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How do you deal with an unethical customer?

A friend of mine has an ethical dilemma. Kind of.

A client of his, whose CEO has decided, retrospectively, that a signed contract isn’t worth the money, wants to renege on an agreed deal and pay less for the same product than agreed.

My friend is under internal pressure within his company, to force the client to deliver the full amount agreed.

So he is caught in the middle.

He is trying to figure out the best course of action.

We all want to keep customers happy.

And we all want to get paid what we think we’re going to get paid, especially with a signed contract in place.

But when a customer tries, with no real reason that’s related to the contract, to go back on the deal because the CEO now decides he doesn’t like the deal in the recession, surely that’s unethical.

What should the response be?

My friend doesn’t want to get into a legal fight with the customer.

He could, and he would probably win.

The paperwork is on his side.

But a ‘legal’ fight will mean no more future business with this customer.

Equally, he doesn’t just want to roll over and accept a smaller amont of cash for the product, when he expected a larger sum.

It’s difficult because giving in means setting a dangerous precedent for other deals.

If this customer gets a discount just because they want it after they sign, what about all the others?

The customer is behaving badly.

He has a choice: Let them get away with it, for a guarantee that 70% of the contract will be paid.

Or stand up to the client, and force contractual compliance.

How do you react when the customer behaves in such an unethical manner?

2 Comments

  1. Well, the question is how badly he wants to retain bad customers. The conventional wisodm is that we should get rid of bad customers, more so unethical customers, the moment they are discovered.

    So take the part money and write off the balance as bad payment. This customer is not worth doing business in future.

    On a more practical note, try offering an instalment plan for the balance amount if the customer has a genuine cash flow problem due to recession.

    On a more cunning note, promise a fabulous discount on the next project while asking for full payment this time. But most CEOs won’t bite this as they themselves use this trick all the time. Good luck!

  2. Well, the question is how badly he wants to retain bad customers. The conventional wisodm is that we should get rid of bad customers, more so unethical customers, the moment they are discovered.

    So take the part money and write off the balance as bad payment. This customer is not worth doing business in future.

    On a more practical note, try offering an instalment plan for the balance amount if the customer has a genuine cash flow problem due to recession.

    On a more cunning note, promise a fabulous discount on the next project while asking for full payment this time. But most CEOs won’t bite this as they themselves use this trick all the time. Good luck!

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