Have you ever noticed that when starting a new business or even expanding the current business into a new field, there is always the temptation to provide products and services extremely cheaply to early clients? It’s quite normal to want to attract as many paying customers as possible isn’t it?
So then, these early clients tend to get special treatment and why not indeed? It’s not as if the start-up doesn’t have the spare time does it? So later in the year when we start to expand we can always pull back the level of services provided to these early birds to more realistic and practical levels. Can’t we?
Short and sweet answer, no you can’t. Or at least not without potentially losing these early clients, what you see as a more practical level of service they will most certainly see as a lower level of service and not what they paid for. The result is then, almost inevitably, angry clients. Worse, the clients could end up taking their business elsewhere, even to rival start-ups that are currently offering the same level of service that you did at the beginning. Perhaps this will be a vicious circle for the clients, but it will be lost business for you.
This doesn’t necessarily have to be the end of the contract with these clients and any negative publicity that goes with cancelled contracts. As an aside thought, think about how word gets around quickly within any business, people like to talk. People especially like to talk negatively about their experiences. The business could easily lose potential clients and not even be aware of them yet. To set things right with these clients is an almost impossible task unless you are prepared to always treat them as a special case.
How can we overcome these situations? It really isn’t very complicated and there are various methodologies that could be applied:
- Don’t spoil the clients in the first place, always make sure that the level of service provided at the beginning of the contract is precisely the same level of service that is sustainable should the business be successful and busy.
- Provide this extra-special service level for any client you wish to. However, write into the contract with the client, and make sure they sign off on it, where the start level of service will be valid for a given period. After that, either reduce the level of service directly to the level intended or drop to that level in steps, also in a stipulated contracted period.
These are just two of the most obvious strategies to handle what could very quickly become an extremely difficult situation. Of course, there are many variations of the same themes and everything in between. The most important point being, not to over-stretch your business at the beginning by using your business plan and forecasts to estimate, hopefully quite accurately, where you hope to be in the foreseeable future.
Of the two strategies proposed, you may find the second one to be more realistic and reasonable. Here comes human nature for you, even if you faithfully point out during the contract negotiations phase the time limits for each level of service. There will probably still come a time, perhaps not with all clients, where they will still feel cheated in some form. People being people, we all too easy get used to a status quo and we all get upset when things change in the negative direction. No matter what was written down and agreed upon.
There is no hard and fast solution to this dilemma except to make you all aware of the power of human nature. Even highly intelligent, calm and reasonable people will get upset and annoyed should they feel, rightly or wrongly, that they are being cheated. They may not even be aware that they are thinking in this way or it may be only in their sub-conscious, but they will not be as happy with you are they once were.
Your only hope is to be constantly aware of the pitfalls and to maintain a very good and personal relation with the clients. Try not to be friends but always remain respectful and friendly (This will be a point that will be covered elsewhere in these papers). Be seen to be cooperative whenever possible. Sympathise with their business pain and offer advice when asked. More you cannot do.
Of course, should the business become more successful than forecast and, importantly, this success is sustainable. You may well be able to increase the minimum level of support provided to all clients. This will, of course, be hugely popular with your existing clients. On the down side, it will also be more expense for your business to cover. However, you may be confident enough to think that it is worth it in terms of building up your positive reputation within your industry.
Be careful here, increasing the level of service because you are successful can just as quickly turn around and cause you a lot of problems should the business become less successful in the future. Perhaps due to unforeseen market problems, economic downturns and so forth. The why is unimportant but the consequences will haunt you as you may well be forced to, what? You guessed it, reduce your level of support once again to more affordable levels.
Déjà vu? Yes indeed, you will now find yourself in exactly the same situation as before. Clients again perceive a reduction in the level of your services, in exactly the same way as already described for new clients. Only now, it isn’t just the earliest clients, it is now all of your clients.
The lesson then is to think very long and very hard before committing your business. Always assume the worst-case scenario. Further, well this article isn’t about how to run your business and I wouldn’t presume to do so. The point is to be aware of human nature at its worst and most selfish. We are all guilty of having these illogical feelings from time to time but that doesn’t make them any less real in any business.
I have concentrated on level of service in this article but, of course, the same arguments will apply to just about any business-client relation. Be aware!