Power shift from customer to supplier

I’m sure we’ve all heard the adage “the customer’s always right”.  Theory being whilst they might be demanding, possibly even unreasonable from time to time, they are what pay the bills so you have to try your best to keep them happy.

Does this apply anymore?  I’m starting to think not.  I think there’s three main reasons for this.  How new these are I’m not sure, but it seems to increasingly be the case that suppliers call the shots.

 

Customer lethargy?

This really hits with the big corporates.

We’re all guilty of lethargy as customers here.  We’ll moan about our bank/utility provider, but very rarely change.

We’ve become accustomed to sitting through 20 minutes of “your call is really important to us, please continue to hold” automated messages, before possibly speaking to a human.  We hate it, but don’t expect other suppliers to be any different, so stick with “the devil we know”.

We also know that their price quotes are mostly marketing spin.  You go to some price comparison site, every competitor price is lower than the deal you’re on now…but that’s just because they hook you in on a low deal, then ramp up the price a year later, knowing again that whilst you’ll think about doing something about it, you probably won’t bother.

Unfortunately I don’t think there’s any way to fix this.  Perhaps we are all busier than we used to be, and the belief “they’re all as bad as each other” means we put up with it.

The corporates know this, which is why they put so little effort into customer service.  It sounds like a terrible idea for a small business to not care much about your customers…but for big corporates it seems it’s a rational business decision.

So the end result is the supplier charging you an unreasonably high price, but you as customer do nothing about it.

 

Simple supply and demand?

We’ve been trying to get a few bits of building/handyman work done over the last few years.  I imagine many people have been in the situation we’ve encountered:

So you need some work done.  You contact 3 builders, expecting 3 quotes, so you can go with the one who you felt comfortable could do the job and price was ok.  Is that what happens?  Not from my experience.

You contact 3.  One won’t respond at all.  One will come round promising the earth but then never be seen/heard from again.  The third, if you’re lucky, will actually give you a quote.

If you actually wanted 3 quotes you’d probably need to contact 10+ builders.

The above is just to get the quote.  You then confirm with the “lucky” builder that you want to press ahead, and struggle to pin them to a date when they can actually start.

Why?  I’m not a builder so don’t know for sure…but I think in the South East it’s perhaps largely a supply/demand issue.  With house prices so ridiculously high, building an extension compares well with the other option of moving to a bigger house.

This applies to far more than just building work, but is perhaps an issue only suffered when dealing with suppliers of a tailor made service, rather than an off the shelf product.

What it means is that it’s all very well being a customer with cash sitting in your pocket, but that doesn’t in itself guarantee you’ll find plenty of suppliers wanting to provide the service you’re after.  Very frustrating situation to be in, especially when all you hear on the news is about massive unemployment etc etc.

Then the work starts, things take longer than expected, cost more than quoted, you don’t get the calls with updates when you were promised…but when you ask around your peers it seems like that’s par for the course.  You therefore end up having little choice but to be grateful for the average service you get.

Only thing I don’t understand is why more suppliers don’t politely decline the work at the outset, rather than string you along with promises they seemingly have no ability to/intention of keeping.

 

Automation/systemisation reducing flexibility of suppliers?

Possibly this is the only “new” one, though could have started with Henry Ford and his no doubt slightly misquoted “you can have any colour you like, as long as it’s black”.  It’s also one I can sympathise with as a supplier.

For us to remain competitive, we need to be able to systemise things.  This largely means having Maslins clients fit a certain “mould”, so we can:
– have a database help keep track of things for us, like deadlines,
– do searches to easily find all clients who meet a certain criteria for advice purposes,
– ensure we can be on top of any tax changes that impact them (tax legislation is HUGE and constantly changing, so being an expert in every single thing is impossible).

On the MVL Online side it’s even more pronounced.  Clients need to complete an online form, again populating a database, which then has information pulled out into various templates across the lifespan of a liquidation.

This isn’t about providing bad client service, I’d certainly hope it’s about the opposite, ensuring we provide GOOD client service.  Avoiding the risk of over-promise/under-deliver, ensuring things don’t slip through cracks etc etc.

However, what it does mean is when a potential client approaches us, asking whether we can do things a different way to what we normally would, quite often the answer will be unfortunately not.  It’s not practical for us as a business to take on clients of all shapes and sizes, or each with very bespoke needs.

