Renee’s Rule™ — It never hurts to ask.

February 26, 2009

Approximately 20 years ago, I began compiling Renee’s Rules, which I will share from time to time on this blog.  (My son Jason created a great “talking” set of the original Renee’s Rules™.   If you would like a copy of the executable file, please contact me.)

Rule #1:  It never hurts to ask.

This true story illustrates the point:

Shortly after I began working as Interim CEO of a manufacturing company, it became apparent that the company was going to lose  its proverbial shirt on a large job.  The selling price was approximately half the direct cost of the job.  The company had not yet started the job.

We scheduled a meeting with the customer, explained the problem honestly, and told him that we could complete the job only if we doubled the price.

Instead of pulling the job, he agreed to the new price.

In these troubled times, cash-strapped companies simply cannot afford to sell below their direct costs.  They need to be better off–not worse off-on cash.  Period.

CEO’s of deeply distressed companies need to find a way either to reject cash-losing jobs or to increase the prices so that the company is better off on cash after the job than it was before.

It never hurts to ask.  For many companies, doing so may spell the difference between survival and liquidation.

4 Responses to “Renee’s Rule™ — It never hurts to ask.”

  1. February 26, 2009

    This is so true – not only dealing with customers, but dealing with vendors as well. I can’t tell you how many times I have gotten a company to reverse a late fee or [sub-standard]service charge or return something after the no return date – all because I just asked them to do it. Of course, it’s a lot easier to do this if you maintain a good track record with your vendors.

  2. March 18, 2009

    We had a similar experience with one of our clients a couple of weeks ago. Management was concerned to go and ask for better terms thinking that the relationship with one of the main customers was going to be at risk. Management went ahead and arranged the meeting with the customer and the results couldn’t be better. Proving that keeping a strong relationship with customers, suppliers and financiers are key for a sustainable growth. Check our blog – turnaroundmanagement.blogspot.com

  3. April 15, 2009

    I agree with you completely. When working with legacy products, these items were creating losses because of poor pricing (by a lot). An alternative was to stop selling these products, but instead we decided to talk to the customers, explain the situation, and propose our new pricing. Not only we were able to keep the customers happy for continuing to supply these components, but we also avoided further losses for the company.

  4. May 12, 2009

    Are you suggesting that you Can’t sell below cost and make it up in volume? Darn 🙂

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