Most Hudson Valley organizations believe the aim of business should be to form lasting relationships with customers. Does your company draw the line with customers who pay late, or threaten not to pay at all?

How much does it really cost you to lose a customer? What is customer worth to a company over an average purchasing lifetime? Ford Motor Company recently calculated that the lifetime value of a typical customer is $178,000.

Many companies see non-payers not as “partners” who are in trouble, but as cheats or deadbeats. Heavy-handed collections are seldom successful at getting payments but always create resentful ex-customers. These people will never buy from you again, even when their finances improve.

Happy customers not only buy from you; they send friends, relatives, neighbors, and associates to your door. When each customer can bring you so much business, it’s foolish to behave in a way that discourages them from coming back.

This applies to customers making late payments. The collection supervisor for an upscale department store believes that the majority of late-payers are honest people facing either tough financial problems, or are reacting to customer service concerns. “Aim to get them to make payments, without losing their business”.

One customer she dealt with had encountered many personal setbacks: divorce, layoff, and an extended illness. He ended up bringing his account current and later explained, he always paid her first, because she made him want to keep his commitments to her.

At US West Cellular, the challenge is to collect a late payment without losing the customer’s business. Look at late-paying customers as honest people who need friendly, but firm, attention. Emulate US West Cellular’s methods to keep the customer and get paid.

Always start a conversation by saying that you’re confirming that they have sent in their payment. Starting the call off on a friendly note assumes the customer did what you asked them to do.

The second message is “show empathy”. Those who owe you money are people like you, facing the same problems you face. Follow up by immediately offering the customer a choice of using a credit card or setting up a payment plan. Customers must know you take their debt seriously and you are willing to work with them.

Next, always ask why the customer has failed to pay on time? It’s very common for customers to withhold their payment because of service problems and non-payment offers the customer a way to get that service or satisfaction.

Always being “friendly but firm” establishes the foundation for a continued relationship. Aim for a specific agreement about how the customer will pay and ask them to repeat it to you. Put the agreement in writing, and send a copy letting them know that you expect the agreement to be followed. Each time the customer makes a payment, “call to thank them and reinforce the good behavior”.

Hudson Valley companies can deliver a positive message in what is otherwise an uncomfortable situation. Customer relationships can be profitable only if kept alive. Don’t get the payment but lose the customer, you can have both!

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