Get
Ready to Say "No" to Some Customers
Shortages
of employees, products, truckers and ships mean you may soon have too many
customers. Here are five things to keep in mind as you figure out who gets your
product and who goes home empty.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@TULLMAN
Every day in Republican-dominated states, MAGA
morons continue to spread anti-vax disinformation only to end up gravely
ill, or dead, while overrunning the scarce ICU capacity,
burning out medical staffs, and taxing the limited resources of their local
hospitals. It is beyond sad, not to mention completely avoidable, and still
costing thousands of lives every month.
Interestingly enough, the ICU shortage is
providing an early warning signal and an instructive model for businesses that
are already beginning to feel the pain of too few workers to fully reopen, the
lack of materials and supplies, a supply chain moving like quick-drying cement,
and growing, unsatisfied demands from increasingly unhappy customers.
Think of the resource allocation problems of
the Covid-19 wards as the canaries in the coal mine for the rest of us. Too
many heedless patients, too few intensive care beds, medication shortages,
time-consuming, ignorant efficacy disputes, and doctors and nurses working
12-hour shifts have all combined to adversely impact the levels of support and
service in far too many facilities.
While the medical profession and the military
are at least somewhat prepared for the rapid decision-making, unavoidable loss
of life, and the constant tension of triaging and prioritizing the competing
needs of sick, wounded and dying patients, most businesses aren't.
While most business's choices and challenges
aren't exactly life-threatening on a daily basis, for the vast bulk of their
existences, the owners and managers of most of these firms - large and small -
always believed that having demand for their products and services that far
exceeded their ability to meet it in a timely and professional manner was a
dream of a problem. They could hardly wait to have to worry about having too
many customers. But that's not the main constraint that they're facing
at the moment.
The world is different today. Car
manufacturers that used to jam the pipelines and fill their dealers' lots with
excess inventory ("a loaded dealer is a loyal dealer") are now
struggling to even produce sufficient vehicles to fully support the bare
minimum floor planning needs of dealers. The dealers are reluctant to take
orders and deposits for cars that may never come. Vendors of large and
expensive consumer electronics and appliances can't honestly begin to offer
their distributors and their clients even the most conservative estimates of
availability. They're all learning and hearing daily that customers don't give
a damn about their constraints and problems. They just want the goods. And, if
you can't deliver, they're happy to go elsewhere as soon as they get a better
offer. Or any offer.
So, time to face facts and start thinking
about the biggest challenge you're likely to have in the next year. Customer
triage. Or, who gets the goods when there's not enough to go around and what do
you do when you can't do it all? There have been plenty of articles written
about retaining the right customers and "firing" the ones who aren't,
but the old rules don't make a lot of sense in
times like these. So, as you are trying to decide who among of your customers
to placate and who you're gonna have to piss off, here are some key
considerations to keep in mind.
(1) Don't simply ask your
salespeople for a short list of their favorite customers.
Even on their best days, their own agendas and
priorities are rarely going to align with yours. They get paid by the sale
and/or spiff, you're in it for the long run. Take their suggestions with a
grain of salt - trust but verify. Salespeople doing something on the side for
their friends, families and even people paying them extra on the side aren't
doing you or your business any favors.
(2) Don't automatically
take the highest bidders even if people paying premiums are increasingly
common.
Apart from the serious risk of buyer's remorse
when these idiots paying huge premiums over the list prices for cars and other
scarce luxury items come to their senses, you don't want one-off buyers, you
want long-term customers who will keep returning and keep buying from your
company. You want the people who value the fact that you were willing to be
there for them in a pinch rather than ones who just figured they could buy their
way to the head of the line and don't know you from Adam.
(3) Don't get misled by the web.
Just like politics, a lot of purchasing is
local, and the Internet can really lead you astray because buyers can be from
anywhere, but, if they're remote, they're a shaky foundation to build a future
relationship on, especially for products and services which have a long tail of
after-sale service and support revenue. As every startup quickly learns, having
a small number of customers spread across cities, states, countries, and time
zones is a complete nightmare for customer service and support. Great for
bragging rights, bad as a practical matter for business.
(4) Make it clear to the folks that
you can't accommodate at the moment that they're on the list and you're doing
your best.
As with every other aspect of your business,
constant communication is critical and being fast and forthright makes a huge
difference in terms of your continued connection to your best customers. Anyone
who can read knows how tough and tight things are now and they're probably
dealing with variations of the same issues in their own lives. The truth only
hurts when you don't tell it.
(5) Don't think you're in the clear
because your products are digital rather than physical.
Sure, there's pretty much zero cost in
producing and distributing more digital copies of a software program, book or
movie, but there are still risks in random scaling because you are going to
have to deploy, implement, train and support users of these products. That's
going to tax your team and require rapid headcount growth, which in many cases
is tougher and more costly than simply manufacturing more widgets.
