When your contract with a longtime client expires, do you reread every word of the original contract? No? Let me tell you a story.
A major contract we have with a city agency came up for rebidding recently. We'd had the account for 12 years. Because of our track record and our cordial relations with people who work at the agency, we figured we had a good shot at landing the contract again, but--when the bids came in--we discovered that, on paper at least, our bid was higher than the others.
"What are we going to do?" Brad Clinton, our sales manager, asked me.
"The first step is to read the contract," I said.
He gave me a curious look. "Sure, if you say so, but..." He shrugged.
"But what?" I asked.
"Well, it's not like we don't know what's in it," he said. "We've had it for 12 years."
I couldn't help smiling as a distant memory flashed through my mind. "Let me tell you a story," I said.
The story dated back to the beginning of my legal career. I was 23 years old at the time and fresh out of Brooklyn Law School. Although I had passed the bar exam, I was not yet a full-fledged attorney. In those days, it took six to eight months to be admitted to the bar after taking the exam. I, like most young lawyers, spent that period working at a law firm, where I received my initiation into the practice of law.
The initiation began during my first week on the job. As I was getting ready to go home at about 5:30 one afternoon, the attorney I worked for handed me a massive file and said I should show up in court the next day to represent a motion he had submitted on behalf of the client.
I was taken aback. "You want me to go into a courtroom?" I said. "I've never been in a courtroom."
"Don't worry," he said. "It's nothing. Just be there at 9:30."
"Nine-thirty!" I said, staring at the file. "You want me to read all this tonight?"
"No, no, no," he said. "You don't have to read anything. Nothing's going to happen. When the judge calls the case, you just say, 'For the motion.' The judge will say something like, 'I'll take it under consideration.' Then you can leave."
"Okay," I said, but I was nervous all the same.
The next morning, I took a seat in the gallery of a dingy courtroom in Queens, N.Y. It looked to me as if the other people there were all in their nineties. We stood as the judge entered. He, too, looked about 90 to me. I waited until he called my case, whereupon I leaned forward and said tentatively, "For the motion."
At the sound of my voice, the judge put on his glasses and looked in my direction. "Is that you, sonny?" he asked. "Did you say that?"
My stomach tightened. "Yes, Your Honor," I said.
He pointed a long, bony finger at me and curled it back abruptly. "Come here," he said. I rose and walked down the center aisle toward the judge's bench. I could hear people snickering.
The judge waited until I was standing directly in front of him. "Noooow," he said slowly, peering down at me from the bench, "is this your first time in court, sonny?"
"W-w-well, yes, Your Honor," I said. I heard laughter from the gallery.
"Are you admitted to the bar yet?" the judge asked.
I must have turned bright red. "No, not yet, Your Honor," I said. More laughter.
"Well, sonny, tell me what this motion is all about," he said.
I stammered and squirmed. "Well, I, uh...it's about...I mean, we filed this motion...well, not we, but the attorney I work for..."
The judge cut me off. "You have no idea what it's about, do you, sonny?" he said. "You came into this court unprepared, didn't you? I should deny this motion for that reason alone."
People behind me were now roaring with laughter. I felt so embarrassed I wanted to melt through the floor. "Yes, Your Honor," I said.
"But instead I'm going to give you your first lesson in life out here in the real world," the judge said. "Never, ever walk into my courtroom unprepared." He glowered at me for a moment to let the lesson sink in, then waved his hand dismissively. "Now scoot, scoot, scoot. Go back and tell your boss that you didn't do so well today."
When I walked into the office, my boss had a big smile on his face. "What happened in court?" he asked.
"You know what happened!" I said. He just laughed.
So I'd been set up. I later learned that the judge had a reputation for dispensing lessons to novice lawyers. The experience had been excruciating, and I swore that I would never allow myself to be so humiliated again. In the following months, I went to dozens of such hearings and said "For the motion" many times. No judge ever asked me what the motion was about--but I could have answered if I'd had to. I'd read the file. I was prepared.
By the time I went into business, the habit of preparing intensively had become second nature to me, and it proved to be a major competitive advantage. I found that I could close a significantly higher percentage of sales than my competitors simply by knowing more than they did about the customer, its representatives, and every other aspect of the deal. That's still true today. Our closing rate is better than 95% among prospective customers who come to visit our facility, and not just because we have nice warehouses, beautiful offices, and wonderful employees (though all of that helps). We prepare thoroughly. Before the customer's people arrive, I go online to find out as much as I can about the organization's structure, mission, and history. My salespeople give me a full briefing on the visitors I'm about to meet--what they're like as individuals, whom else they're considering, how the decision will be made, and so on. I tailor my presentation accordingly.
A couple of months ago, for example, I gave a tour to some people who were thinking about switching their company's business to us after many years with another provider. Their biggest concern, my salespeople said, had to do with maintaining access to their files during the transfer. Now, in the course of one tour, I can't tell visitors everything we do, but if I know about a specific concern, I can address it without waiting to be asked. In this case, I made a point of saying, "One of the things we're most careful about is making sure people have access to their files or boxes during the move. Here's what we do." The prospects were delighted. We closed the sale.
It's even more important to be prepared when you meet with a customer after you've screwed something up...and you should be able to explain exactly how it happened.
It's even more important to be prepared when you meet with a customer after you've screwed something up. To be sure, you need to apologize and promise that the problem won't arise again, but you should also be able to answer the question that customers always ask: "How did it happen?" That takes preparation. You have to figure out exactly what went wrong, and why, and how you can ensure it won't happen again. Then you can say right up-front, "Listen, we've researched this incident, and here's what caused it. We're not making excuses. We just want you to understand what happened and what safeguards we've put in to protect you and all of our other customers. The truth is, you've helped us to correct an important problem we were unaware of. We really owe you our thanks for that as well as our apologies." In most cases, I've found, customers are willing to give you a second chance.
There are no shortcuts here, not even when you're dealing with customers with whom you've had a long-term relationship. You can't assume that you or they know what's in a contract just because you've been operating under it for several years. It's too easy to forget critical details--details that may determine whether you keep the business.
The city contract I mentioned earlier proved to be a good example. When we went through it, we came across a clause stipulating that whoever got the business could not use subcontractors. Knowing that, we were able to get one of the other bidders eliminated, one whose people had neglected to read the contract as closely as we did. In addition, we were able to show that the remaining companies had based their bids on unrealistic expectations about how some parts of the job could be done. Instead of doing the research, they'd guessed. When you calculated what they would actually have to charge, it turned out that we were the low bidder after all.
So we're going to get the contract again, and I owe it to the judge I encountered the first time I ever set foot in a courtroom.
Norm Brodsky is a veteran entrepreneur whose six businesses include a three-time Inc. 500 company. His co-author is editor-at-large Bo Burlingham. (firstname.lastname@example.org)