The company had been experiencing two decades of success by selling a range of w
ID: 364626 • Letter: T
Question
The company had been experiencing two decades of success by selling a range of well-branded hair products in the New York area. The sales force consisted of thirty salespeople. Every day, the salesperson serving the NY area, was visiting several customers. Salespeople were responsible for checking the stock of their customers, selling the entire range of products, opening new accounts and clearing accounts “receivable.” All NY customers were benefiting from the minimum of three and up to six months’ credit. Competitors were offering similar credit terms.
Once customer had accumulated a debt to the company of around 20,000 dollars and was refusing to clear although the A/R term expired. The customer was allocated to a newly hired salesperson. Prior to visiting this customer, the sales team manager informed the new salesperson to try to collect some money from him but not leave any products unless the customer was prepared to pay cash. The salesperson heard very carefully the words of his team manager. When he visited his customer the following conversation took place.
Salesperson: Good morning. My name is Kevin and I am the new salesperson for this area. Is there anything I can do for you today? Do you need anything from us today?
Customer: Thanks for calling in. Yes, I do need some products (and he went on listing the products and specifying the quantities he wanted).
Kevin: How would you want to pay?
Customer: By credit. You come and collect the money after three months.
Kevin: That’s fine.
Customer: Did you not receive any instruction from your company as to how to handle my account?
Kevin: Yes, I did. But do not worry. I think I did the right thing. Even if I lose my job, it will be for a good reason. I trust all my customers. I am 100% sure you will not let me down. See you later.
The team manager was furious. He told Kevin that he did not want to work with him and reported to the general manager (GM). Kevin was disappointed since the team manager did not want to hear anything about the reason. GM called Kevin in and asked why he did this.
Kevin: I will not do it again but I bet this one soon will be one of my most valuable customers.
GM needs your help and invited you to advise. As a consultant to GM, how would you help GM solve the problem? Use the SPSR-step: (1) summarize situation (2) define problem (identify causes and/or issues), (3) offer at least two (or more than two) alternatives (options) to solution weighing pros and cons with each option, and (4) recommend the best option or a combination of multiple non-competing options.
Explanation / Answer
1. Situation is that a customer is not paying up the money for the products he purchased, Newly recruited person is assigned this customer with proper instruction but he goes out of the way his team manager gave instructions and is not facing the situation for his decision about the customer and his committment.
2. Problem - Kevin did not followed the instructions from his Team Manager. The root cause for the same is the pending payment from the Customer.
3. GM Can fire Kevin from his job on recommendation of his team manager which will solve the situation but again the problem of pending collection will still remain a problem for the company.
GM can allow the Kevin to handle this customer on his risk only which may bring in new sales for the company but there lies a risk of payment on timely manner again.
4. GM can allow Kevin to deal with the customer on his risk (means if customer do not pay up, Kevin will have deductions from his pay). This way customer can be revived, new sales from customer can be generated and risk factor of payment can be mitigated by not needing to fire the Kevin.