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pjf (2464)

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I run Perl Training Australia [].

I help with Melbourne Perl Mongers.

I spend an awful lot of time talking about Perl, and have had my picture in the Australian newspapers with a camel. That's rather scary.

Journal of pjf (2464)

Thursday November 17, 2005
01:28 AM

Business tips: Interrupt your clients

[ #27611 ]

Business tips: Interrupt your clients
There's a financial concept called Goodwill. Despite the name, which makes you feel all warm and happy inside, it has a very precise definition. Goodwill is when a consumer purchases your product at a higher price than an equivalent product from your competitors. This quantifies the intuitive meaning of goodwill towards an organisation, but also covers less intuitive concepts such as brand-name loyalty.

A lot of businesses stay in business because of their goodwill assets. Our printers are a perfect example. They charge more than the bigger printing house down the road, and other printers have approached us with better deals; so why do we continue to use the same printers we've been dealing with for years? The answer is simple, we think they rock.

Our printers will work to tight deadlines. If there are problems, which there rarely are, they will fix them quickly and efficiently, and at no extra charge. They're friendly sociable people who send us cards and wine during the festive season. Our printers get an A+ for people management, and hold a large amount of goodwill because of that.

Today was the first day that I realised that there also exists badwill, which has an equally precise financial meaning. Badwill is the amount that a client will pay extra to avoid purchasing your product. The more badwill a company has, the more competitive it needs to be. Companies that hold a monopoly seem to be the ideal accumulators of badwill, they can stay in business a very long time simply because they have no competitors.

My task tomorrow is to negotiate with our suppliers to whom we feel badwill towards, ones that we'd joyfully drop given any reasonable alternative. My negotiations will involve me explaining all the ways that we've been unreasonably treated, and to set out the amount of money that we'd like to be refunded in compensation. This is an unfortunately common occurance, and while they money helps, I'd much prefer them to get their act together.

The whole thing has me wondering what generates goodwill and badwill in business relationships, and surprisingly most of it seems to revolve around a single point: communication.

The suppliers who we like the most are very good at what they do, but they also communicate. If something is going to be late or problematic, then we'll get a phone-call about that. The earlier we get the call, the longer we have to resolve the issue, and the happier we are. The important thing to note here is that these suppliers will interrupt our flow of business to warn us of upcoming problems.

The suppliers who we like the least have the opposite problem. Rather than calling us when there's a problem, we have to stumble over the problem ourselves and then call them. Worst still is when one of our clients discover the problem before we do. We have to keep on calling these suppliers to determine the status of our work, and otherwise keep the matter on-track. This is a polling type arrangement, and as we all know that consumes a lot of resources.

It seems that communication is the largest difference between our good suppliers and our bad ones. Of course, if you're running a business, you want to have goodwill with your customers. Think about how you can structure your processes to provide better communication to your clients, especially think about ways in which you can inform them in advance of anything good or bad that may affect their business. Calling your clients with bad news may be unappealing, but it's much better than them calling you after they've discovered it on their own.

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  • The printers for The Perl Review [] charge more than the other guys. I got lured away for an issue, and although the output was good, I went back to the other guys. When I did, they knew exactly who had lured me away and how they had done it and what problems I had had. I just didn't like talking to the account rep. Apparently every other client he lured away came back too, telling them the same thing.

    All reputable printers have basically the same costs, and you are going to end up paying the same. I select