Coping With the Chronic Complaining Customer

Editor’s note: The following article originally appeared in Credit Today, the leading publication for the credit professional, a CMA Partner. Click here for Special CMA Member $10 Trial!

Like it or not, handling complaints is part of the work that goes on in a credit department. And it’s a task that’s vital to your company’s success. How well you handle gripes from disgruntled customers can make the difference between getting paid and keeping the customers–or losing their business altogether.

You answer the phone, hear the voice on the other end of the line, and feel your blood pressure begin to rise. It’s one of your chronic complainers, credit customers that always have a problem. Much as you’d like to turn the call over to someone else, you’re the one of the firing line. How are you going to keep from losing your cool–and losing the customer? Here’s help.

  1. Listen actively. It’s important not to turn a deaf ear to the chronic complainer. To begin with, there is often a legitimate grievance of some kind. If you don’t take corrective steps, the problem could come back to haunt you.

    Key Point:
    Paraphrase the complainer’s main points. Say something like “Excuse me, but do I understand you to say that the package didn’t arrive, you’ve written twice and received no response, and that’s why you didn’t pay your bill?”

    Added point: Be sure to acknowledge the caller’s feelings. A big part of the chronic complainer’s problem is the sense of powerlessness that comes from feeling that nobody knows, cares, or even understands how he or she is suffering. Verbalizing what you take to be the customer’s emotional reaction to the situation helps to break the cycle of blame, ignore, blame-for-ignoring, etc.

  2. Establish the facts. A key feature of chronic complainers is their tendency to exaggerate facts and then to overgeneralize them. Thus, if a chronic complainer tried to call you three times during lunch hour, it becomes: “I tried calling you all day, but, as usual, you were trying to avoid me.”

    Key Point: Limit the scope of the complaint by asking questions that isolate the facts. Ask when, exactly, the customer’s unanswered calls were made, unanswered letters were written, or the problem was first noticed. Check your files or phone logs to verify these statements, and state your findings. Remember to keep the discussion on a factual level. Don’t comment on the implications of the facts because this will lead very naturally to responses like: “You see, I told you your department fouled up.”

  3. Resist the temptation to apologize. Although apologizing for some glitch may seem like the most natural thing in the world, it’s the wrong thing to do when you’re faced with an unhappy credit customer.
    Reason: Since the main thing the person is trying to do is fix blame–not solve problems–your apology will be seen as an open invitation for further blaming.

    Key Point: Ask problem-solving questions. For instance, ask “Would an extended warranty solve your problem?” or “Would a credit to your account be satisfactory?”

  4. Force the complainer to pose solutions. If the chronic complainer ignores your suggested solutions, evades the opportunity to help, and persists in trying to get you to admit what a poor company you work for, throw the ball back into the complainer’s court with this gambit:

    “I have to speak with someone else in 10 minutes. What sort of action plan can we work out in that time?”

    If the customer can’t come up with anything, he or she should at least recognize by this point that you alone can’t take all the blame for the impasse. And if the person does come up with a suggestion–no matter how impractical–you will have at least succeeded in getting him or her to stop complaining. Now your customer should be much more receptive to whatever reasonable compromises you come up with.

This article originally appeared in Credit Today, the leading publication for the credit professional.
Click here for Special CMA Member $10 Trial!

Can the bank seize these goods, even though the creditor and supplier agreed they were on consignment?

Editor’s note: The following article originally appeared in Credit Today, the leading publication for the credit professional, a CMA Partner. Click here for Special CMA Member $10 Trial!

“We just heard you’re going to be selling off inventory from Claire’s Concrete, Inc.,” said Florence Sherman of FirstRate Concrete.

“That’s right,” replied Joe Kaplan of WestEnd Bank. “We had a security interest in all of Claire’s inventory.”

“Well, a lot of the raw materials Claire’s had belonged to us,” Sherman said. “We sent them materials on consignment. If they didn’t sell, we could take them back. Or, if we needed material manufactured into specific forms, we had Claire’s do the work, and we paid for it. So, we’ll be taking those materials back.”

“I see no indication that those materials belonged to you,” Kaplan replied.

“Look on the inventory sheets. Some of the materials have ‘FR’ in front of them. That means they belong to us.”

