How to Protect Your Business and Still be Customer-Friendly

vince dicecco

Vince is a dynamic and sought-after seminar speaker and author with a unique perspective on business development and management subjects, primarily in the decorated- and promotional-apparel industries. With 20+ years of experience in sales, marketing and training, he is an independent consultant to various decoration businesses looking to profit and sharpen their competitive edge. Visit his website or send an email to Vince@ypbt.com.

As the American economy is trying to decide which direction it wants to take, I’ve noticed more hand-written, impromptu signs being placed in the reception areas and near the cash registers of the shops and businesses I frequent. “MINIMUM $50 on orders paid by credit card.” “All sales are FINAL once you leave the shop.” “50 percent deposit on ALL orders. NO EXCEPTIONS.”

I can appreciate that a business needs to have policies, terms and conditions to protect itself from less than principled customers out to milk every last cent and incentive they can. But does a company need to word its policies in such a way as to have me question if I should do business with it in the first place? Besides, what percentage of your company’s clientele makes it their sole mission in life to rip you—an honorable and legitimate decorated-apparel business—off? I venture to say it’s less than one percent.

There must be a reasonable balance between the policies an enterprise must have to protect its liability exposure, and positioning itself as a company that is likeable, trustworthy and with whom it is convenient and enjoyable to do business. What are your policies—formally stated and unwritten—on deposits, quotations, order cancellation, returns or any other issue that may stand in the way of a prospective customer doing business with you? How do you educate your clientele about your policies and procedures? Do your rules send a message to your customers that you appreciate their patronage? Is protecting your interests while portraying an image of being customer-friendly even possible? I think so. Let’s explore it, shall we?

Vital few, trivial many

Now, don’t fault a customer for taking advantage of every discount and deal you offer, if the wording of your policies and limitations of your promotions are vague, misleading or deficient. Having too many marketing promotions—such as “buy one, get one free” or “we’ll match our competitor’s prices”—and an under-developed policy on your company’s terms, conditions and standards is just asking for trouble. It may work for the Goliaths of the apparel industry, but that doesn’t mean it will work for every David-sized business.

For example, my wife’s favorite department store is Kohl’s, whose Sales and Pricing Statement reads: “We pride ourselves on offering name-brand merchandise at values our customers just can’t pass up.” With her MVC—Most Valued Customer—shopper status (which doesn’t take much to earn), she often is able to buy items that are already on sale at further-discounted prices. Matter of fact, I don’t think there’s an article of clothing, a fashion accessory or household appliance that sells for the manufacturer’s suggested retail price in the entire store, and my wife is still able to take up to 30 percent off the entire bill at the register with the coupons Kohl’s sends her. With its liberal pricing and discount policy, I marvel at how Kohl’s was able to sell, in 2007, nearly $16.5 billion in merchandise, maintain a gross profit margin of 36.5 percent and plans to open 75 new stores this year.

If one digs beneath the surface to Kohl’s customer-service policies, one may begin to understand how it has been so successful for more than 16 years. The company does not have a litany of rules regarding pricing, promotions and discounts. In fact, every time it chooses to deny something a consumer may ask for, it states its policy politely and in such a way as to put a positive spin on such denial.

Case in point, Kohl’s does not issue “rain checks.” The store’s policy, simply stated, is: “Unfortunately, if an item is out of stock while it’s on sale, the sale price will not be available if the item is restocked after that sale is over. But continue to check Kohl’s for the item because it could be on sale again soon!”

You see, Kohl’s focus has been its high-volume buying power with name-brand manufacturers, aggressive advertising to become a commonly recognizable name in the market, rapid-turnover inventory management, and an in-store shopping experience that ultimately positions it as “the store just for her.” Kohl’s customer-service policies—although few in number—all relate back to its corporate mission. Add to this the fact that it employs more than 125,000 associates, was named one of BusinessWeek magazine’s Top-50 Best Places to Start a Career, and provided $42 million to community programs across the country and you get an inkling of the spirit in which a small business may begin to develop its customer-relationship policies: Specifically, be good at the vital few things for which your clientele knows and appreciates you, and set aside the trivial many that don’t support the company’s vision.

