Category Archives: Customer Satisfaction

Contracting Disease

It is somewhat interesting to me that you can both “catch” a disease, and you can “contract” a disease. So what is the difference? The principal difference is that catch suggests a transmittable infection (ex. You can catch a cold or the flu), while contract can refer to a wider variety of diseases, including those that are not contagious (ex. You don’t catch cancer or leukemia, you contract them). I had to look this up. I didn’t say that it was engrossingly interesting to me; I said it was only somewhat interesting to me. In the business world the equivalent would be that you don’t catch a bad deal with a customer or supplier, you contract it.

So many businesses do so many things right in the ongoing process of trying to satisfy customers, so it is truly a shame that when it comes down to consummating the relationship with the customer, in the form of a contract, that they fall short of the good contractual goal. It is almost as if the business entity gets so excited at the prospect of completing the deal that they forget to write a good contract. Contracts at their most basic are very simple: Both entities in a contract want to get something, and in return are prepared to give something. Buyers want to get products or services and in return expect to provide money, and sellers want to get money and in return are prepared to provide products or services.

Beyond this it gets complicated.

Buyers want to get more products and provide less money and sellers want to get more money and provide fewer products. Herein lies the rub. How do you make sure everyone delivers what they should and pays what they should? You create a good contract.

There are many benefits and detriments associated with the advent of contracts. The greatest detriment that I can think of is that contracts gave rise to a new species of life, commonly referred to as “lawyers”. To bring a little circular logic into play here, it is good to remember that it is very difficult to “catch” a lawyer (at anything). Invariably you must “contract” them, but if you wash your hands thoroughly afterwards, while you probably will not reduce any of your risks, you will definitely feel cleaner.

I know it sounds a little trite but contracts are definitely a necessity in business. There must be some way for both parties to enforce the agreement that they are pursuing. Promises are good, and I am sure that everyone involved is both reasonable and honorable, but it still needs to be put in writing. Understand that agreements and requirements of any type can span multiple years. During that period it is not uncommon for the people who were party to the initial deal and who may understand the reasons for what was done, to move on to other roles. At the very least there needs to be a historical record of the agreement in the form of a contract so that those who follow on both sides of the agreement have something to refer to when questions arise.

This brings us to “Contracting Disease”. This is a malady that affects many businesses and is very prevalent particularly around business deadlines or at the end of any measurement period. A measurement period is usually the end of a month, quarter or year. It is during these deadlines or end of the measurement periods where usually reasonably sane organizations will succumb to one of any number of pressures and sign what is known as a bad contract.

A bad contract is the result where for whatever reason one of the parties to the contract either temporarily or permanently seemed to lose their mind and the other party to the contract lets them.

Contracts are normally designed to balance each party’s risks against the specific values that they are to receive. The standard risks are normally associated with how much of a good or service is to be supplied, how long it will be supplied, how much is to be paid for it and when it is to be paid for. There are normally many other items to be considered in a contract, but these are the primary ones, and usually any others somehow relate to these.

Contracting Disease can strike buyers at almost any time but usually occurs when the buyer either puts themselves in a position where very few if any suppliers can fulfill their product specification requests, or they find themselves in a position where an external factor has occurred and they must obtain a good or service at almost any cost in order to remain functioning. The US government is a perfect example of the self inflicted product specification contract. Government contract specifications and processes are usually incredibly complex and are pursued by only a limited number of specialized businesses. This is the type of process that results in contracts for five hundred dollar hammers and twenty five hundred dollar toilet seats. This is not an example of “you get what you pay for”. This is an example of “you pay, and you pay a lot, for what you needlessly over specify”.

A good example of the buyer’s need situation can be seen in the oil embargo of the 1970’s here in the US. OPEC decided that the US was not their friend, needed to be taught a lesson and as a result they were not going to ship any more oil to the US. This resulted in a reduced supply of gasoline at the pumps for all consumers and anyone else who drove a car. Consumers needed gasoline so that they could continue to drive their gas-guzzling cars. Enterprising gas stations recognized this opportunity and started raising their prices for gasoline far beyond any rational level based on the newly limited supply. In short they took advantage of the situation and raised the price of gasoline to unheard of exorbitant levels, but back then they would at least clean your windshield when you filled up so it wasn’t quite so bad.

Gas stations raised their price for gasoline to far more than ONE DOLLAR per gallon during the OPEC oil embargo. Can you image the nerve of those places charging more than a dollar for gas?

This was seen as price gouging and federal laws were quickly enacted to stop the practice. However, at the time, gas buyers who wanted to drive their cars had no choice but to agree the gas station’s contract and to pay the exorbitant price if they wanted any gas.

Contracting Disease can strike sellers in a myriad of ways, but it usually boils down to the fact that the buyer for whatever reason wants the buyer’s money and will agree to almost anything the buyers’ want in order to get the money. As I noted, Contracting Disease in sellers appears to be primarily a seasonal related malady. It seems to strike at the end of each quarter and especially hard at the end of the year. It is no coincidence that these periods coincide with the end of the various financial reporting periods. It is at these times that some sellers’ drives for incremental revenue (and contracts) can reach a fevered pitch.

Unfortunately (or fortunately depending on which side of the contract that you are on) there are no laws to protect sellers from themselves when it comes to selling their goods or services. This has to be one of the ultimate self regulating environments; the environment where the long term costs of signing a contract outweighs the short term inflows of money. When this self regulation does not occur, Contracting Disease sets in. In many markets it appears that buyers have recognized the periodic nature of sellers’ Contracting Disease and purposely try to wait until these high risk periods to negotiate and sign contracts.

