Do Not Say Yes When You Have to Say No: Should Marketers Espouse this Philosophy?
Having been a hardcore marketer myself for the best part of my career, and having chosen academics to play my second innings, prima facie I have no issue with "everything revolves around the customer" philosophy. However, having observed corporate affairs from close quarters (or should I say the box seat?), and finally with some gray hair (I am glad I am left with some), I sometimes wonder whether companies overdo this `anything for the customer' act. I know this statement might have already made some eyebrows raise by now. But one should be gracious enough to see both sides of the coin. After all, divergence is not a taboo anymore in progressive thinking organizations. Hence, this article!
MBT was established by first generation entrepreneurs who were new to this industry. The promoters took active part in the day-to-day operations of the company and had direct contacts with all the major customers in the country.
Gurdeep Steel Traders (GST) was the authorized dealers of MBT for Mumbai. While they largely patronized MBT, there was no exclusive arrangement, and GST was free to source requirements from other suppliers also. In fact, MBT being a relatively new player, did not have the full range of sizes, and GST sourced such items beyond MBT's range from other local/overseas manufacturers.
GST had excellent contacts with all the coach (bus body) builders in Mumbai. In 1982, one of GST's major clients got an export order from Sri Lanka for building 150 buses. While this was good news for GST, for MBT there was a hitch. The design specified by the Sri Lankan importer called for replacement of conventional round tubes by rectangular sections for reasons of safety and weight reduction. While most of the sections required for these buses were within the manufacturing range of MBT, there was a particular section 80x40 which was beyond their manufacturing range. This size accounted for 20% of the total quantity required.
Manjeet Khosla, proprietor of GST, made it very clear to the management of MBT that he would not go to other suppliers just for one size and in case MBT did not develop this size, they should be prepared to forego the order for the entire 250 metric tons.
Nitin Gupta, Managing Director of MBT held consultations with his core team and urged them to develop this size. In spite of the Manufacturing Head explaining the constraints for developing this size at such short notice, Nitin Gupta, afraid of losing the order for 250 tons, insisted that the manufacturing team should develop this size "at any cost". He impressed upon the team that GST was one of their oldest customers and there was no way they could displease the customer and prompt them go to the competitors.
Development of this size called for major modifications in the hot roll slitter, pickling line, tube mill, toolings and finishing equipment. After struggling for more than three months, the production team could successfully develop 80x40. But the lowest thickness that was feasible was 1.6 mm, whereas GST's client wanted tubes of 1.2 mm thickness.
The manufacturing Head of MBT urged his marketing counterpart to take this up with Khosla for getting the order amended from 1.2 mm to 1.6 mm. When GST was approached with this request, Khosla was furious. He accused MBT of keeping him in the dark and coming out with lame excuses for not supplying the required size after making him wait for three months. He rang Nitin Gupta and gave him a piece of his mind. He was not prepared to negotiate with his customer for any amendments, because the actual user was in Sri Lanka and any deviations in the material specification at that stage would show `Hindustan' in a poor light in front of the entire world. He threatened Nitin of diverting the entire order to Chennai Steel Tubes, who were the pioneers of the steel tube industry in India. Sensing his mood, Nitin Gupta had no choice other than committing the supply of tubes in the required thickness, for which he sought extension of delivery period by a week, which Khosla reluctantly agreed to.
The entire manufacturing team worked 24x7 to honor the commitment made by their MD. They could produce a few good tubes of 1.2 mm thickness, but the yieldwas just 45% against the normal yield of 90-95%. On final inspection, they found that 5-10% of the tubes declared good on the mill were in fact weak welded. However, bowing to delivery pressure, they went ahead with the dispatch of the consignment as any shortfall in quantity would have resulted in corresponding shortfall in the number of coaches built.
When GST's customer started using the tubes, some of the tubes could not withstand the forming and started opening up at the seam. This was viewed very seriously by GST and Khosla vented his ire on Nitin Gupta in the choicest of Punjabi vocabulary. It took further seven days for MBT to replace the defective tubes with good ones, which had to be produced afresh. As the quantity was not very large, the yield further dropped to 40%. Apart from this, other prestigious orders from major automobile customers could not be executed, leading to disruption in the production schedules.
