Growth Factorials

A few years ago, a customer asked us to supply some extra material at no additional cost. We agreed to meet part of his demands. Though the customer wanted more material, he agreed to our proposal. Our team accidentally sent more material than we had agreed upon. Even though it was sent by mistake, the customer refused to return the extra items. We needed those materials for another customer, so I asked my team to request the return of the surplus. However, this request upset the customer, who then threatened to take their business elsewhere. Having learnt from our mistakes in the past, we stood firm in taking the extra material back. The customer took some time to calm down but decided to stay with us.

Situations like these are common in business-to-business (B2B) dealings in India. Business transactions usually have clear terms for delivery and payment, but a few customers try to negotiate these terms after delivery, often making unreasonable demands.

Over the years, I’ve seen many customers or partners go against the agreed terms, asking for more than what was initially decided. At first, these requests might seem manageable, and businesses often give in to maintain good relationships. However, this can quickly become unsustainable. Eventually, there comes a point where it’s impossible to accommodate further, leading to strained relationships and bitter outcomes.

Such outcomes are bad for everyone involved. To handle these situations better, businesses can follow a four-step approach:

1. Set limits: Clearly define what is acceptable and what is not to avoid constantly giving in to non-standard requests.
2. Create a process for exceptions: Establish a formal process for handling exceptions, including how to request, approve, and document them. This ensures accountability and helps review decisions later.
3. Manage expectations: Communicate openly with customers and team members about any exceptions made. Make sure everyone understands why the exception is being made and what the expected outcome is.
4. Stick to the process: Following the established process consistently shows commitment to agreements and discourages the idea that everything is negotiable. Not following the process undermines credibility and invites further challenges.

By following these steps, businesses can reduce the chances of disputes with customers and build healthier, more sustainable relationships