When discussing Contracting Disease it is best to remember that buyers are usually protected in one form or another when it comes to the purchase (contract) of necessities and staples required for ongoing survival. Collusive or predatory practices by vendors are illegal. However Contracting Disease that results in a contract with incremental self inflicted risks and expenses associated with either the purchase of, or the sale of goods and services has no regulatory limit.

stead of caveat emptor (“buyer beware”) or caveat vendor (“Seller beware”), it should more accurately be Caveat Contractor.

When in Doubt….Ask

Customers are funny things. They need your product and they want your help. On the other side of the equation, you want their business. On the surface this would seem to be a relatively simple situation where the solution is obvious. You provide them the solution they want, and everyone is happy. Right?

The reality seems to be that it rarely works out that way.

My experience has been that customers know exactly what they DON’T want when they see it. They can tell you exactly where the provided solution falls short of their expectation, but only after it has been provided. By then it is too late. They are dissatisfied with the solution, and you are in recovery mode. It doesn’t matter that it is precisely what they asked for, or even demanded as part of their contract.  

Customers seem to have a very hard time defining the necessary aspects of what they want to the level where the provided solution can easily satisfy them. There is an art to getting the customer to provide you the desired, and in many instances needed information to enable you to satisfy their needs. In many instances this is because the customer is not aware of, or does not know all of the variables associated with their specific business need.

So what do you do? You start asking questions.

We have all heard the old adage: “There are no dumb questions.” This is wrong. There are an incredible number of dumb questions. If you happen to ask enough of them you can and will destroy your credibility with the customer and put your deal at risk.

On the other hand, you cannot make the customer fact finding process appear to be an interrogation. Each customer feels they are, and in most cases truly are unique. Template and check list question approaches need to be used with caution as they have a tendency to remove the individual and personal relations ship that a customer requires. It also makes them feel as though they have been “sold” to and you are now just filling out the required forms.

I recently read a book, “The Sales Messenger”, by Mary Anne Davis, where she actually addresses the art of questioning a customer. The idea was not to immediately start “selling” or interrogating, but to engage them in more of a give and take proposition. Obviously this is something all sales people want, but is much easier said than done. She did get me thinking about some of her ideas and particularly the words and approaches she uses.

Ideas such as asking your customers for “opinions” and not “decisions” as a way of creating a discussion where the customer can be induced to provide more information they may not have even known they had. We are always in a hurry to get a customer to decide if they want “this” or “that”, when it is possible that ultimately neither will end up satisfying the customer.

Opinions draw pictures, where decisions select from provided options. Unless you have all the information that has enabled you to provide the correct solution / option to that specific customers needs, the idea of looking for customer “advice”, “help” and “experience” in creating solutions for that customer can only help improve the final outcome for everyone. Asking the customer for their “beliefs” on what is important and their “priorities” on what they expect help to draw the customer deeper into the desired solution, as well as draw out the deeper information necessary to create it.

The book also brought out the negative or “fighting” words that we all use. These words have a tendency to appear when the customer’s opinion or advice does not completely match our own. When this happens we usually use words like “but…” and “however…” These words will cause contention with someone you are trying to work with.

We need to debunk another old saying here: “The customer is always right.” That is not the case. If it were, every customer would be satisfied with every purchase they have ever made. Have you ever met anyone that could say they were happy with every purchase they ever made?

Healthy contention is a good thing. It will usually result in the creation of a stronger solution. The idea is not to conflict with your customers opinion. If you believe there are aspects of the needed solution that are not reflected in your customer’s opinion, do not directly challenge them. Instead, ask them a challenging question. Get them to think about your point without conflicting with their point.

As I said, customers are funny things. I thought that the ideas in the “The Sales Messenger” on how to get the information that they need and want to give you, but may not necessarily know they have, were good. The connotation of the words that you use and the approach that you use them in are key. The creation of healthy contention versus customer conflict helps to create a stronger overall solution.

It also might end up helping make your customer more satisfied with their decision to partner with you, and more satisfied with the solution you provide them.

Start a Users Group

Communicating with customers is a key to their satisfaction and to increasing sales. It is well known that it is almost 5 times easier to sell to existing customers than it is to sell to new customers. This doesn’t mean that you should ignore obtaining new customers. You must continue to add new customers to sustain and grow the business. It means that you need to have a separate focus on each customer set.

In focusing on existing customers, one of the best ways to communicate with, and eventually sell more to them is through the creation of a “Users Group”. Creating a users group enables your customers to communicate their product and service needs, wants and desires directly to you and to other customers. If they are dissatisfied with aspects of the product, you can learn the application and desired solution. This helps build the bond with your customer and strengthens the product by identifying (and hopefully fixing) product gaps. You must be prepared to commit the necessary resources to correct any identified product issues, or this approach will not succeed. 

As with internal business teams, where you listen to and work with all business disciplines to create a cohesive solution, the users group enables you to extend this “teaming” arrangement outward to the customer. Their involvement creates ownership and buy-in on issue identification, prioritization and resolution. Their ownership and buy-in can also eventually lead to additional sales of product expansions and systems as well as references and recommendations to new customers that they should purchase your products as well.

Do not expect immediate sales increases and relationship improvements with the creation of a users group. You must be prepared to deal with any and all relationship and product issues, even those you were unaware of. However, once you get started and demonstrate your commitment to the group and their requests and product needs, they should be won over and both your sales and their satisfaction should increase.