We have all heard the saying “The customer is always right!” Generally speaking, that’s true.
That doesn’t mean it won’t be frustrating. From time to time a client will request a change in their contract. Sometimes, that change is a good one – perhaps they need you to service additional buildings or increase the frequency of servicing their account. But at other times, a “change” might have a negative impact on your business. How does a commercial cleaning business owner handle that?
Putting contract changes in perspective
Years ago, when the economy took a downward turn, our franchise had many large clients scale down the number of days per week we would service their account. Some of the smallest clients that were only one day per week decided to go in-house so they could keep a staff member busy instead of laying them off. At that time, it was understandable; nearly everybody was facing the Great Recession. It made sense to adapt to clients’ needs because that helps the overall relationship.
But what about when the economy is doing well and a client asks for a change? When a contract or a service agreement is in place, you could simply tell the client changes cannot be made until the end of the term. However, not allowing any flexibility may force their hand to go out for bid the next time the agreement is set to renew. The tactic to stand your ground on a contract could be short-sighted, keeping the price in place but losing the client at the end of the term.
Case study: A client who needs a change
Let’s look at a recent situation within our franchise system. A client recently asked to re-negotiate the renewal of a service agreement that was signed for a 3-year term. It is a good-sized client, a contract worth more than $150,000 per year. Just as the new term was about to begin, the client contacted us to change everything and reduce the service agreement by one-third, meaning our franchise owners who service them would lose some $50,000 in annual revenue. In a situation like this, what do you do?
When the request comes in, don’t panic
First and foremost, stay calm. There is no reason to get upset about requests to change a contract. Try to find out what is going on and address it as best as possible. Most likely, the client is trying to accomplish something internally to be in a better financial position. Once you look at it through those eyes, it is hard to get angry or frustrated.
Work with them…but let them know the impact
Sitting down with a client to find the best possible solution to achieve their goal means that you may ultimately have a decrease in monthly revenue. So long as the client understands – and accepts – that a smaller contract is going to also mean a reduction in services, you should be just fine. Make sure to remind the client of the problems that may arise from lowering the standard of service. The changes they make may have unintended consequences.
In the case mentioned above, it was a school looking to eliminate a day porter. This raised questions: Who will make sure that the restrooms are stocked and clean during the day? If a child gets “sick” who will be responsible for cleaning up the mess if there is no day porter? The teachers certainly don’t want that responsibility!
Look at the numbers
Maybe it is a good change for all parties involved. Perhaps the elimination of the position (a day porter in this case) will allow for a more profitable client. After all, the day porter position doesn’t yield high profits.
When your company faces a situation like the one above, you have every right to stick to the agreement. After all, your client signed a legally binding contract. But keep in mind that you want to maintain a long-term relationship. If you tell them they must keep to the contract, they may very well make your life miserable and cause so many problems that you may end up losing the client!
Compromise is often the best solution. Negotiate with the client to give them what they need, but keep the essential services in place. Be firm and make sure that the change doesn’t strip the profit from the contract. In the end, we are all in business to make a profit.
About the author:
Tim Conn is president and co-founder of Image One Facility Solutions, a Rolling Meadows, Illinois-based commercial cleaning franchise with 100 locations that trains franchisees in all facets of the business, including sales, operations, and quality control. The company has received recognition for franchise-owner satisfaction by the authoritative Franchise Business Review and has been recognized as a top low-cost franchise by CNBC.com and Entrepreneur. For more information, visit imageoneusa.com.