How To Handle Difficult Situations

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I'm back from a very nice trip to South Africa where I had the opportunity to party hearty with lions, tigers, hippo's, rhino's, and elephants. At some point I'll be posting some of the photos on the website.

While I was vacationing one of my friends got into a sticky wicket with one of his large customers. This is something that just happens sometimes, no matter how hard you try to keep everyone happy.

This customer decided that the charge for his service was too high, and went around him to the manufacturer.The manufacturer buckled, and quoted pricing lower than his. This is what started the fight.

Do customers have the right to go directly to the manufacturer?

Yes, they do.

Should the manufacturer quote the customer a lower price?

No, they shouldn't, especially if their broker is bringing them a good amount of business, which is the case here. Basically the manufacturer has hung his broker out to dry, when it was the broker who brought the business to the manufacturer in the first place.

This customer is also telling everyone within earshot that they should go around the broker, and threatening to escalate a small pricing dispute into an attack on my friends business.

They are basically taking on the role of the schoolyard bully, and sabatoging otherwise stable relationships with my friends customers. In my opinion this is unethical, and if you are a manufacturer there should be a red flag waving up and down in front of you.

The question is: If they are willing to bludgeon your broker,
are they willing to bludgeon you? In most cases, yes. Their next move will be to dictate to you how much you can charge them, or they'll take their business elsewhere.

When you have a manufacturer/broker or publisher/broker arrangement there need to be iron clad rules in the arrangement.
One of the rules should be that only the broker can quote a customer, and there are no deals made directly. There are companies that handle this situation well, and companies that don't.

A company that quotes behind their brokers back to a customer is one who should be dropped by the broker. And the company that initiates that contact should be dropped too.

This may involve a short term loss. But remember, there are millions of companies that can use your service, on your terms.

Get rid of the dead weight and bad energy as fast as you can.

Years ago I dropped a huge low margin account after an analysis of my business. I got called by an incensed VP of Sales. As far as he was concerned I was out of my mind.

But I spent 25% of my sales time servicing an account that made the company 5 to 6 cents on a dollar. The rest of my accounts returned 33 to 45 cents on the dollar.

In the next six weeks I opened three new accounts that gave the company the same return as my higher margin accounts. Weeks after that I opened a huge account at a 26 per cent margin.

My point is this: There are all kinds of order takers, guys and gals that will virtually give away the store to sell volume.

Volume ain't profitable, and in many cases, it's unprofitable.

Never let someone else decide how you should run your business.
You run it the way you see fit, and sometimes that means dropping a problem customer. Life is too short to worry about their problems.

P.S. It sure was great to see South African cheering on Michael Phelps. You would have thought he grew up there.

Jim Whelan is The chairman of Board and owner of The James R Whelan Agency - The Most Powerful Name in Advertising. Please sign up for his daily free newsletter at thejamesrwhelanagency.com

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