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Customers and POs from Hell

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I do most of my business with credit cards and while I realize that the CC companies and merchant banks are making a killing off my sales with merchant percentages, the convenience of having credit card processing fully automated to the point that I often have to do absolutely nothing other than review orders is well worth the extra expense.Credit card processing (or PayPal processing for that matter) is convenient for the customer too, but most of all the process can be mostly automated.  I run through my online store and a related offline application which is a very slightly modified version of our West Wind West Wind Web Store to do all my order processing. The process is completely automated except for most software updates which require manual validation. I'm using Authorize.NET with a merchant hookup through MerchantPlus and with this setup life is good. The review rate for these transactions for declines or other CC processing issues is under 2%.

I wish it was all that easy

So the vast majority of customers (a little over 95%) use Credit Cards and things are straight forward and easy. There's an occasional W9 form that gets sent but other than that the process is nearly automatic with minimal effort and immediate confirmation for customers without any need for their interaction either.

But the remaining 5% tend to be highly problematic and take more time to process than the entire rest of the bunch combined (and that's including the occasional chargeback research). The remainder tends to be Purchase Orders with each customer requiring their own setup and configuration. Most of the time these customers will throw you a PO that is 5 pages long with Vendor number, department numbers, not one but 3 PO numbers and instructions of what the order has to look like for the privilege of serving them. To top it off a few recent POs had a Politically Correct questionnaire for Equal Opportunity regulations that apply to my business.

Now I may be extremely arrogant in this, but WTF do these people think? I realize some organizations have strict rules and regulations for how order processing needs to proceed and I can relate to that as long as the requested information is reasonable. Obviously some sort of manual filling is in order and that's understandable. There are organizations that have a clean way to provide vendors to submit the necessary information and provide POs that are 1 page or 2 pages with instructions that can be easily followed and completed in a few minutes and without fuss. No problem there.

But it's those 'other' customers (generally they are the mega institutions or government orders) that are painful and require an hour's worth of form filling and additional research just to satisfy their need for information that is ridiculously out of sync with any requirement for the order processing. Companies and Government organizations that try to completely force their order processing on the vendor for some small one off order seems ridiculous. Here's an example: A couple of days I ago I got this PO Order that was literally 10 faxed pages. In addition, this document required a separate W9 form filled out for a purchase of $199. The whole process was to be set up as a vendor. I sent the form back and told them to send back a 'short form' or  order online or else forget it. A few emails went back and forth and in the end they did actually order online by credit card - not out of good manners, but because it saved them $15. So let's see here - these guys value $15 more than the forms they sent me to fill out.

Arrogant, yeah I know. I should be so happy to have customers. But seriously I draw the line when I see customers whose bureaucracy has crazily gone out of hand and is going to make me pay for it. If I had filled out that form I would have easily spent an hour looking up all the various references required some of which did not - uhm feel exactly appropriate. Equal Opportunity Rights are OK to a point, but please give me a break on whether this really makes a difference in placing orders with vendors especially when it's a trivial amount of money on a one off order.

Charging Extra

Because there's a lot of extra effort involved with Purchase Orders we charge a $15 surcharge for their processing. The amount doesn't really cover the extra time spent for any but the most simple PO's, but it's meant to discourage use of POs. It used to be that using credit cards caused a surcharge because of the extra fees a vendor pays (which is actually not allowed by CC merchant contracts), but I actually feel that the opposite is true in this day and age: A credit card transaction typically is cheaper if paper work and routing and excessive back and forth chatter can be avoided. The $15 surcharge is an added incentive NOT to use POs.

Some companies get really pissed off at the surcharge to the effect that they simply cross it off the PO and send it back - without note or comment. And so the PO goes back and forth a few times. And more time's a wastin'.

Another vendor (a reseller) recently contacted me and wanted to know where their order confirmation was for a third party customer. I had filled and submitted their Purchase Order request form ( a 'mere' 5 pages) and sent it back. In the next 3 days I heard from 3 different people in the same vendor company, but not one had confirmed my original PO form that I had requested verification for. Nor did they ever reply to any of my requests like who the heck to send the final download links to. In the end I had talked to 5 DIFFERENT people in the company and only heard back from one last manager who finally figured out to cc the others in an email in his department and get their story straight. Apparently all the bureaucracy is confusing even these folks in THEIR OWN office! It took the customer starting to complain loudly (apparently they had paid the vendor before the PO was even approved) to get these folks off their butt and finally resolve the issue. Incredible.

Is it Arrogant?

Stuff like this happens all the time. 90% of effort for 3% of total order volume.

So here's the question of the day: Is it truly arrogant to say "Enough is enough!" and hold the customer to provide a reasonable PO request? Or is the customer always King no matter how screwed up their process is and whether it's a giant waste of time (both theirs and mine)? 

Granted my case is special because I'm a one man shop and handle everything myself. A bigger organization can probably manage better because there's a full time person to handle order processing and knows how to deal with all the crazy forms, but regardless it's still a massive waste of time when 3% of customers cause 90% of the order processing work load - it's so rare that it really sticks out when it happens. In the end it depends some on the amount of an order, but on small orders especially, I tend to give customers some grief to keep things simple that a form can be filled out in a timely manner or tell them to - well, "Stick it!"

