Recently, one of my clients was complaining about yet another (ridiculous) hoop one of his top customers was asking him to jump through. I suggested he not only look at the revenue this customer was bringing in but the cost of service. Finally, after some prodding and sending him this article, he did some analysis. And sure enough, slowly over the past year, the revenue and its margin weren’t matching the amount of effort he and his team were expending to keep their customer’s business. But more importantly, it was keeping my client from pursuing and supporting the new business we had identified as the keys to his company’s long term success.
How did this happen? It was one of his long-time customers that he had felt “grateful” for in the beginning of his business. But with that long-time relationship, came some baggage in the “extra” things he had done and now his company still was doing to meet the ever-increasing demands of this customer. Like a petulant toddler, “no” wasn’t in his vocabulary.
We reviewed some strategies and while he didn’t really want to lose this customer, he realized continuing the relationship on the current terms was hurting his bottom line. So, we made a plan. We went through his offerings and determined where he could be flexible and where he could be firm. He set-up a meeting with the customer to review the account. During that meeting he would review his company’s contributions to his customer’s success and let them know what changes had to happen for them to keep working together.
“I know now I have to be willing to walk away. No matter how painful it is in the short term, this just isn’t working.” He told me and I agreed.
I was proud of my client because setting boundaries in our businesses as well as our personal lives can be a tough thing to do. And often, waiting too long to set those boundaries causes unnecessary pain and suffering. We become resentful when a customer (or a friend or a family member) doesn’t live up to our expectations of how they are supposed to behave or treat us.
But really, the important thing to remember is that we have to set the boundaries in what we want and are willing to tolerate in a relationship. And here’s the thing, it’s not up to our friends, family, employees and customers to adhere to the boundaries. It’s up to us to follow-through on what we have decided as the consequence for ignoring the boundary.
In my client’s case, there were many. But the two top ones were expecting overnight service without paying a premium and slow pay on invoices. My client said, “None of our newer clients expect or demand this. It is not only costing me more to service them, they are also not compensating us. I’m financing them with their slow-pay!”
In our personal lives it may be a friend who consistently cancels at the last minute, a spouse who expects that you will do a certain chore you have not agreed on or a family member who always borrows money and never pays you back. At the end of the day, these people keep doing this because we let them. It’s no different with our customers.
Now there might be consequences from these actions should you decide to say, “I’m not waiting for you if you are more than 10 minutes late the next time we plan a dinner together.” But, your boundary setting allows everyone clarity on what will and what won’t happen. And it’s up to you to not wait more than 10 minutes the next time you do plan a dinner together. After practicing this for a while, you may find that your blood pressure goes down and your bottom line goes up.
In my client’s case, he was happy with the meeting with his customer. He said, “I’m going to give them the benefit of the doubt but I think their culture is too ingrained to do things in the way that works for us. In the short-term, my team will be more productive and this buys me a little time to obtain some customers who are better suited for my company.”