Stop Giving Customers Free Milk- Guest Blogger Desirée Grace

Something about free milk and a cow…

My midwestern roots are showing, but every time I see services or add-ons given away, I think about the expression, which implies that you are giving something of value away without getting anything in return, like a commitment or improved partnership.

New salespeople, people pleasers, call them what you like, but they need to correct a colossal mistake. You should not be afraid to charge for extras. MAYBE you don’t charge if it’s your very best customers, as they have continuous growth, mutual sales and marketing plans, and a demonstrated commitment to your partnership. But for the rest of the herd? Absolutely not!

Let’s look at some examples where those freebies are cutting into your profits, and what you can do about it.

Late night or weekend delivery? You are paying a premium for your delivery service or your delivery person’s overtime. So, charge a service fee.

Expedited delivery? You have the inventory in stock, at the right price, and the customer wants it today. You drop everything, put the order in your truck, and drive out to the customer. Apply that rush delivery fee.

Your customer informs you that their new policy is to pay everyone in 60 days AND take a cash discount. Add 2.5% to their cost, effective immediately. (Or whatever percentage your cash could accrue in a high-interest savings account for 2 months.)

The above 3 scenarios may sound harsh, but giving away these extras demonstrates that you don’t value your time and resources, so why should your customers? If you give away services and extras for free, naturally, they will accept them. Like my assistant says, “free food ALWAYS tastes better.”

These 3 examples are only the front of the cornfield. Such costly situations grow over time and, like stinkweed, take over. Maybe it’s safety training or lockout-tagout training you provide, without an order. Maybe it’s doing inventory in their storeroom on a semi-monthly basis. Perhaps you provide trailers on the jobsite. There must be a return on your investment, or those customers are costing you money. Train your team to be proud of the value you provide and get paid for it.

TACTICAL ISSUE: What if the customer short-pays the invoice and conveniently does not pay for the line item denoting the service fee, expedite fee, or extra-fresh milk fee? You have some options to deal with this issue.

First, you should have disclosed the fee in the first place when agreeing to the extraordinary effort, and make sure you both agreed on the high value. If you did this, and they still short-paid, offer up that email, text message, or notes taken during the phone call. This issue is an opportunity for an open and honest discussion about how you will transact together going forward.

Second, if they maintain that line items breaking out those extras will always be short-paid, then you know what to do going forward. Build it into the cost. The customer is telling you that’s how things need to be done. Listen to them.

Cows need to be fed, and you do, too. You cannot nurture your team and invest in your business if your customers starve you. Make sure you know your worth and start charging for it. If you need help getting started, I know someone who can help.

Desiree Grace is an advisor, consultant, and mentor with 30+ years as a senior leader in the electrical distribution and manufacturing sectors. She builds brands, grows revenue and motivates teams, facilitates strategy and execution, and offers special expertise in helping offshore companies enter the North American market. An experienced professional who enables win-win outcomes for organizations and their partners, find her on LinkedIn at www.linkedin.com/in/desireecgrace.

 

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