Sometimes a brutally frank discussion with your customer is your only option.
Over the years, I’ve witnessed a number of customer relationships that deteriorated because the sales representative was unwilling to have an honest and open conversation with their customer. Problems languished and frustrations grew. The sales rep’s fear of angering or embarrassing their contact paralyzed him or her. In many cases both sides contributed to the problem, but from the customer’s perspective the only viable option they were left with was to find a new vendor.
It is generally acknowledged that it is easier and cheaper to sell additional products to an existing customer than to acquire a new one. While there is some dispute regarding the magnitude of the difference, some estimates indicate that new client acquisition costs as much as 8 times more than a sale to an existing customer! Early intervention can get things back on track if it is done correctly. The key is to get everything out on the table, gain agreement on a corrective plan of action, and then execute that plan.
Make sure that you:
1. Own Your Mistakes: The customer has already been impacted by the problem(s). It doesn’t help your case to be defensive or provide a series of excuses. Be honest and let them know you are serious about a solution.
2. Look at the Problems From Both Sides: Often times, the customer’s behavior has compounded problems. They might have modified their orders late in the process, given conflicting information, asked for rush deliveries on a routine basis, asked for customized processes, or failed to let you know about changes to their organization which affect your processes. If the customer doesn’t agree to alter these types of behaviors, problems are going to continue. While you may not win points with the customer during the discussion, it is the only path to problem resolution.
3. Agree On the Real Problem(s): Sometimes the actual problem is being disguised by a lot of symptoms. You will need to avoid the temptation to find a quick fix and keep working through the issues until you can highlight root causes of your problems. It is important to have the customer’s input and make certain that they agree with the problem definition.
4. Develop an Action Plan With Time Frames for Resolution: Once the issues are clear, the corrective actions need to be specific and include an owner for each action item. Time frames need to be established with a critical path determined. Execution is critical. At this stage, your customer is just waiting for an excuse to sever the relationship. Failure to hit key milestones will further stress the relationship.
5. Communicate Any Deviation From the Schedule ASAP: If a problem occurs which will cause you to miss the action plan schedule, you need to give your customer as much notice as possible. Don’t communicate the bad news in an email. Call or visit your customer, identify the problem, tell them what steps you’re taking to minimize the delay and provide an updated schedule.
6. Follow Up, Follow Up, & Follow Up: At this point, there is no such thing as over communicating. Have a regularly scheduled status meeting and keep it on the schedule until both sides agree that everything has been resolved and the relationship is back on track.
7. Consider Involving Your Executives in the Process: Key customers warrant extra attention. Executive involvement indicates how serious you are about retaining the customer, and you will find it easier to get resources allocated if you have an executive involved in the process.
8. Plan Future Growth: Once the crisis is over, your account plan needs to be updated with input from your customer. Spend time to understand their business objectives and plans. Identify ways you can help the customer reach their goals.
Troubled accounts can be saved. I had a chance to watch this process work several years ago. Within two days of taking over a new sales region, I was confronted with a problem with the largest account in the new region. The company I was working for at the time had expanded rapidly through acquisitions. This customer had been the largest account of the acquiring company at one point and had a lot of involvement with the company’s top management. Over time, our company had grown much larger and the customer was no longer one of the company’s top accounts. The main customer contact was extremely frustrated with our responsiveness and called our CEO regularly to complain.
While our growing pains contributed to some issues, the main problem was the customer refused to follow our normal implementation process and time frames. He demanded expedited order implementation and special processing as a matter of routine. I immediately scheduled a face-to-face meeting with the customer. His first statement to me was that he was getting ready to cancel our service. After listening to the litany of problems with our company, I agreed we had issues. But I also pushed back and told the customer he was part of the problem as well. I let him know that he had to stop using our CEO as his account manager. He was really angry with me, but and I explained that the CEO didn’t have the time to solve his problems – BUT that I did. I promised him that we would get the issues resolved if he would work with us.
We followed the process listed above, held regular meetings, and developed an order process and installed time frames that we could commit to and upon which he could rely. Over time, the crisis mode was replaced with a real partnership. If he did have an emergency, he would let us know and we responded effectively. Ultimately, he became our best referral source and would go out of his way to help us gain new accounts. We came close to losing his business, but ended up developing and growing our revenues.