I have a client who has always sent a birthday gift to his customers as a way of showing his appreciation for their business. The client currently has about 100 customers, which means that he will send a gift to about 9-10 customers per month. The expense of the gift will often vary depending on the business relationship.
Some of the customers have been with my client since he started his business over 30 years ago. Without their loyalty, especially in a very highly competitive market, his company would not have thrived the way it has over the decades.
About ten months ago, one customer started to become a little bit past due, eventually becoming significantly delinquent over the months. This customer has been with my client for over 20 years and had been a solid source of business throughout. In fact, there have been years when orders totaled the equivalent to 5-10% of my client’s annual sales.
In addition, as is the case with many supplier / client relationships, it went beyond strictly business. Sometimes my client and his customer went to dinner or played a round of golf together.
A few months ago, my client reached out to his customer to find out if everything was alright, only to hear that things suddenly were going south. A few of the customer’s major end users did not pay, and one of them went bankrupt leaving a huge debt. Not only was my client impacted through this supply chain cash flow disruption, but other suppliers were also not getting paid.
In view of the latter situation, my client asked me if he should still send a birthday gift to his customer. I responded, “Yes, I think you should. Since he has been with you for all these years and your company had flourished due to his loyalty, sending a birthday gift would show your appreciation for your long-term relationship. In fact, if there is any money that the customer can spare to pay his suppliers, your kindness during this difficult time may put you at the front of the queue.”
I further suggested to my client that for any orders which might come in, they should be priced at a deep discount. This would allow his customer to increase the profit to his domestic end users and contribute to getting passed this difficult period.
What would you advise? Your thoughts and comments will be most appreciated.
Nancy Seiverd, President
CMI Credit Mediators, Inc.
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