When there is a problem the best option is to recognize it and own up. When you recognize that there is a problem then only it can be fixed.

The Usual

When we have missed out or messed up on a delivery or quality, most managers either tend to either duck and hide or pass the buck to the juniors. As the boss man, one should neither duck nor pass the buck.

The Avoidable Knee Jerk Reaction

If you tell  your customer that you are very sorry but your incompetent junior has messed it and you, who can make no mistake, will set it right straight away, the company is on an avoid list. The customer is worried about your processes your quality of staff and your ability   as the boss   to manage and will not trust you anymore to deliver good stuff.

My Experiences with Truth

I have learnt that whenever we as a company have goofed, I was the first to call up the customer, sometimes even before he found out, and tell the customer that we had slipped. Then I go on to tell him what went wrong and what are we doing to correct it. I also tell him what changes we are going to make to the process so that we do not goof again. I lay out very clearly the effect on the customer, the best case and the worst case scenario. Take it on the chin.

The Outcome

The customer, after an initial shock, will realize that we have saved him embarrassment and will appreciate it and stand by you. You have not lost a customer but gained a devotee for life. This heads up will enable the customer to plan his recovery or else when the bid situation actually hits him it is too late for his recovery and he has suffered damages or lost a customer. If you duck and don’t come clear when the situation actually hits the customer he is in a mess and his recovery is difficult and you have lost him

How we handled

Recently we found out that we have been overbilling the customer due to an oversight. We were providing two types of services, one at a  premium and the other normal. Slowly the customer’s off take of premium services went up and the normal came down. There were then a couple of months when there were no normal services only premium service.  Subsequently , and we have no record as this happened three years ago, we were billing only at premium rates without checking if there were any normal services. It was not noticed even by the customer, who paid on trust, and therefore was carried on. We found out quite by accident about this overcharging.

I got lot of advice saying that the most prudent course would be to just bill correctly from now on and don’t raise the past. It might be very messy and open us up to all kinds of audits. We were dealing with an American customer. I thought about this but my conscience would not permit. We had set reliability and trust as our differentiator.

I called the customer and told them that for the last three years we have been overbilling @7% and that we will make up by paying back 10% of the invoice value as credit. The customer was zapped and said that this is why we do business with you.

In the next blog will discuss what should one do when one cannot pay.

About the Author

 

Mr. Veer Sagar, Chairman, AOE

Mr. Veer Sagar consults and advises companies on general management, business development, cost and process management, objective creation and company positioning

Has over 48 years of general management experience in India with a particular focus on marketing and on the information technology and manufacturing sector. Currently is the chairman of Selectronic. Selectronic is one of India's earlier BPO operations.

 

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  • September 21, 2015
  • Association Entrepreneurs
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