How do I stop my salespeople from taking my customers?

Monday, May 4th, 2009

Dear Norm:
I’ve heard you say that—if you run your business right—departing employees shouldn’t be able to take your customers with them. So what am I doing wrong? I give our project managers and salespeople a lot of freedom to serve customers. After a year or two, the employees walk off with the account. Each time, I get the same feeling as when I receive a letter from the IRS.
Charles

Dear Charles,
Start by looking at your hiring practices. It sounds as though you could do a better job of spotting salespeople who want to be around for the long term. You also need to be proactive. You’re asking for trouble if you and your operations people don’t have regular contact with customers. That’s the only way to make sure a customer belongs to the company, not to the salesperson. I’m careful not to step on the toes of our salespeople, and they’re happy I’m so visible. My presence gives them a competitive advantage. They’d have only one reason to object: if they didn’t really have the company’s interests at heart.
Yours truly, Norm

Permalink  |  Posted in Customers, Employees, Ethics

What do I offer my father for his company?

Monday, March 23rd, 2009

Dear Norm,
Five years ago, my father brought me into his company so that he could spend more time doing outside sales. Lately, he seems to be working less and taking more cash out. Once I was told I’d be given the company; now it turns out I’ll have to buy it. I’m thirty years old. I want to grow the business, but I can’t unless we start reinvesting our profits. So it’s time to make an offer. I don’t want to pay too much, but I also don’t want to insult my father with a low offer. Any advice?
Robert

Dear Robert,
Before you offer anything, you need to do some soul-searching and life-planning. Where do you want to be in ten years? What kind of life do you want? Then design an offer that will allow you to attain your life goals. Do some research into the value of comparable businesses, and figure out what you can afford. Your proposal should specify how much you’d pay, when you’d start paying, over what period of time, how much salary your father could continue to draw, and so on. You can’t fault your father for wanting to sell you the company. He built it. He has a right to get something for it. But you don’t necessarily have to buy it. In fact, you may eventually decide it’s better to leave. Just make sure you can leave on good terms. Tell your father, “Here’s my plan. I think I can do it if I buy the company from you under these conditions. I love you. I love the company. I’d like to stay. But I need a plan that’s going to let me achieve my goals.”
Yours truly, Norm

Permalink  |  Posted in Ethics, Family, Growth

Will selling to customers online upset our dealers?

Monday, March 16th, 2009

Dear Norm,
We are a $40-million manufacturer, and we distribute our products through 250 independent dealers in North America and Europe. How can we use the Internet to sell products to the end user without upsetting our loyal dealers?
Chris

Dear Chris,
I doubt your dealers will be upset as long as you sell at the same price they charge and give them a commission on any sales in their area. In fact, they’ll probably encourage you. It’s trickier if you’re planning to sell your products for less. You’re going to need the dealers’ permission to do that, and you may have to agree to pay them their normal commission on the sales in their area. In any case, the key here is communication. I’d start by sending out a questionnaire to the dealers. Tell them you want to give them an opportunity to make a lot more money by earning commissions on sales over the Internet. Explain how the system would work, and ask them what they think. As long as you communicate properly, you should be all right. If you don’t, you’ll have a problem no matter what you do.
Yours truly, Norm

Permalink  |  Posted in Customers, Dealers, Ethics, Internet

How do I handle an employee who has resigned to become a competitor?

Monday, February 23rd, 2009

Dear Norm,
One of my salespeople recently resigned and started his own company competing with mine. I subsequently learned that he had been conducting his new business on the side while he was still working for me. What should I do?
Vennie

Dear Vennie,
You should do nothing. Keep building your company and forget about the guy. Don’t let this incident cause you to lose focus on what’s really important to your business. People waste a lot of time and energy worrying about ex-employees who become competitors. When employees leave to go into competition, I wish them well and send them a plant. It’s a cactus. This guy should be history as far as you’re concerned. If he’s an unethical person, he’ll eventually get his comeuppance.
Yours truly, Norm

Permalink  |  Posted in Competitors, Employees, Ethics

What should I do about an unethical competitor?

Monday, January 5th, 2009

Dear Norm,
What should I do about an unethical competitor? I recently opened a service business that has been very successful, but our success has drawn the attention of a large established company in town, which is taking aim at us with marketing materials that misrepresent our service and professionalism. These people have played dirty before. I’d like to think their practices would catch up with them, but that hasn’t happened yet, and I’m afraid they have so much cash they can outlast the rest of us. Any advice?
Rob

Dear Rob,
Yes. Don’t lose your focus. Provide great service at competitive prices and develop a reputation as the class act in town. Give prospects the names of customers they can call to check you out. Above all, don’t badmouth your competitor, even if it’s badmouthing you. Customers will think less of you if you do. That’s an iron rule in my company. If I’m asked about a competitor I consider unethical, I say only, “I don’t think they can provide the type of service you want.” People get the message. If your competitor doesn’t mend its ways, it will be the loser in the long run.
Yours truly, Norm

Permalink  |  Posted in Competitors, Customers, Ethics