is always room for improvement. Improving customer service is the easiest route to more business.
Chris Reich, Author of TeachU’s Business Talk Blog