On Nitin Gupta's insistence, Mayank Modi, Cost Accountant of MBT did an ABC of this order. The results were quite revealing, albeit disturbing. While they could recover their variable cost, the contribution was not sufficient to cover the fixed cost, leave alone generate any profits. Had they not accepted the order for 50 metric tons of 80x40, they would have achieved a decent contribution of 15%, after covering the variable costs, which is marginally higher than the average contribution for all other orders of GST executed during the year.
M/s. Supriya Carriers (SC) took care of the inbound and outbound logistics of KMS. The logistics department headed by Arvind Chinnappa coordinated with the Plant Manager of KMS and the proprietor of SC, Chandra Bose, for dispatch of outbound goods and receipt of raw materials from various local/outstation suppliers.
Pradyumn Mehta, an MBA from one of the leading business schools in Bangalore had been inducted into the top management team of KMS by his father Vikram Mehta who had founded this unit. Pradyumn was designated as JMD (Joint Managing Director) and was slowly taking over the operations of this unit from his father.
Pradyumn emphasized the importance of customer service and keeping customers at the center of their business to all his employees. He used to personally monitor the performance of the organization in terms of adherence to delivery schedules and conformance to quality standards for the top 20 customers. He was also instrumental in getting ISO-9002 accreditation for KMS in 2005, within 18 months of his joining the organization.
Mahalingam Fabricators (MF), Coimbatore, a leading manufacturer of pre-fabricated windows and doors in South India, was one of the major customers of KMS. While their monthly requirement was more than 100 MTs, they used to split the order between KMS and their competitor Madras Metal Sections (MMS), as they did not want to put all the eggs in the same basket.
Every month 4-5 Full Truck Loads (FTLs) were dispatched to MF by KMS. Material dispatched before 6 pm used to reach Coimbatore the next day. Steel being prone to rusting, all possible precautions were taken, such as packing the metal sections with HDPE and covering the consignment with tarpaulin, before issuing gate pass to the vehicle, to avoid any transit damages to the material.
On October 22, 2005, Pradyumn received a strongly worded mail from the Purchase Head of MF stating that the material dispatched on October 19 was received in fully drenched condition on the 21. Though they refused to unload the material, the truck driver insisted on the material being unloaded and the damages endorsed on the copy of the lorry receipt. Material was found to be fully rusted and therefore quarantined for further inspection by KM's representative and disposal instructions.
Pradyumn urged Arvind to investigate further into the matter. To his utter surprise Pradyumn found that only 6 MT was dispatched, though the vehicle had a carrying capacity of 10 MT. When questioned as to why the truck was underutilized, Arvind replied that because of the urgency of the material, whatever quantity was available had been dispatched, as per the instructions of the Marketing Department, though it did not form a FTL. Not satisfied with this explanation, Pradyumn held detailed discussions with the marketing, manufacturing and logistics heads and asked for a report of the dispatches made to MF during the past six months. In the meantime, one of the Quality Engineers was deputed to Coimbatore to inspect the consignment involved in the complaint.
The report submitted by the Plant Manager on the dispatches made to MF threw up more questions than answers. Almost every alternate consignment was not a FTL, but the freight charges claimed by SC were for FTL as the quantity guaranteed at the time of indenting the truck was 10 MT. When questioned about the underutilization of truck capacity, which was a direct loss to the company, Arvind put the blame squarely on the Marketing Department, which always wanted to rush consignments to MF to meet their production urgencies, even if the quantity ready for dispatch was not a FTL.
Pradyumn summoned Chandra Bose to his office and questioned him. He accused Chandra Bose of compromising with the company's interests in spite of being their authorized carrier for more than 19 years. Chandra Bose, however, put the blame on the Marketing Department. Not happy with the explanation given by Chandra Bose, Pradyumn asked him to investigate further as to what went wrong with the consignment dispatched on October 19 and report back to him immediately.
