When Customers Treat Your Company Like a Bank, There Are Ways to Respond
Years ago (too many to mention) I worked at a local bank. When an opportunity arose to take a position at a local newspaper, I made the career change and joined the media industry. In the past 30+ years in media finance, I can't begin to tell you how many times a customer's request for a long-term payment plan or a change in my company's terms reminded me of a banking loan transaction. The fact is, people will treat your company like a bank, but only if you allow them.
We are living in unsettling financial times. Customers ask us to bend on fees and extend special payment plans beyond our published terms. To avoid losing a single customer, we are always willing to work out a plan to get the debt paid.
Unfortunately, many times the customer won't keep up with the altered terms or they default on the plan altogether. These same customers will take advantage of every benefit on offer: from value-added deals to complimentary spots. But when it comes time to pay, they'll refuse to do so. There's always an excuse. As a result, the customer you worked so hard to save will often take future business elsewhere to avoid uncomfortable conversations regarding their history with your company.
There are usually three reasons why a customer doesn't pay: 1) they don't have the money; 2) they aren't happy with the product or service; 3) they want to spend the money they owe you on something else.
If a customer doesn't have the money to pay but has full intentions of settling their obligation, chances are they will reach out, explain the situation and ask for an extension. This isn't ideal. However, by working with them and agreeing to a short extension, you earn their loyalty. They'll work harder to pay what's due. It's far better to be paid eventually than not get paid at all.
If the customer isn't happy with the product or service your company has given them, hopefully it's something that can be easily fixed. First, you need to understand your customer's perspective by having an open and honest conversation. A small fix is worth it if you can make the customer happy and ensure payment. Sometimes it's not as simple as this. And an honest conversation doesn't always diffuse the situation. You don't want to make the customer so defensive that they will ignore everything you say.
Calmly and frankly explain the policies and the terms that they were made fully aware of when they first signed up. Many times, this is enough; the client understands and makes payment. Unfortunately, not everything and everyone is fair when it comes to business. Every now and then, a customer becomes hostile. No matter what you do, it's impossible to make them happy. Depending on the amount they owe, sometimes it's not worth the controversy. It's better to simply chalk it up as a business lesson.
Then there's the client who never had any intention of paying your company. This could be for a variety of reasons. The most common one is that they want to spend their money on something else. This is the type of customer you may want to avoid. Credit checks are an easy way to do that. Contact the potential client's past business partners to learn of their credit worthiness. This is not a guarantee of payment, but it can help avoid a potential problem before it happens.
If they have no trade references, don't be afraid to ask for payment upfront. After all, they must have cash in advance terms with everyone they are currently doing business with so your request for payment in advance shouldn't be anything new to them.
Developing a good customer starts with good communication and understanding both sides of the partnership. Begin the relationship with a conversation about your company's terms. Have the customer sign a credit application agreeing to those terms. Detailed contracts stating prices as well as terms also need to be discussed and signed by the customer.
No matter how diligent you are up-front with a new customer or servicing an existing customer, sometimes you are going end up with a delinquent debtor. Just don't allow the delinquency to become long term, like a bank loan.
This article was originally published in the Mar/Apr issue of TFM.
J. Dee Stevenson is the corporate credit and collections manager at Gray Media Group Inc. She can be reached at (850) 766-4748 or dee.stevenson@Gray.TV.
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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.com/MyersBizNet.
