Monthly Archives: March 2012

Friends Don’t Let Friends Be Their Customer

You’ve probably heard this before: All things being equal, people would rather do business with their friends. This may be true, but the question then becomes: Does the friend providing the service feel the same way?

Here’s the scenario: Joe needs a widget. It just so happens that Joe’s friend Jane has a business that produces widgets. Of course Joe is aware of what Jane does, and knows she would give him the best price on the widget – often for little or no money. However, Joe doesn’t want to feel as if he’s taking Jane for granted and so shops around a bit. Jane soon finds out about Joe’s widget need, and naturally tells Joe that she will take care of him.

Jane thought she was doing her friend a favor, and Joe thought he would get a great deal from his friend. It’s all good right?

A few weeks later, Joe checks in with Jane to see how his widget is coming. He’s a bit stressed because he knows how important it is for his business to get that widget going. Here’s the conversation:

Joe: “Jane, how’s it going with my widget?”
Jane: “It’s coming along, no problem!”
Joe: “When will I have it?”
Jane: “Not too much longer, I’ve got you covered! I just have a couple other customers to take care of then I’ll be finishing up yours.”
Joe (uncertain) “Ah, OK.”

A few more weeks later:
Joe: “Jane, what’s happening? I really need that widget.”
Jane “Well, you know I was sick, then the family vacation got in the way, but as soon as I get done with my current customer you’re next! So are we on for beers tonight?”
Joe: (disappointed) “Yeah, see you tonight.”

And so it goes. To make things even more painful, imagine that Jane only makes widgets part-time (i.e. “on the side”) or if you replace “friend” with “relative”. Your widget? Not going to happen, or at best you will get a widget that you never asked for – and don’t like.

From this scenario, three things are clear. 1) Jane is not treating her friend Joe as a customer, 2) Joe doesn’t feel he’s being treated as a customer, and 3) Joe is now wondering whether he can still consider Jane a friend.

The principle that comes into play here is price versus cost. The PRICE Joe would have paid for his widget to a business with which he had no direct personal connection was higher than buying from his friend, so the choice seemed simple. But the COST of his decision –  increased stress, loss of his clients, loss of revenue, a potentially inferior product and possibly the loss of his friendship with Jane – far exceeded that bargain price.

You’re thinking that this would never happen with YOUR friends right? Maybe. If you’re planning on doing business with a friend or relative, there are ways to alleviate much of the risk involved. Consider these guidelines:

1) Define each other’s roles as customer/provider. Talk it over, and make sure you both agree that this is to be a business arrangement, not a favor.

2) Set a timeline. Make sure you both understand the need for the product/service, and the provider can deliver it when you need it as well as how you want it – no excuses.

3) Sign an agreement. Awkward! Sure, at first your friend may feel annoyed or unhappy because they perceive this requirement as a sign of distrust, but if they understand the point of the first guideline above they won’t hold a grudge. And if they do grouse, that will be your red flag that perhaps you shouldn’t be mixing this business and personal relationship.

These three simple steps will ensure the process goes smoothly – with benefits to both parties: you get what you need when you need it, and your friend gets sincere thanks from you –  and recommendations to others. Best of all, the cost will not outweigh the price.

If you do business with your friends or relatives, open communication is key. Price is a temporary setback, cost a permanent one. Your choice.

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