Verbal contracts and honour

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In terms of gathering in new clients, I cannot call myself a hard-nosed salesman, but I do sell on the value of my business offerings. Generally my approach is soft-selling, letting the prospect lead herself to make the decision. I generally think of my “close” rate at better than 90%, but of course that is not boasting. All my prospects have already qualified themselves by finding me through on-line and old-fashioned media or by word-of-mouth. When I meet them they already know they want me and all we have to decide is the price. When we have agreed this that’s is the end of the sales process. The next stage is delivery and my delivery of peace of mind for the client. At least that’s the theory.

Having seen the client, it is necessary to send the client an engagement letter or contract. The purpose of this is to ensure that we are clear on our respective responsibilities, and the client knows what she is getting for the fee she has agreed, and what she is not getting; in other words, what services are extra. The letter has more general legal stuff but essentially it is all about what she is buying and how much it will cost her for her peace of mind.

Honour bound

When I started work in the City it was an important tenet that a gentleman’s word was his bond. So was a lady’s. If we shook hands on a deal it was sealed. The paperwork was a formality. That was the way it always was. Just recently I have noticed a trend to renege on verbal agreements, and often not always in a straightforward way; not delivering the papers, or just going missing.

What to do about this?

Sam Goldwyn said “A verbal contract isn’t worth the paper it’s written on.” In reality verbal contracts are seldom enforceable and certainly if we have not yet delivered we do not wish an unwilling client to pay up for services or goods he has decided he doesn’t want.

We are familiar with the expression “caveat emptor”: let the buyer beware. In a difficult environment we must also think “caveat venditor”, let the seller beware. We must be absolutely certain the prospect has signed on the dotted line and is happy about the deal. It will save a lot of heartache.

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The tools of our business – choice, discretion and honour

Back in January when visiting the local branch of my bank, I was whisked in by the customer relations manager and offered their premium service at a discounted rate. I weighed up the benefits and agreed to sign up. It looked like a good deal.

A couple of weeks ago I had a standard impersonal printed letter from the bank’s mass mail saying that the bank had looked at my banking practices and decided that I no longer qualify for their discounted rate because I do not satisfy the conditions, which they listed. Guess what? My account charges would be going up 43%.

Now, it is important to note that the bank’s customer manager told me that I qualified for the special rate. I examined the criteria set out in the impersonal letter I had received. I have to say that I never qualified for the discounted rate in their terms because the accounts I run for three different business entities and several income streams are not managed in a way that could satisfy the requirements.

I am not pleased. Because of the benefits I thought I was getting I cancelled some insurance I had elsewhere and my existing car breakdown cover amongst other things.

I called the bank and was told there was “nothing they could do” other than apologise and register my complaint. They cannot offer the service at a discounted rate.

Now, this is not supposed to be a whinge about large organisations in general. Of course, once upon a time, bank managers had discretion to change things and fit services and charges to individual customers.

It so happens that my first job was with a bank. I accepted a job offer at a salary which turned out to be higher than the amount normally offered to someone of my then age. My new employer, or at least the personnel manager, realised the mistake but told me the bank would honour their offer, and this was all before I started the job.

As small business owners we are in a different position. We have a choice as to what services to offer at what price, and to cement our relationship with our customer thereby. Our customers still have a choice to use us or not, but as long as we can offer a valued service at a valued price we should be able to keep them.

Should something go wrong we can use our discretion to put it right. We should keep our word, our self respect and our honour by honouring our commitments. We can even get a nice warm feeling in doing so. If we stick to our ethics we can grow our small business into a big one and instill our honourable approach into our staff by allowing them discretion.

Large organisations such as banks have lost all connection with customer service through becoming remote from us in ivory towers known as call centres. They may say they need to be competitive in terms of cost, but I would not mind paying for a proper service from a bank which honoured its commitments. They should note that supermarket chains generally take customer complaints seriously and try to put things right. It is not about being too big: it is about having real customer-facing staff with discretion to act on their own initiative. Banks and mobile phone companies haven’t a clue about this.

As a small business owner I am happy that choice, discretion and honour liberate me from becoming like the banks, including mine which has just been voted the worst in the UK for customer service. Are you not pleased, but not complacent, that you are not as they are?

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