Special Orders Don’t Upset Us…
Have you ever filled a customer ask you wish they hadn’t asked for? Maybe they placed a special order you expected would be incredibly difficult to offer. Or you despised the manufacturer supplying the part. Whatever the reason, you didn’t want to disappoint them so you took the order anyway.
You don’t want clients thinking you don’t want their business. But you also don’t want to become resentful fulfilling a difficult request because your customers will pick up on your frustration. Yet there is a way to proceed so disagreeable jobs are worth your while:
include an inconvenience factor in your price. A difficult job should cost relatively more than an easy one despite your cost. Whenever you make a sale, be joyous, not fearful.
You can phase out obsolete products this way without losing clients. If you want to stop offering a particular item, don’t drop it or you’ll drop the value your clients perceive they get through you.
Look, every company changes its offerings over time. Retailers change distributors, service firms change their portfolio, and wholesalers drop or add manufacturers as they suffer quality problems or change direction.
But don’t tell your customers of the internal reasons for not wanting to offer a particular product. They just want service, not to hear about your supply chain problems. And if you drop a part, they’ll have to go to your competitor.
Allow your client the choice. Even if they don’t buy from you at that time, by not refusing them you still place yourself as a one-stop-shop and keep your relationship intact.
As legacy sales become more dated and thus more difficult, your price tag can grow increasingly expensive. This continues until the customer sees that the cost to upgrade outweighs the inconvenience of buying new equipment.
Clients want control of a transaction. It’s when they feel out of control that emotions bubble and tempers flare. Your job is to lay out their options and let them choose how to use the information. Don’t assume control of a decision that affects your client.
Case Study: Computer Reseller
The computer industry continually struggles with product obsolescence. Years ago even a basic computer system cost thousands of dollars, and new equipment and software took much more time to learn. Customers periodically upgraded their existing systems at a fraction of the cost of buying new ones, and most got used to upgrading.
One company had lots of customers with obsolete technology that they insisted on upgrading. In some cases these clients were captive to legacy software programs that ran on their specific machine, and the programs weren’t offered on a newer system.
As a rule, sales would price out the various components and labor, and schedule the system for upgrade. The service technicians were often unfamiliar with the older technology so the work took much more time as the staff had to retrain forgotten technology.
Sometimes staff became surly to customers while patiently trying to explain the difficulty of upgrading their old equipment. It took much longer to fulfill orders, and this infuriated clients. Customers didn’t understand nor did they care about the difficulty; they just wanted their machines upgraded and returned quickly. Occasionally the company had to pay expensive rates for specialized technical support. In extreme cases, leadership contracted specialized talent to handle upgrading one of these monstrosities.
These legacy upgrades became a sick internal joke. The service manager complained to the sales manager that continuing to offer these services was cumbersome and unprofitable. The company’s relationships with some of the clients with these legacy systems deteriorated. The situation got so tense that the company was considering discontinuing upgrades on all older technology.
This brought up an important question: how far back does ‘older technology’ go? The company brought in my team to set a policy of refusal without losing clients.
We surprised them by recommending they mark up these legacy jobs to include a surcharge. We suggested they not only charge for the cost of components and labor, but also the inconvenience. That way when sales gives a customer an exorbitant price, the customer either scrapped it and bought new, or agreed to pay the hefty fee. The service and sales managers insisted the policy would infuriate customers and vehemently opposed its implementation.
However, putting the choice in the customer’s hands solved the problem. To the company’s delight, sales discovered that it could steer clients easily by giving them two choices and incentivizing the direction they wanted them to go.
As expected, most clients opted for the less expensive path and bought new systems. However, when the company received a rare upgrade request, they charged for the inconvenience. The company profited handsomely in these cases and resurrected their relationships with their legacy clients.
They earned a reputation as an expert in a highly desirable niche. As their fame grew and the company broadened their geographic market, they eventually won a large service provider contract with a tier one manufacturer. They increased their income tremendously over the next few years, gained an unassailable competitive advantage, and earned a healthy margin.
Training Your Customers
By increasing prices and making it increasingly inconvenient for a customer to do business a previous way while opening the door to a smoother alternative, you can steer them. Give your client the choice (don’t tell them) whether they endure added hassle and cost to go ahead one way, or accept a more convenient, inexpensive alternative. You can guide them by incenting or disincenting along many dimensions of value, and in this way we can lead our clients wherever we want them to go.
In a few weeks we’ll expound upon this technique to explore other ways you can lead clients, and also use this technique with suppliers, employees, and even your own senior people. You can craft a peaceful and happy existence as an entrepreneur and I look forward to showing you the way.
The reason is because the old way lies misery, failure, and discontentment. While the new way lies happiness, profit, and contentment.
And wouldn’t you prefer to choose the easier route?
profitable business All!