Celeste Barber raises more than $50M for Australia-wide bush fire relief then learns that the money can only be given to the New South Wales Rural Fire Service (instead of directly to those in need).
A study of 48,000 visitors to webpages of 90 software companies over 1 month finds that only two people read the End User Licence Agreement terms, even though consumers must read and agree they have done so, before purchase!
Donella Andrews, from Thomastown GA, purchases a travel insurance policy, reads it from end to end before signing and discovers a clause entitling her to a $10K prize. The insurance company concerned had inserted the clause as part of a campaign to encourage customers to read policies!
Consumers fill talkback radio with bank, telco, timeshare, and gym horror stories and the painful experience of discovering the ‘devil in the detail’ of their contracts.
If only they had read the fine print!
The fact is people do not read the fine print.
That means staff do not read customer contracts and most never see one.
The impact of this cannot be understated. You cannot play the game if you do not know the rules. If you do not know the rules, then someone is going to get hurt. In a B2B customer-supplier relationship, this will most likely be the supplier and it will be costly.
Staff who do not know the rules make up their own. They over service. They over supply. They keep the customer happy and they give their all. The customer, however, does not pay for ‘their all’. In fact, when you read the fine print of the contract, service level agreement, or terms and conditions, you find that they are only paying for about 35% of what they receive. And next year they will be asking for more!
You can appreciate the compounding impact on a suppliers’ margin.
It Costs 15-25%
The fine print that B2B suppliers fail to read and apply typically costs them between 15-25% of net-margin, per customer.
The good news is this problem can be fixed.
In less than a week, a cross-functional team can be taken from a state of contractual confusion to outright certainty. They can have simplified Play Books for the mutual roles and responsibilities of supplier and customer alike.
The process requires careful decryption of contracts, terms, conditions, and service levels. The resulting material commercial clauses are then converted into a role and function set of easy-to-read and apply summaries.
Imagine how your bottom line could look if your staff read the fine print?
Try This Exercise
If you think that this is not an issue in your business, try this audit.
Dig out your most important customer contract and read it in its entirety. Then, issue these questions to each staff member that plays a role in servicing the customer.
- Do you have a copy of our customer contract?
- When did you last read it?
- When does it expire?
- How much revenue will it earn our business this year?
- What is our profit margin likely to be?
- What are the key things it obligates your role to provide?
- How much of what you do for the customer is not specified in the contract?
- What are the reciprocal obligations of the customer?
- How compliant is the customer to the contract conditions?
Compare and contrast the answers.
You might just want to read the fine print again.
Complimentary Margin Review
A 45-minute Zoom call, focused on a customer of your choice,
that pinpoints margin gain opportunities