When Should Customers or Supplier Relationships Be Salvaged?

At some stage of our business we all get into that situation where tempers flares, words are exchanged, and the end result is a damaged relationship with your client or supplier.

It doesn’t matter who was right or who was wrong.  What matters is answering 3 questions:

Do you want (or rather need) to salvage the relationship?

Ok, so first things first.  Do you want to or need to salvage the relationship?

Often, we make decisions from an emotional perspective like “We actually don’t need their business” or “We don’t need to put up with this abuse or customer service”.  But have you considered that the customer or supplier is also thinking “Well we don’t need their product / service” or “We don’t need their business”?

It doesn’t matter which is true or not, as these questions are usually stated from an emotional perspective rather than a logical perspective.

If it is a customer, you need to ask yourself the following questions:

  • How much do you need the customer’s business?
  • How much is your customer worth to you per month, year, lifetime?
  • What impact will losing the customer have on your bottom line?
  • Will losing the customer negatively impact your business?
  • Could firing the customer, negatively impact your business’ reputation?

If the impact to your business is negative resulting in significant loss of revenue, then you need to consider that even if you might not WANT to salvage the relationship from a emotional perspective, from a business and logical perspective you might NEED too.

If it is a supplier, you need to ask yourself the following questions:

  • Can you get the products or services provided by your supplier, elsewhere?
  • If so, what will the impact be on your gross and net profit margins?
  • How will firing your supplier affect your ability to deliver to you customers?

If the impact to your business is negative and affects your ability to deliver to your customers, you need to consider salvaging the relationship, at least until such time that you can find an alternative supplier and/or adjust your pricing or business strategy.

By doing a proper logical analysis of the impact of losing a client or supplier, you will be able to determine if you NEED to salvage the relationship in the best interest of your business, emotions aside.

If you will not suffer a negative impact on your business, you need to consider if you WANT to salvage the relationship.

Can the relationship be salvaged?

In my experience the relationship with your customer or supplier can be salvaged, and it simply takes the right amount of leadership, influence and communication skills to have both parties shake hands and move forward.

Yes, this is a two way street, and yes, you will both have to tuck your pride and ego in your pocket.  As an experienced hostage and crises negotiator, I have learnt that most issues come as a result of perception and not reality. You need to manage the customer or supplier’s perception, not reality, if you want to resolve the situation.

More often than not, the issue that caused the breakdown in the relationship is simply due to both sides not fully understanding the other persons perspective and challenges, and a breakdown or misunderstanding in communication.

You might be upset with a supplier for not delivering or being unable to provide delivery dates, but have you considered that their might be a problem internally that is causing this and the poor sales rep you shouting at is being bombarded with dozens angry calls from customers?

What about a customer being frustrated with a service or product you have provided?  Could it be that the customer does not understand you having some internal supply issues? Or maybe they bought a product that is not what they thought it was and don’t have excess funds available to them?  Maybe their boss is coming down hard on them because your service is not up to scratch?

The point is, have you fully taken the time, emotions aside, to understand what the underlying issue is that is causing or has caused the breakdown in the relationship.

Often when you understand the underlying issues, the relationship can be easily salvaged by diplomatically discussing a solution that works for both of you.  Sometimes its as simple as providing them another point of contact.

Where a relationship cannot be salvaged, then only should you considered terminating the relationship.  But never make a decision from an emotional perspective. See the article When to Fire A Customer.

Does the other party want to try to salvage the relationship?

Ok, so we answered the first few questions.  You have determined that you either NEED to or WANT to salvage the relationship and have found a potential solution to salvage it.

So, the next question is “Does the other party want to salvage the relationship?”.

Trying to negotiate or resolve a situation with someone who is not interested, is like hitting your head against a brick wall (both from a customer and supplier perspective).  Why do it?

But before you give up, you need to consider if you are speaking to the right person to resolve the situation.  Often when I am called in to help people I mentor, I see these discussions happening with front-end staff rather than the directors or owners of the business, or at least senior management.  Remember, those on the higher levels, mostly, are also considering the same things you are in terms of the impact this will have on their business, assuming they even know there is an issue which often they have not been made aware.

Make sure you speaking to the right people with the authority to make decisions on behalf of the business and your chances of resolving the situation increases exponentially.

If you don’t know how they are, then that is bad customer or supplier management on your side, and you need to find out.

On a final note

Relationships with suppliers and customers should be managed so that it does not get to this point where you need to try salvage a broken relationship.  Deal with issues as they arise and manage them with the right people.  Be proactive, not reactive.

We need to also remember that you can never satisfy everyone, as everyone will have difference expectations.  The wonders of individuality and choice.  As a leader you need to work around that and find common ground where possible.

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