A CPS sales resource article. © by Critical Path Strategies, Inc. All Rights Reserved.

CRITICAL PATHWAYS by Joe Foley

Delivering Bad News to Your Customer...A Difficult Conversation

What’s a Bad News Conversation? Generally, bad news falls into one of these categories:

Increases to price, lead time, or anything else that reduces your perceived value

Reductions to the product offer, customer benefits, or service level

Changes to the relationship, sales channels, or project support

While a bad news conversation is not an objection per se, the same listening, empathy, and questioning skills will be crucial. And while the conversation is not a negotiation at the start, it may evolve into a negotiation as the conversation develops.

It helps to think about the challenge of delivering bad news as having three phases: preparation, opening, and moving to collaboration.

Successfully managing a trusted partner relationship with a key customer includes relentlessly doing the right things to build trust.

But invariably there will come a time when it falls to you to deliver bad news (sometimes real bad news) to a key customer. Your

skill in handling these situations will influence how quickly you rebuild trust and further strengthen the relationship.

A CPS sales resource article. © by Critical Path Strategies, Inc. All Rights Reserved.

CRITICAL PATHWAYS

The Preparation Phase You have often heard, “There is a second side to every story.” You need to prepare for your bad news conversation by understanding and getting comfortable with “your story.” You also need to invest in understanding your “customer’s story.”

What is the problem? How did the situation get to this point?

What will your customer say the problem is? How will they view it and react? Did they contribute to the situation?

What is your preferred outcome?

What is your preferred relationship with your customer? How can you limit any collateral damage?

What obstacles could interfere?

Your challenge is to adopt a mediator’s view of the situation, understanding both your own and your customer’s story and being able to express them in a balanced and empathetic way. Once you’ve done that, ask yourself if this difficult conversation is even necessary or does your customer‘s story change how you should move forward?

Assuming the retest says the bad news must be communicated, you need to prepare for possible negotiation and implementation. You must be clear on whether any part of this bad news is nego-tiable. If so, by what parameters:

Can the price increase be delayed for another quarter?

Can current orders be protected?

Can the current agreement be extended?

Likewise, understand areas that are absolutely non-negotiable. If an area is non-negotiable, keep it off the table.

Bad news often brings with it the need for both you and your customer to implement something as a result. Be prepared with the details of what you and your company need to do and anticipate implementation steps your customer may need to take. Some of these may require immediate action. Some may have longer-term implications.

A CPS sales resource article. © by Critical Path Strategies, Inc. All Rights Reserved.

CRITICAL PATHWAYS

Opening the Conversation You only get one chance to deliver the news, so plan accordingly. Bad news travels faster than good news in most well run busi-nesses, so be proactive in delivering the message to the decision-makers. They should not get the news from below, above, or through the rumor mill. It needs to come from you.

Bad news first is the rule. Don’t try to postpone or sandwich bad news between lesser topics. Your opening statement needs to be clear, concise, and complete.

1. Start with the mediator’s view of the situation that recognizes both your story and your customer’s story and demonstrates empathy for their interests and needs.

2. Don’t use any ambiguous opening statements that may encourage or confuse the customer that this news is reversible or negotiable.

3. Use your best listening and questioning skills on their response.

4. Acknowledge how your company may have contributed to the need for this and listen for them to acknowledge any contribution they have made.

5. Do not dwell on assigning blame.

Using “and” in your opening statement can help:

Fear, anger, embarrassment, defensiveness—any number of unpleasant feelings can occur during a bad news conversation. When you are delivering bad news, you should expect that personal feelings will be involved and recognize them. These individuals were highly involved and are accountable for their company’s relationship with yours. Expecting an “its only business” reaction sells your personal relationship short and does not recognize that the trusted partner relationship has taken a hit. It’s ok to talk about your feelings and hopes for the future relationship. Encourage them to do the same.

Your company and ours have accomplished…

We need to increase price and reduce benefits…

We have reached a no-bid decision and can’t revisit…

Denotes teamwork and collaboration.

Get all the news out at once, not in stages.

It’s non-negotiable. Don’t waste the effort.

A CPS sales resource article. © by Critical Path Strategies, Inc. All Rights Reserved.

CRITICAL PATHWAYS Moving to Collaboration Collaborating on what happens next is the pivot point where life beyond the bad news begins.

It is imperative that your customer feels like they have an active role in this phase. You have been in control in delivering the bad news. Give back some of that control in the collaboration phase by partner-ing, not dictating:

Explore the solution options together

Select the most promising option for both and test for fit

If road blocked, commit to a follow-up session

Develop best next actions and a work plan

Set standards for measuring results

Document and communicate

Commit to inspecting the new results together

Focusing most of the conversation on the solution creates an opportunity to re-energize the trusted part-ner relationship through collaboration. Take the lead in managing as much of the process as possible, but be sure to have the customer fully engaged as a partner in your shared solution.

One more thing. After you have a plan in place, track any progress made in solving the problems that led to the bad news. Frequently update your customer on the situation and the speed of progress. This is good news.

While delivering bad news will become easier, it will never be easy. But do it well and your customer relationships can emerge even stronger.

www.criticalpathstrategies.com LinkedIn Group: The Best Best Practices in Sales Effectiveness

Critical Path Strategies would like to acknowledge Douglas Stone, Bruce Patton, and Shelia Heen of the Harvard Negotiation Project for insights from their book Difficult Conversations.

CRITICAL PATHWAYS

Difficult Customer Conversations Do… Don’t…

Know your story and your customer’s story

Develop a mediator’s view

Know what’s negotiable

Be prepared with implementation steps

Plan your opening; go first

Be clear, complete, and concise

Collaborate on the best go-forward solutions to rebuild TRUST

Document

Communicate throughout

Assume your customer views will resemble your own

Wing your opening

Assume personal feelings aren’t involved (it’s just business…)

Make ambiguous statements that could be misunderstood

Play the “blame game”

Oversell that your solution is superior to theirs

ABOUT CPS. Critical Path Strategies helps clients improve the effectiveness of their sales organization. Our portfolio of services addresses the strategic, organizational, and relationship issues that impact selling performance. Our powerful processes enable clients to transform their sales culture, enhance their competitive position, and accomplish strategic business initiatives. Our clients—emerging companies and members of the Fortune 500 alike—typically measure 100 to 500 times their CPS investment in revenue growth.