On October 25, the Quality Engineer returned from Coimbatore. He had a few photographs of the material which was really in bad shape. He informed Pradyumn that the truck reached MF's factory only on 21 afternoon. There was no tarpaulin covering the material and rainwater was dripping from the bundles of metal sections. On seeing the pictures, Pradyumn got furious and immediately rang Chandra Bose. He asked Chandra Bose to submit the investigation report within 24 hours or settle his account with KMS. In the past also, there were a few complaints about the services of SC, but the senior Mehta never took such an extreme step. When contacted by Chandra Bose, Vikram Mehta advised him to settle the matter with the JMD as he was not involved in the day-to-day affairs.
Chandra Bose became panicky as his business was at stake. He swung into action, summoned the truck driver and after a lot of cajoling and threatening, extracted the truth.
The truck driver, on noticing that only 6 MTs was loaded at KMS, saw an opportunity to make a quick buck. After crossing the Hosur check post, he picked up some chemical powder consignment from a small scale unit in SIDCO industrial estate, consigned to Pollachi (a place near Coimbatore). This consignment was loaded on the top of the metal sections of KMS. As he had to do this in a hurry, he did not deem it necessary to put back the tarpaulin and secure it tightly. As luck would have it, it rained heavily between Salem and Erode, due to which the entire cargo got wet. The wet chemical powder reacted with the steel sections and set off the rusting process. The truck driver had to go to Pollachi, unload the chemicals consignment after a lot of pleading and persuasion with the consignee. With the extra money they made, the driver and cleaner had a nice celebration in a dhaba before reporting at MF on the 21 afternoon.
Pradyumn was appalled with the sequence of events. It was true that the customer had put lot of pressure on the marketing people to dispatch material, even if it was not forming a FTL. The marketing team, in their eagerness to please the customer, took too many liberties with the dispatch system. The Plant Manager overlooked these deviations, which he thought were too trivial to be acted upon. The Logistics Head tried to accommodate his marketing colleagues and the transport carrier was not much bothered as he was paid freight charges for a FTL. Ultimately, it was the organization that suffered huge losses due to the casual attitude of all the parties concerned.
In their famous book titled Don't Say Yes, When You Want to Say No Herbert Fensterheim and Jean Baer emphasize the power of assertiveness. While being assertive certainly helps individuals to have better choices and more space in their professional and personal lives, a business organization unfortunately cannot act like individuals. Business relationships are much more complex than individual relationships and saying no to customers may not be so easy for many businessmen. This being the case, one would certainly like to know as to how business organizations should balance the `customer is boss' philosophy with the demands of other stakeholders.
First things first. Customers are not the only stakeholders of an organization. There are other stakeholders in the corporate ecosystem, i.e., promoters, financiers, suppliers, employees, government and the public at large. Apart from complying with the statutory norms and running the business along ethical lines, managers have to protect the interests of those who own the organization, whether it is the promoters who have a major stake in the company, angel investors, venture capitalists, financial institutions and banks, or a large number of shareholders who hold the company's stocks. Being customer-centric is no doubt an effective strategy to create wealth. But the question is, should it be at any cost?
It is common knowledge that beyond an optimal level, the cost of serving customers goes up exponentially. While the curve may have a manageable slope of up to 95% service level, beyond 95%, the cost of improving the service can be exorbitantly high for each incremental percentage point.
How does one deal with this? Here are a few suggestions.
Marketing Mastermind Aug,2010
CRM
-- Shailendra Dasari
Faculty Member, IBS Bangalore.
The author can be reached at
shailendra.dasari@gmail.com
Faculty Member, IBS Bangalore.
The author can be reached at
shailendra.dasari@gmail.com
The customer is king. The customer comes first. The customer is the reason for your existence. These are common adages strongly associated with marketing. However, based on real life examples drawn from one's own experience, the author brings to light the limitations of adhering to this philosophy to its extreme, and advocates adopting a more realistic stance, i.e., "Do not say yes, when you have to say no."
