Even the biggest pollyanna in the sales group will discover one day that it is possible to have a bad customer. Yes Johnny, it is a fact that not all customers are desirable. Oh I know, in sales one is always rabid to close the deal. Get the sale and move on to the next prospect with a pulse. But what is the difference between a good customer and a bad customer if their money spends the same?
Ideally, a “Great” customer comes back for repeat business, is flexible on terms and conditions, pays 30 days net, gives long lead times for delivery, accepts FOB terms, accepts delays and price increases without protest, and picks up the dinner tab when out for a visit. [~~Sound of needle scraping across phonograph album~~]
If only such compliant customers existed (Sigh). In reality, most chemical customers are in what I would call the “Good” category. That is, they have reasonable expectations of price and delivery as well as an understanding of what constitutes fair business practice.
But on occasion one runs into what you might call a “bad” customer. Such customers are found across the entire spectrum of size and business model.
A bad customer is one that consumes excessive resources during the course of service.
A small bad customer might want you to do free product development for them, or may try to negotiate bulk pricing only to turn around and try to get bulk pricing on small quantities. Bad customers may finagle front-run samples from you and then disappear for months or years without a peep.
Large bad customers like to throw their weight around. They know they are above you on the food chain and behave accordingly. They dangle promises of big and long term sales and wangle free services from you. Services like gratis process development, holding inventory for free, tolling or other business agreements that tie your hands and force you to open your books for their auditors.
Bad customers large and small have other maddening habits that consume resources. Specifications that change over time, always to the side of higher stringency, are a favorite of bad customers. Bad customers will discover that they can shave costs by elaborate just-in-time delivery schemes with favored shippers, a circumstance that will require full time attention by logistics people and production managers.
Bad customers want the transaction to follow their particular terms and conditions. Bad customers will want 60 days net- a particularly transparent scheme to float their resources in interest bearing accounts while the vendor has to finance manufacture up front. The fetid odor of MBA finance people lingers here.
Bad customers will want their vendors to provide indemnity to shield them against any conceivable liability related to the product. Bad customers will want to own any and all inventions pertaining to process improvements relating to the product. They’ll want to be free to take this improvement and hand it to your competitors in order to generate a tidy little bidding war over their business.
Practices that I have been calling “bad” are generally accepted in the business world. On the buy-side they are considered good practices. On the sell-side they are arguably bad practices because they increase risk and expense related to the transaction. A good buyer tries to implement these bad attributes. A good seller tries to eliminate or minimize these bad attributes.
In the real world, one rarely has the option of walking away from bad customers. But it is possible to stand firm and prevent profit erosion. Very often a customers apparent demand is just a straw man. If not entirely a bluff, it might be negotiable to some reasonable concession. The best practice is to be up front with your concerns and communicate with the customer. They are nearly always reasonable.
The 80/20 rule often applies to customer service: 20 % of your customers will take 80 % of your time. This is life in the fabulous world of sales. Every sales person must eventually come to terms with it. Sales consultants talk about “qualifying” sales prospects, but that only applies to real estate and vacuum cleaners. The world of custom business-to-business chemical sales is such that if someone can identify your product and seek your services, they are almost always a legitimate player.
Lamentations on Chemistry 
Look at all the Tier 1 suppliers to Detroit that are or recently were in bankruptcy: Tower Automotive (with a 67% market share!), Meridian, Delphi… They are supplying extreme example of bad customers and going under in the process.
Is beating up your suppliers over price a sustainable business model?
Back in the 90’s, GM proposed having all of their suppliers of patented items/materials/designs…license an alternate supplier of those items so that GM could have a choice of suppliers!
Worse yet, I remember seeing a memo from an executive VP emphasizing that no one should sign such an agreement. Apparently sales people are so desperate that they need to be told that. (Yo! A system is rarely optimized by optimizing each variable independently.)
Luckily I do not have to deal with GM or any of the other automotive manufacturers. I have dealt with them in the past and, as you say, they are brutal taskmasters with their vendors. Annual price concessions of several percent. When you represent GM or some other megalithic corporation, even lower level managers can swagger around like a tough guys.
Some negotiators measure their results by looking at what they have won and how it relates to their needs or requirements.
Others are transfixed by the $ that they imagine remain on the table. These are the zero-sum game people. They live in fear that someone else may have won something. Their interest transcends getting a fair or good deal. They have an internal need to “prevail”. They want the slam dunk.
It is good to identify such people because their need is to bring back a scalp from a negotiation. It it may be possible to let them have some kind of trophy without wrecking the deal.
10q so much. I will keep in touch with u.