The 13 Unlucky Signs Your Customer is Looking Elsewhere
Knowing what signs to watch out for could help you save a customer’s business, and improve your relationship in the process.
Customers switch suppliers for all kinds of reasons. Maybe they get sideways with their account representative, or feel underserved. Maybe they are testing the market for a cost reduction, or react to a persistent quality issue. Or maybe they have added a new member to their team who has a favored supplier. Regardless of the motivation, there are several warning signs that your customer may be looking. Catch them early and you may be able to address the issue before it’s too late. Watch for these 13 signs that your customer may be eyeing a move to another supplier:
1. They call and ask you to provide the unit prices on the work you perform for them. Perhaps they are just updating their records or resolving a discrepancy, or maybe the customer figures that the easiest way to compare your pricing to that of your competitor is to ask you to provide it.
2. They tell you their volume is going to be a little low this month. It is possible, if your customer is backing off on production for a short period of time, they have too much inventory or their market demand is a bit slower than anticipated. It is also possible that they are sending some work to an alternate supplier as a trial run.
3. An adjunct to No. 2, the customer may not do you the favor of telling you to expect a reduction in volume. The volume of work dropping off without any explanation may indicate a trial with another supplier.
4. You see your competitor’s sales representative’s name in the sign in log at the front desk. Not that I would ever do such a thing, but I have heard of sales people sheepishly paging through the guest log when nobody’s looking, just to see if the competitor has stopped in recently. The competitor’s name in the book is a pretty good sign your customer may be shopping.
5. You are asked to “look at” your pricing. This is a tactic used by a customer who cares enough about the relationship with you to let you requote before they move the work elsewhere. Some customers prefer, for a variety of reasons, not to overtly tell you that you are being bid against, and instead hint at it using this approach.
6. The customer suddenly gets overly picky about quality. I have seen this approach used when the supplier maintains a relationship with the customer’s upper management and employees further down the corporate food chain prefer to move to another supplier. To provide cover for their decision, the customer begins raising “quality” issues that were never branded as such before. Little nits that were previously treated as water under the bridge become major quality concerns, providing justification for a supplier switch should upper management question the change at a later date.
7. Alternately, a customer that has already decided to make a switch may quickly let the supplier off the hook when a meaningful quality issue arises. The decision to move the work has already been made, so the customer makes little issue of the concern, leaving the supplier with the impression that it is being let off easy when in fact the relationship is at considerable risk.
8. A milestone, say three years since the customer was won, or nearing the conclusion of the original contract period. Many customers routinely quote out work every two or three years, especially if a fixed-term supply contract was negotiated as part of the current relationship. Pay close attention to contract termination or renewal dates and address the renewal with the customer before the date arrives.
9. The buyer wants to stop by for a tour. Out of the blue, the customer’s purchasing or procurement team announces their interest in stopping by for a tour of your facility. They might just be curious, or maybe they are touring your competitor’s facility and want to see yours for the sake of comparison. Welcome them with open arms, but understand the purpose of the visit.
10. Proprietary process information is requested or excessive process-oriented questions are posed. It is certainly possible that your customer is performing routine quality control or quality system updates and wants to make sure information is current. However, when requests like these are made, the skeptic in me always considers the possibility that the customer wants to share this information with another supplier interested in my displacement. Hold truly proprietary information close to the vest, and ensure that proper confidentiality and nondisclosure agreements are in place before sharing such information with anyone outside of your organization.
11. Your previous advocate leaves, and his or her replacement is difficult to warm up to. It’s possible that the new contact is just less social than the predecessor, but perhaps he or she has a favorite alternate supplier that is not you. Be wary.
12. You see a run-up in accounts receivable. It’s unfortunate, but true. Some unscrupulous customers encountering a cash crunch will stop paying you, compound the amount they owe, shamelessly switch to another supplier and then use you as their bank, forcing you to chase them around for payment and leaving you without the leverage of cutting off their supply. Expressly unethical, but I have seen it more times than I wish.
13. Finally—the most obvious of all signs your customer may be considering a supplier change—you see the competitor’s truck at the customer’s dock. Hello!
The behavior outlined above may not necessarily indicate a shopping customer, but it is better to be safe than sorry. If you see it, take action. Make contact with the customer and tactfully probe for anything that may be amiss. The way a customer answers a question as benign as, “We’re doing some capacity planning for the coming months and just wanted to inquire as to whether to expect a change in volume?” can tell you all you need to know about whether the relationship may be at risk.
Originally published in the August 2015 issue.