The first thing most marketers are taught when they join a company as trainees is the `customer is supreme' doctrine. "Do whatever you want, but never displease your customer" was what the Managing Director of my first company advised all the management trainees, during the first interactive meeting we had with him. While this had happened more than 30 years ago, I am sure even now the subject most harped upon in a majority of corporate training rooms is the importance of being customer-centric. Having been a hardcore marketer myself for the best part of my career, and having chosen academics to play my second innings, prima facie I have no issue with "everything revolves around the customer" philosophy. However, having observed corporate affairs from close quarters (or should I say the box seat?), and finally with some gray hair (I am glad I am left with some), I sometimes wonder whether companies overdo this `anything for the customer' act. I know this statement might have already made some eyebrows raise by now. But one should be gracious enough to see both sides of the coin. After all, divergence is not a taboo anymore in progressive thinking organizations. Hence, this article!
Case 1: The Section that Could Not be Made
Madhya Bharat Tubes (MBT) was engaged in the manufacture of precision steel tubes. During the 1980s, there were only four or five major manufacturers of steel tubes in the country. MBT was number two in terms of volume and had been making profits ever since it started its operations in a small town in Madhya Pradesh during the mid 1970s. MBT was established by first generation entrepreneurs who were new to this industry. The promoters took active part in the day-to-day operations of the company and had direct contacts with all the major customers in the country.
Gurdeep Steel Traders (GST) was the authorized dealers of MBT for Mumbai. While they largely patronized MBT, there was no exclusive arrangement, and GST was free to source requirements from other suppliers also. In fact, MBT being a relatively new player, did not have the full range of sizes, and GST sourced such items beyond MBT's range from other local/overseas manufacturers.
GST had excellent contacts with all the coach (bus body) builders in Mumbai. In 1982, one of GST's major clients got an export order from Sri Lanka for building 150 buses. While this was good news for GST, for MBT there was a hitch. The design specified by the Sri Lankan importer called for replacement of conventional round tubes by rectangular sections for reasons of safety and weight reduction. While most of the sections required for these buses were within the manufacturing range of MBT, there was a particular section 80x40 which was beyond their manufacturing range. This size accounted for 20% of the total quantity required.
Manjeet Khosla, proprietor of GST, made it very clear to the management of MBT that he would not go to other suppliers just for one size and in case MBT did not develop this size, they should be prepared to forego the order for the entire 250 metric tons.
Nitin Gupta, Managing Director of MBT held consultations with his core team and urged them to develop this size. In spite of the Manufacturing Head explaining the constraints for developing this size at such short notice, Nitin Gupta, afraid of losing the order for 250 tons, insisted that the manufacturing team should develop this size "at any cost". He impressed upon the team that GST was one of their oldest customers and there was no way they could displease the customer and prompt them go to the competitors.
Development of this size called for major modifications in the hot roll slitter, pickling line, tube mill, toolings and finishing equipment. After struggling for more than three months, the production team could successfully develop 80x40. But the lowest thickness that was feasible was 1.6 mm, whereas GST's client wanted tubes of 1.2 mm thickness.
The manufacturing Head of MBT urged his marketing counterpart to take this up with Khosla for getting the order amended from 1.2 mm to 1.6 mm. When GST was approached with this request, Khosla was furious. He accused MBT of keeping him in the dark and coming out with lame excuses for not supplying the required size after making him wait for three months. He rang Nitin Gupta and gave him a piece of his mind. He was not prepared to negotiate with his customer for any amendments, because the actual user was in Sri Lanka and any deviations in the material specification at that stage would show `Hindustan' in a poor light in front of the entire world. He threatened Nitin of diverting the entire order to Chennai Steel Tubes, who were the pioneers of the steel tube industry in India. Sensing his mood, Nitin Gupta had no choice other than committing the supply of tubes in the required thickness, for which he sought extension of delivery period by a week, which Khosla reluctantly agreed to.
The entire manufacturing team worked 24x7 to honor the commitment made by their MD. They could produce a few good tubes of 1.2 mm thickness, but the yieldwas just 45% against the normal yield of 90-95%. On final inspection, they found that 5-10% of the tubes declared good on the mill were in fact weak welded. However, bowing to delivery pressure, they went ahead with the dispatch of the consignment as any shortfall in quantity would have resulted in corresponding shortfall in the number of coaches built.