Some more important than others

Whether a business owner is developing the company policies for the first time or just tweaking its current ones, one should consider all of the possible situations where a policy should be set. Consider the following scenarios:

Order cancellation—Presumably, this is why it is common practice in our industry to collect 50 percent on all incoming orders. If the printer or embroiderer has already commenced work on the job, she should be entitled to full reimbursement for any costs incurred prior to the notification of the order being cancelled. Most of the time, the deposit covers these costs.

Customer-furnished materials and artwork—If the garments to be decorated were supplied by the customer, but are unfamiliar to you or your production staff or are incompatible with your shop processes, you should be able to charge for any preparatory or experimental work necessary to perform. If any “camera ready” artwork requires touch-up or clean-up, the customer should be aware that there will be a charge for that. Likewise, any customer property that is released to the apparel decorator will be safeguarded against the usual threats—fire, water damage, theft and so on, while in the possession of the decorator; but if the work done on customer-supplied materials results in a reject or defective piece, only the cost of the embellishment will be refunded to the customer and/or the rejected item will be offered to the customer without charge. In general, it is wise to have a policy to dissuade customers from supplying you with garments.

Proofs: artwork, color and machine—Every apparel decorator should have a system for having the customer “sign off” on the design—checking for correct spelling, dates, details, color matches and the like—prior to starting actual production of the job. If the customer does not care to approve the proof, have him sign and date a waiver of indemnity before the work is performed. Certainly, a printer or embroiderer regrets any undetected errors that may occur through production, but should not be held responsible for errors if the work is performed per the customer’s approval or if proof corrections were made verbally without signature or initials. If the customer requires machine proofs, rather than paper or electronic proofs, the decorator should expect to be paid for the production of such a proof.

Delivery and packaging—Unless otherwise specified in writing, the price quoted is for a single shipment, “bulk” packaged, without storage, freight-on-board the customer’s address. Any modifications to this standard—partial shipments, individual folding, tagging or bagging, special “rush” priority pick-up or delivery, to name a few—may result in additional costs to the customer.

General warranty, substitutions, alterations, rejects and returns—Although apparel decorators use quality materials, due to the wide variations in the way garments are laundered, maintained or worn, the business should not be held responsible for fabrics fading, shrinking or being otherwise damaged during cleaning. You may consider reserving the right to substitute garments of equal or better quality without notification, provided the specifications of the order have not substantially changed. If any alteration work is performed beyond the specifications of the original order, that work may incur additional charges to the customer. Any buyer should have the right to purchase any rejects or overruns at a reduced cost, but if the buyer declines to purchase them, the decorator reserves the right to sell them as seconds or irregulars or dispose of them in any manner he sees fit. Finally, in the specialty, one-of-a-kind, made-to-order marketplace, it is common to have a “no-returns” policy.

Policies and prerogatives

A business owner can have any number of policies she desires. How, when and how often they are communicated and enforced falls under the business owner’s prerogative. Let’s look at an issue previously unaddressed in this column: quotations. First of all, all quoted estimates should have expiration dates—typically, 30 days. If you’ve had the unfortunate experience of being asked for a quotation from the same prospective client on more than three occasions and have yet to be rewarded with an order, you’ll appreciate the advice I will now share—adopt a Charge-for-Quotations policy.

How long does it routinely take you to prepare an estimate or quote? Even if it’s as little as an hour, what is your time worth? For the sake of argument, let’s say your time is valued at $250 per hour. That hourly rate now becomes what it will cost a prospective customer to receive a quotation for your goods and services. However, it is your also policy that if you are awarded the business, any charge for the quote will go toward the purchase price of the order.

If a first-time prospective customer approaches you with a request for a written quotation and you want to position your business in the most positive light, explain your policy to him, but then say, “But you look like a nice enough fellow, so for you I will waive the charge for quotation, if that’s okay?” See, you have the prerogative to enforce or waive any of your policies if, in doing so, good customer relations are generated.

The same can be done with your cancellation policy or extra charges for rush delivery, but in every case where you invoke your prerogative to waive a fee, get the credit you deserve. Make it a point to bring to the attention of the customer that you are doing them a favor and saving them time and/or money. They hopefully will look favorably upon doing business with you again and more often. Good luck!