We’ve all heard the adage that the customer is always right. That’s mostly true; however, sometimes the customer is not right. But the customer is still the customer. Sometimes, the vendor or service provider cannot satisfy the customer regardless of the effort invested. This is unproductive for both parties and may derail current and future possibilities. The best time to mitigate a faltering business transaction is at the beginning.
Last year, I observed a very instructive situation. It involved my client, a third-party manufacturer’s representative, and his customer. My client’s customer had experienced a massive flooding event. He was anxious to mitigate the situation and return to the pre-event status. Post Covid, vendors were still dealing with supply chain and labor issues. Supply chains were sluggish in this industry segment, and companies were having difficulty with staffing and labor productivity. It was not an ideal situation for a smooth transaction.
The customer’s anxiety factored mightily into the conflict that followed. His life had been turned upside down by the flooding event. Understandable. He wanted to return to normal and cut corners to accelerate the process. He set a hard deadline to execute the contract the day before he went on vacation with his family. I remember a flurry of activity that evening. Emails going back and forth between my client and his customer required changes to vocabulary and schematics, which were difficult to decipher. I viewed that evening as ridiculous. My client did his best to incorporate all the required changes. Eventually, the agreement was finalized. The cost of the terms was accurately reflected in the project’s final scope.
The relationship was stressful from the beginning of the project. The customer did not want to honor payment terms, wasting time and fighting with my client. This infuriated the manufacturer. The customer only relented when the manufacturer threatened to stop the project and sue the customer.
Keys to Creating a Competent Customer
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- Maintain Clear and Open Communications
- Check References Before Closing a Deal
- Don’t Make Assumptions regarding Policy
- Talk with Other Knowledgeable Customers
- Review key terms of the agreement in advance.
- Understand your contract fully before you enter into an agreement
He made an issue of discussed components that did not make it into the agreement. Those costs were not added to the terms of the agreement, however. Said components could have been added to the project at any time, but the customer decided against it.
The manufacturer had production problems related to internal issues, including labor. This further antagonized the customer, who vented his frustration at the manufacturer. The manufacturer retaliated by slowing down the process further.
My client had worked desperately to accommodate the customer’s need to complete the agreement before his vacation. In hindsight, he should have forced the customer to slow down the process to ensure a better understanding. There was no need to work so fast.
Ultimately, the project was completed,, albeit later than expected. Nevertheless, that did not delay the overall project, as other vendors were still engaged to complete their work. However, many relationships were affected.
Normal business practices were significantly disrupted by the COVID-19 pandemic, and in many cases, companies have not fully recovered. It was a challenging time as firms were fighting to recover and survive, and hard lessons had to be relearned.
The larger the transaction, the greater the customer’s responsibility to understand and be fully versed in delivering the product or service. In other words, the customer must be confident that rough spots won’t become significant issues. As vendors or service providers, we should be sensitive to pressure points that create problems. We should address those points, verbally and in writing, with the customer before executing the agreement.
Creating a competent customer requires the vendor or service provider to educate the prospective customer. The customer must know how the relationship will work, how problems will be resolved, and how and when payments will be made. Key points in the agreement should be reviewed and understood by the customer. Investing time to clarify the mechanics of the pending relationship is well advised. Doing so will help ensure a healthy and productive working relationship.
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Jim Weber, Managing Partner – ITB Partners
Jim Weber – Managing Partner, ITB Partners
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