When GST's customer started using the tubes, some of the tubes could not withstand the forming and started opening up at the seam. This was viewed very seriously by GST and Khosla vented his ire on Nitin Gupta in the choicest of Punjabi vocabulary. It took further seven days for MBT to replace the defective tubes with good ones, which had to be produced afresh. As the quantity was not very large, the yield further dropped to 40%. Apart from this, other prestigious orders from major automobile customers could not be executed, leading to disruption in the production schedules.
On Nitin Gupta's insistence, Mayank Modi, Cost Accountant of MBT did an ABC of this order. The results were quite revealing, albeit disturbing. While they could recover their variable cost, the contribution was not sufficient to cover the fixed cost, leave alone generate any profits. Had they not accepted the order for 50 metric tons of 80x40, they would have achieved a decent contribution of 15%, after covering the variable costs, which is marginally higher than the average contribution for all other orders of GST executed during the year.
Case2: Pay for Full. Dispatch Part! At Whose Cost?
Kaveri Metal Sections (KMS) was a medium scale unit, based at Bangalore, manufacturing formed metal sections for automobile and general engineering applications. Their monthly production was about 1000 metric tons (MTs), out of which 60% was supplied to customers in Bangalore and Hosur, and the remaining 40% to other customers located at Chennai, Hyderabad and Coimbatore. Customers were generally happy with Kaveri's quality and service. M/s. Supriya Carriers (SC) took care of the inbound and outbound logistics of KMS. The logistics department headed by Arvind Chinnappa coordinated with the Plant Manager of KMS and the proprietor of SC, Chandra Bose, for dispatch of outbound goods and receipt of raw materials from various local/outstation suppliers.
Pradyumn Mehta, an MBA from one of the leading business schools in Bangalore had been inducted into the top management team of KMS by his father Vikram Mehta who had founded this unit. Pradyumn was designated as JMD (Joint Managing Director) and was slowly taking over the operations of this unit from his father.
Pradyumn emphasized the importance of customer service and keeping customers at the center of their business to all his employees. He used to personally monitor the performance of the organization in terms of adherence to delivery schedules and conformance to quality standards for the top 20 customers. He was also instrumental in getting ISO-9002 accreditation for KMS in 2005, within 18 months of his joining the organization.
Mahalingam Fabricators (MF), Coimbatore, a leading manufacturer of pre-fabricated windows and doors in South India, was one of the major customers of KMS. While their monthly requirement was more than 100 MTs, they used to split the order between KMS and their competitor Madras Metal Sections (MMS), as they did not want to put all the eggs in the same basket.
Every month 4-5 Full Truck Loads (FTLs) were dispatched to MF by KMS. Material dispatched before 6 pm used to reach Coimbatore the next day. Steel being prone to rusting, all possible precautions were taken, such as packing the metal sections with HDPE and covering the consignment with tarpaulin, before issuing gate pass to the vehicle, to avoid any transit damages to the material.
On October 22, 2005, Pradyumn received a strongly worded mail from the Purchase Head of MF stating that the material dispatched on October 19 was received in fully drenched condition on the 21. Though they refused to unload the material, the truck driver insisted on the material being unloaded and the damages endorsed on the copy of the lorry receipt. Material was found to be fully rusted and therefore quarantined for further inspection by KM's representative and disposal instructions.
Pradyumn urged Arvind to investigate further into the matter. To his utter surprise Pradyumn found that only 6 MT was dispatched, though the vehicle had a carrying capacity of 10 MT. When questioned as to why the truck was underutilized, Arvind replied that because of the urgency of the material, whatever quantity was available had been dispatched, as per the instructions of the Marketing Department, though it did not form a FTL. Not satisfied with this explanation, Pradyumn held detailed discussions with the marketing, manufacturing and logistics heads and asked for a report of the dispatches made to MF during the past six months. In the meantime, one of the Quality Engineers was deputed to Coimbatore to inspect the consignment involved in the complaint.