Got any good PO stories? I know I have a couple of repeat customers who have personally apologized for the PO practices of their company (one in a rather rather humorous way recently that I unfortunately can't print here)...

Posted in ISV  Personal  

The Voices of Reason


Nicholas Piasecki
June 29, 2008

# re: Customers and POs from Hell

Just be thankful that with your store you don't have to deal with physical product all that often!

I'm a programmer for a small business that sells men's underwear online (it's completely bizarre, I know), and there is one well-known company that shall remain nameless that has a "product acceptance guide" that is nearly 30 pages long. It's full of gems such as

- all product must be shipped in clear, sealed plastic bags. For each improperly sealed bag, a $6 chargeback will occur.
- all product must be labeled with [Company Name], [Color], [Size], [Fabric Content], [Country of Origin] in 10 pt Arial font on a 3" x 1.25" sticker in the lower right-hand corner of the front side of the product. If the label is missing or does not adhere to this format, a $7 chargeback will occur per mislabeled item.
- all UPCs and barcodes must be removed from product prior to shipping. If not, a $5 chargeback per item will occur.

After we accounted for the costs it took for us to adhere to all these rules plus the "chargebacks" for mistakes that got out with the shipment, it simply wasn't good business to deal with this customer. So they now have a "Convenience Fee" line item on their invoice; the amount varies on the day, and depends on just how bad a mood the person generating the invoice in our software happens to be in.

On the paperwork front, some of the larger department stores can be a nightmare, too. We'll get a form faxed to us to fill out as a routing request, but when we fax it back, it's re-faxed back to us with a note to "use the e-routing system at [Web site address]." We spent a good hour trying to figure out how that insane application worked; meanwhile, the product is already all sorted and packaged, and we're wasting time just figuring out how to ship it to them! Heaven forbid we dispatch the shipment with routing code ZX93848A on the package instead of ZX93848B.

When we receive shipments, we might ask a company to handle something for us a certain way, but we expect to pay a fee for the added service. Vendors who need everything gift wrapped on a silver platter and don't expect to pay up a little for that added service are just being cheap.

June 29, 2008

# re: Customers and POs from Hell

Hi Rick,

Your story reminded me of the book I recently read: "The 4-Hour Workweek" by Tim Ferriss
--> http://www.amazon.com/4-Hour-Workweek-Escape-Live-Anywhere/dp/0307353133/ref=pd_bbs_1?ie=UTF8&s=books&qid=1203371924&sr=8-1

He used to have situations like you have and in his recent blog-entry "The Margin Manifesto: 11 Tenets for Reaching (or Doubling) Profitability in 3 Months" he suggests that The Customer is Not Always Right — “Fire” High-Maintenance Customers. Look at the number 10 tenet. It's valuable reading for entrepreneurs like you. Highly recommended.

June 29, 2008

June 29, 2008

# re: Customers and POs from Hell

Hi Rick,

Disclaimer: I am not a lawyer. :)

I really enjoy your blog and articles, and was a West-Wind customer from way back in the VFP days. :)

I concur with others on here -- fire not only high-maintenance customers, but high-maintenance prospects.

Why are you messing around with this kind of paperwork for 5% of your customers? Because you think you should/have to. But you don't.

You are free to set the buying criteria for your products. So let me suggest that you remove the PO options from your order form and add a link entitled "How do I submit a Purchase Order?" that links to your new policy page on POs.

Explain how your products are priced to be profitable when the automated payment process is used, and you are losing money on every Purchase Order your staff has to process.

Anyway, my two cents. Consider the fact that you found them on the sidewalk. :)


Rob Conery
June 29, 2008

# re: Customers and POs from Hell

Crap! I was going to be clever and tell you to read up on the 4 hour workweek and FIRE those customers that soak up so much time. It's a great read (if you haven't read it).

Steven Black
June 29, 2008

# re: Customers and POs from Hell

Completely agreed. No, it's not arrogant. You aren't delivering truckloads of supplies, JIT, to their loading docks, to the tune of millions of dollars on an annual basis. Therefore why do you need that level of paperwork?

I think you might consider going medieval on the abusers. Charge them a P.O. fee of $20 per page beyond the first page. I think you'll find that the subsidiaries of GM-like companies in fact have lightweight side-processes, only the person requesting the software either wasn't aware, or didn't channel it correctly.

Another option: create a semi-priate web-page with all the info requested by persnickety POs. Then you just say, here's all the information, fill-out your own paperwork yourself... or pay us $20-per-page to do it for you.

This cat can be skinned. These paper factories still exist because not enough people effectively complain about them. You doing their gratuitous paperwork was never part of the offer.

Mike Gale
June 29, 2008

# re: Customers and POs from Hell

The easy route is to say CC only, no vendor data entry at all. If you want that stuff do it yourself, here's a page full of it. For orders less than some fair size ($3000?) that might be all you need.

