Tuesday, January 20, 2015

Losing A Big Client - Opportunity For Change

In the life of every company, the day will come when a big client is lost.  Today, this can happen even if great service was provided for a variety of reasons.  More and more Procurement Departments at major companies are controlling buy decisions.  Procurement Managers, presumably as a result of their objectives and perhaps bonus structure are often looking for short term gains in terms of cost savings.   In the process, great service and technology are a given, so they are usually not the final determining factors in choosing a supplier any more.  The notion that a client receiving great service would change to another supplier just never happened 10 or 15 years ago.  Instead, the concept of partnership was used to achieve process improvements and cost savings as a normal aspect of doing business.  This Blogger CEO won't say this is all dead; but I will say that the good old days were better when relationships really mattered, particularly during tough times.

In any case, when the day comes that a company does lose a big client for whatever reason, no matter how painful, after a short grieving period, which is normal and trying to learn from the experience, it is a great opportunity to reinvent the organization from top to bottom.  First, take a look at the company's businesses in terms of viability and profitability.  This could be a good time to change direction and or emphasis.  Cards talk and numbers don't lie, which means use numbers to determine company direction, rather than emotional attachment.   A good manager must know when to hold them and when to fold them.  It may be time to limit investment in some business, while increasing investment in other businesses that could be more profitable. 

As part of the process, doing a talent assessment makes sense, as well.  Losing a big client could result in downsizing and lay offs.  It is a good time to determine the talent needs of the organization going forward.  Obviously, employees directly tied to the lost client, if they can't be reassigned to other clients, or functions, may have to be laid off to cut costs.  However, if it makes sense for the company to change direction or strategy, it may be that other employees, working in other functions and or locations are no longer a good fit, resulting in elimination of those jobs, as well.  This may seem heartless; but at the end of the day, the CEO's job is to insure the survival and financial stability of the company in order to fight another day. 

Finally, a facility assessment should be done.  If the loss of a big client results in having too much office or manufacturing space, it is best to get rid of unnecessary space as soon as feasible to eliminate expense, even if it results in a write off. 

Losing a big client is never a positive experience; but it can be a real opportunity to actually grow a company.  Most important, it is not the end of the world.  When times get tough, the tough get going.  Good managers use use losing a client as an opportunity to learn from the experience and if necessary to change direction to insure the success of the company. 

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