… the HR Minion. Because even minions have opinions. And giggles.

Customer Service in Action

I often write about customer service, good and bad, because most jobs are customer service jobs in the end. Most roles either have customers, clients, bosses, co-workers, shareholders, investors, and so on involved, and that essentially means you are providing a service or good to someone at any given time.

HR alone has to provide customer service to employees, managers, applicants, and co-workers. We are all accountable to someone which is why good customer service skills are so important.

Now imagine this scenario:

A Company signs a contract with a Vendor for their service. The Company agrees to pay a monthly fee for unlimited access to this service. There is no end date for the contract so basically the terms negotiated remain the same until either party chooses to end or change said contract. Both parties agree the price is fair based on current levels of expected use. Many years go by and the Company grows by leaps and bounds. This causes the Company to use the Vendor’s services more than predicted, but the Vendor is seemingly unaware of the increase in use and never questions it.

Then one day, the Company asks to change an aspect of the service. The Vendor pulls a report on the Company, realizes how much things have changed over the years, and issues a new contract charging more than twice as much, not due to the change itself but as a reflection of the increased use over the last few years. The Vendor does not feel they are getting fairly compensated for their services anymore and the Company doesn’t feel comfortable paying twice as much for essentially the same service.

Now, if you were that Company, what would you do? If you were the Vendor, what would you do? Would you sign the new contract and pay the higher fee? Or do you find another vendor? Do you lower the fee to keep the customer? Is there a happy medium? If you wanted to provide the best customer service how would you have handled this?

Hit me up in the comments, I would love to know what you think!

8 Responses | Add your Own

  • 1 Kelly O :

    There’s got to be a happy medium somewhere. If both parties acknowledge that the use of this particular product has increased significantly over what was expected however many years ago, maybe a more modest increase could be negotiated. Since the vendor seems suddenly struck by volume, it doesn’t seem like there is much in the way of additional support needed, but there has got to be a reasonable way to get there.

  • 2 Chris aka new_resource :

    Interesting you post this today, I am writing some about vendor/consultant contracts. I say, read the fine print and be careful, very few vendor/management consultant relations run smoothly.

  • 3 Shauna :

    Kelly – I agree, there needs to be some kind of negotiation here to make it right.

    Chris – Good point, damn fine print. 🙂

  • 4 Doug Shaw :

    Hey Shauna, this blog post is right up my street. Delighted you see the HR/customer link so clearly. It strikes me the vendor took their eye off the ball. Before just doubling the charges how about everyone sitting down and reassessing the situation before trying to strike a deal that all parties are happy with?

  • 5 Stuart :

    Companies will occasionally find themselves in a situation where they’ve been underpaying for a service, and Vendors occasionally find themselves servicing low/no margin contracts. Often it’s a mispriced longer-term contract to blame. In this case it was a month-to-month contract but since the vendor was unaware of the growth, it worked in pretty much the same way.
    As always, market forces will sort it out. A company won’t pay above market rates for long and a vendor won’t re-sign a deal they’re losing money on.
    I agree with Kelly O, if the vendor hadn’t noticed the volume impact in terms of it’s own costs, it’s likely making an increase based on what it thinks the market (read company) will bear and not a need to cover internal costs.
    How I’ve seen this usually play out is that the vendor comes to the party (i.e. old price) within the company’s current budget cycle and they negotiate a new price for the next cycle. If the company really was paying less than market price, they’ll likely (a) go to market (possibly staying with the same vendor but at least proving to their internal controllers they’re paying a fair rate), and (b) look at measures to reduce/control their future consumption of the vendor’s services. Given that people tend to over-consume when things are ‘free’, these measures are usually quite successful.

  • 6 Shauna :

    Doug – You mean have a conversation? GASP! What a thought. 🙂

    Stuart – Damn, awesome comment and awesome advice!

  • 7 Katie Lane :

    Riffing off Stuart’s comment, if the Vendor really wanted to find a good resolution, it would have market data available it could share with the Company about what similar services charge for the level of use the Company has been using. The Vendor can then put its offer in terms of value compared to other options and highlight any price savings the Company will see by sticking w/ the Vendor.

  • 8 Shauna :

    Katie – That would be very helpful to have and if they felt they were really competitive they would be confident enough to do that. Thanks!