“But I can’t tell by looking in the warehouse which material is which,” Kaplan complained. “You didn’t post a sign. I didn’t find any UCC filing that identified your interest in any of these materials.”

“We didn’t have to file under the UCC,” Sherman snapped. “Claire’s knew which goods were which, and we had a firm understanding that our goods were to be kept separate from theirs.”

“Do you have this agreement in writing?” Kaplan inquired.

“No, it was an understanding,” Sherman stressed.

“Well, if you wanted to protect your interest in your raw materials, you should have identified them,” Kaplan repeated. “As a secured creditor, I must be able to come in and decide what goods belong to whom. The way things look, it appears everything belongs in Claire’s inventory. We’re going on with the sale.”

Can WestEnd Bank sell all the raw materials?

Yes they can.

Under the UCC, if goods are “delivered to a person for sale and such person maintains a place of business at which he deals in goods of the kind involved, under a name other than the name of the person making the delivery, then with respect to claims of creditors of the person conducting the business the goods are deemed to be on sale or return.”

Therefore, when Sherman shipped raw materials to Claire’s, they became part of Claire’s inventory since Claire’s dealt in the same goods as the type Sherman shipped.

Had Sherman wanted to protect her company’s interest, she should have either posted a sign near those specific raw materials to evidence her company’s interest in the goods or she should have filed a security interest. Because she did not take either step, the court found the bank had priority, and ruled that all of the raw materials belonged to the bank.

This article originally appeared in Credit Today, the leading publication for the credit professional.
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Talking Points For Speaking to Sales

Editor’s note: The following article originally appeared in Credit Today, the leading publication for the credit professional, a CMA Partner. Click here for Special CMA Member $10 Trial!

 

Communicating With Sales Regularly – Formally or Informally – is Always Important

Do you speak to your sales reps about what you’re doing in credit?

If you don’t, you should.

One of the most important roles of a credit exec is to constantly communicate credit’s role in your organization and how it relates to sales.

In a recent Credit Today listserv discussion, a member asked for suggestions on what she might include in an upcoming presentation to her company’s sales team. A number of great responses were received.

Lisa Childress, Corporate Credit Manager at Bison Building Materials, recommended covering the following topics with sales:

  1. How company profits are diminished the longer an invoice remains unpaid.
  2. What the cost of money (borrowing) is for your company. Also, are bank covenants you must adhere to?
  3. What their commission structures are. For example, are they on a “paid-when-paid” commission structure or do their commissions diminish as the account ages?
  4. How they and credit can maintain customer relations.
  5. Why you in credit absolutely recognize the importance of continued sales.

Cheryl, Fischer, CCP, credit manager at Barber Glass Industries, advised that the way you make your presentation with sales can make a big difference. “You have to communicate to them on their level, she wrote. “And that is definitely not a slight!” she clarified.

Visuals are Key

She’s learned over the years that sales reps in general are visual people and suggested very brief overhead computer visuals. “Graphs are always very helpful. Keep it short, sweet, and to the point with pictures and I don’t think you will find their eyes glazing over.”

And Jeff Borgens, CBA, Corporate Credit & QMS Manager at Aiphone Corporation, offered up some great suggestions as well.

First, he suggested, emphasize the principals of business partnership and mutual expectations. “It’s a partnership and we look for quality partners (customers) we can count on.”

Sales should also understand that credit will do what it says it will do and that “ongoing payments equal ongoing shipments.”

Second, make sure you “talk their language” when communicating with sales people. This means emphasizing customer needs and how you strive to meet those within the policies you’ve established. Talk to them about how you will help make the sale, rather than stop a sale if at all possible. And cover some of the tools you have to make that happen, such as guarantees, credit cards, letters of credit, or other security agreements. Make sure they know you’re not “sales prevention,” but are there to facilitate the sale, he wrote.

Finally, he suggested reminding sales that we need to be aware of the role our customers play with our product.

If you sell to someone else who is depending on delivery of “your” product, and that customer ends up on credit hold and hence can’t get the goods down thru the channel, it potentially puts your firm a bad light. “We need to be conscientious of those that buy thru the channel by making sure our business partners are reliable,” he wrote.
This article originally appeared in Credit Today, the leading publication for the credit professional.

Click here for Special CMA Member $10 Trial!