It also sometimes means a client who’d been happy with us to a certain point finds they have to move on.  Fortunately this is normally very amicable, and is typically due to a client becoming “too successful” and outgrowing us.

We’re of course far from the only supplier this applies to.  Indeed it’s more obvious with things like software.  Take a package like FreeAgent.  You can get it for circa £25/month and it’s great.  However, it can’t cater to every possible business.  If it doesn’t cater to yours, you could try to build your own system, but this would cost an absolute fortune in web developer time…alternatively you could of course look around for other “off the shelf” packages that might be better suited.

What you’ll quite often end up finding though is that you as the customer have to “give” in terms of what you want, because what the supplier provides is fixed.  Another example of the customer being a little low in the power rankings.

 

Interested in what other people think.  Have you been in situations where you as customer have felt very “weak”?  Or examples where you as supplier have got customers jumping through hoops just to give you money?!

3 thoughts on “Power shift from customer to supplier”

  1. “Only thing I don’t understand is why more suppliers don’t politely decline the work at the outset, rather than string you along with promises they seemingly have no ability to/intention of keeping.”
    That’s because they know they can abuse you (I share the same pub as many of them). Not that I am having a dig at builders in particular, but it is very similar with many local government contracts. If you want a good service, you have to tie them down. I have often thought of supplying my own terms and conditions to utility suppliers. Two potential outcomes:
    1. They don’t respond – therefore your terms are accepted (so long as you have stipulated this);
    2. They don’t accept – you can then go to mainstream media and expose them for what they are. That does hurt them. They may be ready to abuse customers, but bad press makes shareholders nervous.

  2. As with many things the answer (if at all) is probably that it’s more complex…..

    I’ve known customers/clients demand urgent responses, prices and programme plans NOW, then take months (or years) to commit to the project (if at all) and then, when they do finally commit, they’re surprised you’re navel deep into something else and haven’t been sitting idle waiting for their ‘GO’ command. Then they take months of nagging for payment.

    Competitiveness (and also be mindful of Felix Denis’ mantra that as a business you’re only ever going to be stealing someone else’s customer – there’s precious little completely new business) has meant that price/cost is the significant criteria to such a large degree that (being let down over) service or delivery of goods is something we’re becoming immune to. It’s complex because the issue has many strands into larger things like the global economy, a culture in flux, less time, an uncertain future and even less money. If you have to deliver your service in a highly competitive market and then cut overheads in order to do so, things are going to give. Or you fail.

    So, for builders it is probably better to say “Yes” to everything, knowing that out of 10 enquiries you only have time to price up 3 out of which 1 customer who says they want to start the build now actually hasn’t got the money, another you never hear from again/changed phone number/has moved and the third is actually the one for whom you’re doing the job. You could be honest and say “No” to the other 9 enquirers, but in the first (few) point(s) of contact it is hard to know who, if at all is actually going to see it through and press Go at a time that fits in with other projects already in hand.

    The concept of the streamlined service versus custom arrangement follows on, somewhat, from this. Hammer and Champey (the preponents of ‘Re-Engineering the Corporation’ – a book that heralded Business Process Re-engineering in the 90’s) talk about the call centre where 80% of the calls are straightforward and can be dealt with via computerised flow charts but 20% are complex and require live interaction with experienced experts. The problem is that when doing 80% well enough to make enough to ‘get by’ becomes the baseline, few will pay the extra (or the 80% does not make enough to pay the overhead of) cost of the experts the 20% need.

    I found, in my more ‘corporate’ former life, that a reasonable amount of the problems presented to me, if not urgent, actually sorted themselves out eventually anyway, So it may well be with the 20% customers. As customers we’re having to adapt to either fit the 80% flowchart model, do it oneself, or just hope that the problem ‘goes away’. And sometimes it does.

  3. Hi Fumbletrumpet, I guess your comment summarises down to two things:
    1) suppliers are rubbish BECAUSE customers are rubbish. There may well be some truth to this, but it pains me. Eg continuing with the building thing, if I’m genuinely keen to go ASAP and have funding, that the builder may treat me badly because they assume I don’t.
    2) your second point (re 80:20 and support) I guess largely tallies with my 1st and 3rd points. They can deal with the 80% for very low cost, keeping most customers satisfied with a fairly automated system. Giving great service to the remaining 20% is very expensive, and perhaps not worthwhile from a commercial perspective, so ignore them. Many will reluctantly tolerate it, others may move, but it’ll be the minority of “trouble makers”.

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