In any relationship, especially long-standing ones, emotion can often
overshadow good common sense, logic and necessity when it comes to
partnerships that just aren’t working. And, as with most relationships
– personal or business – all too often emotion brings you together with
the wrong partner and/or keeps you from breaking up with an existing
one even when you know they are holding you back. Nobody likes pain,
and let there be no mistake, breaking up is painful.
In business, breaking up can take place in a number of different ways
with a variety of different constituencies. Possibly, the easiest
relationship to break is when you change vendors and, in effect, break
up with a long-standing supplier. I think everyone has done this from
time to time. Reasons for doing so can range from the vendor changing
technical specs/capabilities to pricing issues to serious deterioration
in service levels. In this scenario of breaking up, the gains from
doing so are usually clear and preparation before doing so is thorough
with an alternative supplier standing in the wings. While all of the
implications may not have been fully thought out, the customer always
has an easier time dealing with the fallout than the vendor does, and
emotionally, it is always more painful for the vendor.
The fact is that one of the reasons that breaking up with suppliers is
done more frequently than breaking up with other constituents is
precisely because it is not painful. Further, the gain of doing so is
clear, and the emotional pain is minimal to the person doing the
breaking up. Considering how easy and painless it is to break up with
suppliers, maybe we should not be too terribly surprised as to why many
of our suppliers (and customers) have such a jaundiced eye toward
“relationships.”
Breaking up with customers, however, is another thing altogether. After
all, isn’t the customer the very constituency we are in business to
provide products and services to in the first place? And yet, many
times – more often than many of us would like to admit – breaking up
with customers is essential if our companies are to progress to the
next level and prosper. However, the reasons for breaking up with
customers are always difficult to emotionally come to grips with.
The need to break up with customers usually boils down to one of three
reasons. First, the pricing level has deteriorated to a point where the
margin generated by selling to the customer is unsatisfactory and/or
consumes a disproportionate percentage of capacity. This is tough to
come to grips with because it is too easy to get lulled into thinking
that it is possible to raise pricing and/or change the customer’s mix
to improve profitability. Equally, low-margin customers are often
larger customers where it becomes difficult to replace the customer and
their, albeit low margin, dollars easily.
The second frequent reason to break up with a customer is when payment
from a customer has stretched to a point where you feel more like a
bank than a supplier of products and services. When customers resort to
offering the payment promise of the month – with the result that all
are missed or ignored – no matter how much volume you may be doing or
have been promised, and regardless of how many years the relationship
goes back, it is time to take a serious look if you can afford that
customer. In just about every case, the answer will be “no,” and yet,
the emotional course of action will be to hold on “just a little bit
longer.”
Finally, the third reason that it is time to break up with a customer
is when communication and/or expectations deteriorate to a point where
every order becomes a time-consuming debate that results in ill feeling
on everyone’s part. This is when you must rethink if this is a customer
who fits with your long-range business plans and/or if you fit with
theirs. This can be especially notable with quality or technologies
that are continually the source of the relationship’s deterioration.
No matter how much business sense it makes, breaking up with customers
is very emotionally painful: painful for the salesperson who has worked
to build the business; painful for manufacturing who, despite their
possible grousing, counts on the volume; and painful for management
(read the boss) who can’t be sure if a better replacement customer can
be developed in enough time to pick up the slack. And yet, I know from
experience that every time I have swallowed hard and decided to break
up with a customer, as well as in every case I have ever heard of such
a tough decision having been made, as painful as it may seem at the
time, the result always leads to a better, more profitable customer mix.
This brings us to the most painful – and scary – constituency that you
will ever have to break up with: employees. Let’s face it, from time to
time it becomes necessary to face the fact that an employee(s) no
longer fits in.
This brings us back to that old song: “Breaking up is hard to do!” No
matter whom you are dealing with – supplier, customer or employee – it
is essential that everyone fully understand what is not working and
that you have taken every reasonable course of action to prevent a
break up. Breaking up is never easy, but as difficult as it may be,
sometimes it is the least painful way to continue the journey
forward.
PCD&FPeter Bigelow is president and CEO of IMI (imipcb.com);
This email address is being protected from spambots. You need JavaScript enabled to view it..
