Startup levels of service

Too much will burn you later; too little and your business may suffer.

Have you ever noticed that when starting a new business or expanding the current business into a new field, there is always the temptation to provide products and services exceptionally cheaply to early clients? Of course, it’s pretty normal to want to attract as many paying customers as possible, isn’t it?

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New company, we can afford to spoil the clients, can’t we?

So then, these early clients tend to get special treatment and why not indeed? It’s not as if the start-up doesn’t have spare time, does it? So later in the year, when we expand, we can always pull back the services provided to these early birds to more realistic and practical levels. Can’t we?

The short and sweet answer is no, you can’t. Or at least not without potentially losing these early clients; what you see as a more practical level of service they will most certainly see as a lower level of service and not what they paid for. The result is then, almost inevitably, angry clients. Worse, the clients could take their business elsewhere, even to rival start-ups currently offering the same level of service that you did at the beginning. Perhaps this will be a vicious circle for the clients, but it will be lost business for you.

This doesn’t necessarily have to be the end of the contract with these clients and any negative publicity that goes with cancelled contracts. As an aside, think about how word gets around quickly within any business; people like to talk. People especially like to talk negatively about their experiences. The business could quickly lose potential clients and be unaware of them. Setting things right with these clients is almost impossible unless you are always prepared to treat them as a special case.

Protect yourselves.

How can we overcome these situations? It isn’t very complicated, and various methodologies could be applied:

1. Don’t spoil the clients in the first place; always ensure that the level of service provided at the beginning of the contract is precisely the same level of service that is sustainable should the business be successful and busy.
2. Provide this extra-special service level for any client you wish to. First, however, write into the contract with the client, and make sure they sign off on it, where the start level of service will be valid for a given period. After that, either reduce the level of service directly to the level intended or drop to that level in steps, also in a stipulated contracted period.

These are just two of the most prominent strategies to handle what could very quickly become an extremely difficult situation. But, of course, there are many variations of the same themes and everything in between.

The most crucial point is not to over-stretch your business at the beginning by using your business plan and forecasts to estimate, hopefully quite accurately, where you hope to be in the foreseeable future.

Human nature strikes again…

The second one of the two strategies proposed is more realistic and reasonable. Here comes human nature for you, even if you faithfully point out during the contract negotiations phase the time limits for each level of service. There may still come a time, perhaps not with all clients, when they feel cheated.

People being people, we too easily get used to a status quo and get upset when things change negatively. No matter what was written down and agreed upon.

There is no hard and fast solution to this dilemma except to make you all aware of the power of human nature. Even knowledgeable, calm and reasonable people will get upset and annoyed should they feel, rightly or wrongly, that they are being cheated. They may not even be aware that they are thinking this way, or it may be only in their subconscious, but they will not be as happy with you as they once were.

Good client relations, again.

Your only hope is to be constantly aware of the pitfalls and maintain a good and personal relationship with the clients. Try not to be friends, but always remain respectful and friendly. This is a point covered here.

Of course, should the business become more successful than forecast and, importantly, this success is sustainable. You may be able to increase the minimum level of support provided to all clients. This will, of course, be hugely popular with your existing clients. On the downside, it will also be more expensive for your business. However, you may be confident enough to think that it is worth it to build up your positive reputation within your industry.

Be careful here; increasing the level of service because you are successful can just as quickly turn around and cause you many problems should the business become less successful. Perhaps, due to unforeseen market problems, economic downturns and so forth. The why is unimportant, but the consequences will haunt you as you may be forced to; what? You guessed it, reduce your level of support once again to more affordable levels.

Déjà vu? Yes, indeed, you will now find yourself in precisely the same situation as before. Clients again perceive a reduction in the level of your services in the same way as already described for new clients. Only now, it isn’t just the earliest clients but all your clients.

Final thoughts.

The lesson is to think very long and hard before committing your business. Always assume the worst-case scenario. Further, this article isn’t about how to run your business, and I wouldn’t presume to do so. The point is to be aware of human nature’s worst and most selfish. We are all guilty of having these illogical feelings occasionally, but that doesn’t make them any less real in any business.

I have concentrated on the level of service in this article, but, of course, the same arguments will apply to just about any business-client relationship. Be aware!