For bigger orders or if you really feel obliged charge them. Not a nominal fee, the real fee and make sure it covers every contingency you've ever seen. Heck, if it's worth it to you, give them a quote (standardised) for filling out the stuff, $X set up fee, $Y per hour rounded up to the nearest hour for time spent, $Z every time you ask for more information not already requested or change your mind...

There are a lot of people who quote this motto "The customer is always king". Nuts to them. If you're the only supplier or want to totally dominate the market or are just selling commodities then you're maybe morally obliged to think like that. If not, it's better to pick your customer base and shape their behaviour so that it doesn't cost you money. Beyond that you probably want customers who you like dealing with, have a go at shaping that too. (Dealing with a company you may get it right only to have some random dufus assigned to be your liaison. That's life.)

Mike Gale
June 29, 2008

# re: Customers and POs from Hell

I think a lot of companies are overstaffed. There are bright, competent people in there. They have been given a small job to do, maybe way below their capabilities. They do it well and thoroughly. You can't generally change that.

It's a bit like the goverment. They could do more on say 26% of the taxes they harvest if they had dedicated, honest, hard working staff unencumbered by stupid rules and trusted as decent human beings.

Nancy Folsom
June 29, 2008

# re: Customers and POs from Hell

It was a swell day in my life the first time I fired a customer who had run me so ragged I nearly went bankrupt. The next time I needed to do that, I didn't wait so long. Right now I'm waiting on a very late payment because a client I like and want to help never seems to be able to mod my PO for much more than what they need to cover the last invoice.

Anyway, FWIW, I don't read anything arrogant in your post. You've more than tried to accommodate some ridiculous-seeming processes. I say "seeming" because I bet they're doing exactly what the companies are trying to do--discourage purchases.

It would be fine to explain, briefly, that you are able to keep your costs as low and competitive as they are by accepting only credit cards. Or only credit cards and POs that WEREN'T WRITTEN BY AN INSANE PERSON! Good luck.

Chris Miller
June 29, 2008

# re: Customers and POs from Hell

It would be great to only accept CC payment, but some places can't pay that way; they have to use purchase orders. What you could do is to only allow purchase orders to be submitted online. Create a standard PO form on your web site and and only accept PO's that were submitted using form. If they need something faxed, they can print out and fax it to themselves. Limit the fields to only what is truly needed to be on a PO form. They may balk, but if they really want your product, they will comply.

Refuse to fill any questionnaire. Provide a link on your site with the data and let them fill out their own forms. Some government agencies may have procurement policies that require these questionnaires, but that is their responsibility, not yours.

June 30, 2008

# re: Customers and POs from Hell

"It would be great to only accept CC payment, but some places can't pay that way; "

I guess the can if they are forced to. Maybe they pay a lunch $199 with their credit card, but they request a PO for buying small software?

boudewijn lutgerink
June 30, 2008

# re: Customers and POs from Hell

Not Arrogant at all Rick, on the contrary I would say. last year I had one customer-to-be who did not invite me but more so ORDERED me to his office. He had some work for me but first some paperwork...
I "scanned" through the pile first (like a 100 pages to be filled) and found one contract I had to sign saying that they would sue me if this would happen, I would have to pay them such-and-so amount if another situation happened. I was not allowed to work for other companies in the same line of business with a penalty of 10,000 Euro a day if I did blablabla... I walked out, not signing anything.
The man literally shouted at me: "YOU NEVER GET SUCH A GOOD CUSTOMER AS ME..."
All I did was, I turned around and started laughing. So if you "think" you tend towards arrogance, be at ease Rick, you are not even close to arrogance, you simply drew a clear line on hat you accept and what not.

João P. Bragança
June 30, 2008

# re: Customers and POs from Hell

It's the old 80-20 rule.. you spend 80% of your time making 20% of your money. Haha!

Man, this is the story of my life! About 5-10% of our eBay customers want to make a deal outside of eBay (cause they need iut right now or it's something we have here in the warehouse but it is not listed), and usually do it without my say so. My software doesn't process the transaction, and then they complain because their order didn't ship fast enough!

It is so bad that I am spending most of my time rewriting our whole damn platform. Currently it is a mishmash of various systems I cobbled together since I started working here 8 years ago. I want a totally modular system based off of Castle Microkernel / MonoRail / WCF.

Try this: have you list prices, but put a % discount on any order going through your system and show them side by side. Then expose a WCF endpoint for these special customers and say look, this is my service contract, you know your business requirements, you code the damn logic. Then they'll do a cost benefit analysis for that % discount. At least then you are giving them a choice.

July 10, 2008

# re: Customers and POs from Hell

<i>Or is the customer always King no matter how screwed up their process is and whether it's a giant waste of time (both theirs and mine)?</i>

See above links referencing Tim Ferris and the Pareto Principle (80-20 rule). Work on building the good 90% of your business, not the bad 10%.

Don't get me wrong, there's a lot to be said for good customer service. But there's a big difference between fixing your problems for the customer and fixing the customer's problem for themselves.

make money online
July 24, 2008

# make money online

Finally, I found a site that I can depend on for good content. THanks!

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