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When Does $1,895 Equal $2 Million?

Answer: When a manufacturer and its business partners let a customer become dissatisfied over what should have been a trivial sum, and wind up endangering a lucrative long-term business relationship.

“Doug, Harry [sales rep] is no longer with our company. This is a dead issue.
Harry met with the customer and the issue is between the customer and the BP/s [Business Partners]. Harry has communicated that to the customer.

I received the above email from the manufacturer's sales manager [italics mine] after two months of successfully failing to negotiate a $1,895 credit for a client with the manufacturer and their business partners. Perhaps foolishly, I would try for several more months to get the manufacturer/BPs to do the right thing. All to no avail.

The problem: The manufacturer's business partner (BP #1) had difficulties integrating the new voice mail system with the client's existing voice mail system located in another, nearby city. Both systems were from the same manufacturer. Unhappy about the installation issues, the customer brought in another business partner (BP #2) who cleaned things up/closed out the project for a modest fee of $1,895.

The customer: With ~1,500 employees, they're one of the region's largest professional service firms in their vertical market.

My mistake: Believing that getting a $1,895 credit from the vendor was going to be easy. It struck me as a relatively inexpensive customer service "no brainer" that I would resolve quickly.

Customer Service--What not to do
I contacted the manufacturer and their business partners about the billing issue. The finger-pointing and accountability deflections were immediate and went something like this:

* BP #1 (responsible for the sale and installation of the new voice mail system) claims they weren’t given a chance to correct the problems and refuses to "pay" for the services of another business partner ("the competition").

* BP #2 (they cleaned up the problem), says they want to be paid for their services. They are also providing maintenance for the customer's voice systems but don't seem interested in strengthening their position as the incumbent vendor.

* Manufacturer (responsible for supporting the BPs) claims it isn't their problem because the customer didn't "properly engage" the manufacturer to resolve the issue with BP #1 before bringing in BP #2. Apparently there is a unwritten protocol that only they know about and customers must comply with. The area sales manager and account rep seem to have a genuine disinterest in helping take care of the issue, which leads me to... * Manufacturer's Consultant Liaison Program (CLP) manager (my resource when working with the manufacturer and their business partners) is sympathetic to the situation and escalates the issue to the VP responsible for the indirect channel. My requests are pushed back by the VP to the local sales team who pushes the issue to the BPs. In an endless loop. I never do hear from the VP directly. All communication comes through the CLP to me.

At this point you may be asking: Why not just withhold payment on the $1,895 and force the issue? Good question. Unfortunately, the dollar amount isn't large enough to get anyone's attention or small enough to write off.

Eventually, the customer paid the invoice. As far as the manufacturer and BPs are concerned, the matter is closed.

Not quite. While this situation seems minor to the vendors, it isn't to the client.

Unhappy Customers Don't Usually Get Mad, They Just Take Their Business to Someone Else
Think about the last time you were unhappy with your meal or the service at a restaurant. Did you make a fuss with waiter/manager or suffer in silence, pay the bill, and tell yourself (and your companions) that you're never going to eat there again?

Unless there is a major issue, most customers (~90%) who are unhappy with their vendor’s service don't complain. They just go away. Quietly, passively, they take their business somewhere else.

That doesn't mean they don't say anything about their bad vendor experience. They do. Dissatisfied customers are glad to complain to their colleagues, industry peers, consultants, and other vendors about their lousy vendor service.

They also share their negative experiences publicly at User/Affinity Groups and industry conferences. And when unhappy customers do speak up, it has dramatic effect on potential customers who place significant importance in the experiences and opinions of peers within their respective industry.

In 3-4 years, the customer who didn't get the $1,895 credit will need to upgrade their existing voice systems. When they do, the current manufacturer and business partner won't be invited to propose for the business.

For now, the customer will endure the vendor relationship because they have to. However, they won't spend a nickel more than is absolutely necessary.

And when the time comes to buy a new system, the customer is going to show the incumbent vendor the door. And they'll do it with pleasure, all because of this $1,895 issue.

So for less than $2,000, the current manufacturer will lose out on roughly $2M in revenue over a five year period from when the new system is purchased--revenue that comes from new hardware and software, pre-paid maintenance, software upgrades, MAC work, and other miscellaneous labor + professional services.

They'll also lose market share.

They'll lose a good customer reference.

They'll lose other potential revenues from advanced CEBP applications, data network equipment, network services, and managed services that they may offer.

Sadly, I've seen this movie before. I'm always amazed at how shortsighted most sales reps/managers can be. Blinded by revenue targets, they don't see the importance of being a good business partner and delivering excellent customer service.

I often think we focus too much the technology and fail to seriously consider the human factors and behaviors that materially impact the success/failure of the companies selling communication products and services.

Behaviors that mean the difference between being perceived as a valued long-term business partner or just a "box pusher."

Behaviors that are increasingly important as manufacturers look to push more and more responsibility for their success into the hands of their business partners.


Up next, Cisco’s CUBE and then Microsoft's Lync 2010 Licensing.

Until then, all the best.