The report submitted by the Plant Manager on the dispatches made to MF threw up more questions than answers. Almost every alternate consignment was not a FTL, but the freight charges claimed by SC were for FTL as the quantity guaranteed at the time of indenting the truck was 10 MT. When questioned about the underutilization of truck capacity, which was a direct loss to the company, Arvind put the blame squarely on the Marketing Department, which always wanted to rush consignments to MF to meet their production urgencies, even if the quantity ready for dispatch was not a FTL.
Pradyumn summoned Chandra Bose to his office and questioned him. He accused Chandra Bose of compromising with the company's interests in spite of being their authorized carrier for more than 19 years. Chandra Bose, however, put the blame on the Marketing Department. Not happy with the explanation given by Chandra Bose, Pradyumn asked him to investigate further as to what went wrong with the consignment dispatched on October 19 and report back to him immediately.
On October 25, the Quality Engineer returned from Coimbatore. He had a few photographs of the material which was really in bad shape. He informed Pradyumn that the truck reached MF's factory only on 21 afternoon. There was no tarpaulin covering the material and rainwater was dripping from the bundles of metal sections. On seeing the pictures, Pradyumn got furious and immediately rang Chandra Bose. He asked Chandra Bose to submit the investigation report within 24 hours or settle his account with KMS. In the past also, there were a few complaints about the services of SC, but the senior Mehta never took such an extreme step. When contacted by Chandra Bose, Vikram Mehta advised him to settle the matter with the JMD as he was not involved in the day-to-day affairs.
Chandra Bose became panicky as his business was at stake. He swung into action, summoned the truck driver and after a lot of cajoling and threatening, extracted the truth.
The truck driver, on noticing that only 6 MTs was loaded at KMS, saw an opportunity to make a quick buck. After crossing the Hosur check post, he picked up some chemical powder consignment from a small scale unit in SIDCO industrial estate, consigned to Pollachi (a place near Coimbatore). This consignment was loaded on the top of the metal sections of KMS. As he had to do this in a hurry, he did not deem it necessary to put back the tarpaulin and secure it tightly. As luck would have it, it rained heavily between Salem and Erode, due to which the entire cargo got wet. The wet chemical powder reacted with the steel sections and set off the rusting process. The truck driver had to go to Pollachi, unload the chemicals consignment after a lot of pleading and persuasion with the consignee. With the extra money they made, the driver and cleaner had a nice celebration in a dhaba before reporting at MF on the 21 afternoon.
Pradyumn was appalled with the sequence of events. It was true that the customer had put lot of pressure on the marketing people to dispatch material, even if it was not forming a FTL. The marketing team, in their eagerness to please the customer, took too many liberties with the dispatch system. The Plant Manager overlooked these deviations, which he thought were too trivial to be acted upon. The Logistics Head tried to accommodate his marketing colleagues and the transport carrier was not much bothered as he was paid freight charges for a FTL. Ultimately, it was the organization that suffered huge losses due to the casual attitude of all the parties concerned.
Inferences and Learning
Both these cases can be presented to students of business management for elaborate discussion and analysis. I am sure they will come up with more than one solution and detailed implementation plan for both the cases. Let me therefore not dwell too much on the solutions. In their famous book titled Don't Say Yes, When You Want to Say No Herbert Fensterheim and Jean Baer emphasize the power of assertiveness. While being assertive certainly helps individuals to have better choices and more space in their professional and personal lives, a business organization unfortunately cannot act like individuals. Business relationships are much more complex than individual relationships and saying no to customers may not be so easy for many businessmen. This being the case, one would certainly like to know as to how business organizations should balance the `customer is boss' philosophy with the demands of other stakeholders.
First things first. Customers are not the only stakeholders of an organization. There are other stakeholders in the corporate ecosystem, i.e., promoters, financiers, suppliers, employees, government and the public at large. Apart from complying with the statutory norms and running the business along ethical lines, managers have to protect the interests of those who own the organization, whether it is the promoters who have a major stake in the company, angel investors, venture capitalists, financial institutions and banks, or a large number of shareholders who hold the company's stocks. Being customer-centric is no doubt an effective strategy to create wealth. But the question is, should it be at any cost?
