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Please let me know if you see anything weird," Lohmiller & Company credit manager Brenda Erickson would tell her sales reps. But then it dawned on her that they didn't know what 'weird' meant.
She explains, "Salespeople tend to see new shiny things (like cars, trucks, new buildings, equipment, and new hires) as signs of success. But, as Credit Manager, I see new shiny things as the creation of additional, and potentially, unmanageable overhead costs. We balance the information with sales and payment history to continually analyze the situation." So, she decided to create a list of what weird meant to her and called it Early Warning Signals of Distressed Customers. She laminated it and distributed them to their reps, and urges them to discreetly check the list on customer visits. Here's the list:
For more on Erickson's procedures, see our article Strengthening Customer Relationships with a Sales-Commission Reversal Policy.
| Early Warning Signals of Distressed Customers | ||
| Focus: Construction Industry Scenarios | ||
| Yes | No | Warning Sign |
| Decreased inventory, not just from us | ||
| Sudden increase or decrease in orders | ||
| Major expenditures - New vehicles, the new facility |
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| Loss of a major customer or client | ||
| Excessive downtime for lack of work | ||
| Expanding into new areas - New construction to retail, res to cancel |
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| Personnel layoffs | ||
| A key employee quits abruptly | ||
| Illness or death of the owner or key employee | ||
| The owner has domestic problems - Divorce, family crisis |
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| General disorganization | ||
| Lost equipment | ||
| Rumors in the industry that the business is in trouble | ||
| Business is for sale or has recently sold | ||
| Pricing complaints | ||
| Slow down in payments, requests extended terms | ||
| Increased excuses for non-payment - Lost invoices, ran out of checks, no check signer - Unusual disputes, NSF checks - No check signer is available |
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| Tax or workman's comp issues | ||
| Changes in advertising methods | ||
| Ownership uses business money for personal reasons - Building a house, buying a car |
||
| Unusual extravagances - Bonuses or raises out of the norm |
||
Reviewed and Updated August 2020.
Checklist For Early Warning Signals of Distressed Customers - For Sales Reps
Here's the checklist that guides the sales reps to look after the major components for checking and the warning signs of a typical distressed customer
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