It is common knowledge that beyond an optimal level, the cost of serving customers goes up exponentially. While the curve may have a manageable slope of up to 95% service level, beyond 95%, the cost of improving the service can be exorbitantly high for each incremental percentage point.
How does one deal with this? Here are a few suggestions.
· People at the helm of affairs should be totally clear about the customer service philosophy of the organization and communicate to people down the line as to how they should go about satisfying the customers. Otherwise, it would create lot of communication gap within the organization. Different employees interpret the management's philosophy differently and such divergent behaviors and actions are bound to create confusion and consequent losses. Therefore, it is the prime responsibility of the top management to communicate the organization's customer service philosophy to all the employees through regular bulletins, newsletters, case studies and well-structured training programs.
· A well-designed performance appraisal system which rewards behaviors that further the company's philosophy and punishes deviant behaviors is an effective means of making employees understand and abide by their roles and responsibilities.
· Clear-cut agreements/contracts with customers (SLAs) about the scope, specification, delivery schedule, and resolution of complaints pertaining to the product/service offered will go a long way in making the customers understand what they should expect and what they should not expect from the supplier. However, more than the legal documents, openness of communication and timeliness can help clear any possible misgivings that customers might have.
· Minimum quantity to be ordered, mode of shipment, normal lead time for executing the order, payment terms, and warranties/guarantees should be discussed beforehand and mutually acceptable terms and conditions incorporated in the contract. This is a simple but effective procedure, but is more often than not overlooked by marketers/purchasers.
· For every rule there is an exception. Customers sometimes have their own crises and urgencies. Under such circumstances, marketers should not take shelter under the terms and conditions of the contract and delay their actions. However, the customer should be informed of any such deviations having cost implications and be requested to bear the additional cost, should such crises occur in future. This is very important because some purchasers, particularly those which are large and dominant in size as compared to the supplier organization, have selective amnesia. Some of the actions which justify extra charges to be levied on the buyers are airfreight of consignments owing to the failure of some other supplier, dispatching less than full truck loads, tool set-up and changeover costs, yield losses due to production of sub-optimal quantities and cost of working overtime.
· Some marketing executives have a tendency to go overboard to dole out favors to customers just to be in their good books, compromising on the interest of the organization in the process. Managements that tend to ignore such behaviors on the part of their employees end up paying a heavy price. While the cost of providing the extra `perquisites' to customers has a direct impact on the bottom line, other customers also start demanding similar favors, thus putting severe strain on the organization's resources. Apart from this, when the key account executives leave the organization, it becomes extremely difficult for the new incumbent to withdraw such special favors, and many a time, customers may reduce their off-take unless the special privileges are restored. Periodic reviews, well-designed Management Information System (MIS), and teams rather than individuals being made responsible for key account management, are some of the possible solutions.
· Standardizing the terms and conditions of supply at the industry level has been successfully adopted by steel manufacturers. While some people accuse them of cartelizing, it makes sense to have some standard practices for industrial raw materials like steel, chemicals, etc.
· Periodic review of contracts, with ABC as an effective tool for decision making, goes a long way in identifying the customers being subsidized for the wrong reasons and renegotiating the contracts with them. This is particularly useful for services such as ERP and BPO.
Conclusion
While the importance of marketers building long-term relationships with customers for mutual benefit of the respective organizations is acknowledged beyond doubt, managements should implement proper systems and controls to ensure that neither the employees nor the customers take undue advantage of the `customer is supreme' philosophy. The case studies provided in this article are expected to provoke top managers to look at the other side of the coin and introduce necessary checks and controls to balance the interests of customers and other stakeholders. Strong leadership qualities and excellent communication skills are prerequisites for the top managers to implement the customer service process in the right spirit and achieve overall organizational objectives. Care should however be taken to ensure that such efforts are not construed as attempts to blunt the pro-customer initiatives of empowered employees, which will have a demotivating effect on them. 
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