Nobody enjoys a dispute with a customer. However, no matter how diligent and conscientious you are, disputes will occasionally occur. While these situations can be stressful, they can also represent an opportunity to improve your business.
Several years ago, I had a three-month dispute with a customer. I will spare you all of the gory details, but a brief summary of the dispute is necessary.
In early July we began an exterior repaint. A few interior rooms were also included in the job. During the job, the customer added a number of small items–another small room, some baseboards, and similar items. The supervisor provided a price for each item verbally, and the customer agreed to the prices. Because this was occurring several times a day, the supervisor did not write a change order for each additional item. Instead, he planned to write one change order later in the job. When he did write the change order the customer refused to sign it, saying that he wanted to review it.
We were also going to install a new door, which the customer would supply. However, once we were on the job, the customer informed us that the door would not be available immediately.We agreed that we would complete the other work and return to install the door once it arrived. The crew completed the work and asked the customer to inspect the work so that they could take care of any touch up items. He refused. That evening he called our office and left a message that he had a few questions.
Over the next several days I left him multiple messages, but he did not return my calls. I finally emailed him and he informed me that he was on vacation and would return the following week.
Upon his return, he provided a short punch list. We returned to install the door and take care of the punch list items. When the crew finished, he again refused to inspect the work or make final payment. Two weeks later, he submitted a new punch list, twice the length of the first one.
Up to this point I had tolerated his delays and lack of communication. But the new punch list was unreasonable. His refusal to inspect the work while the crew was there– despite the terms of our contract–was creating scheduling problems. His refusal to pay–despite the terms of our contract–was an indication that he might be trying to stiff us.
Over the next several weeks we exchanged emails and phone calls in an attempt to resolve the matter. He demanded that we complete the items on his punch list before he would pay any more. At one point he suggested that we deduct $1,300 from his balance of $3,000 to call the deal even. This was absurd, and I told him so. Our last phone call ended with no resolution. I promptly contacted the Better Business Bureau and requested arbitration to resolve the matter. The BBB contacted the customer and three days later I received a check in the mail for the balance due.
There are a number of lessons to be learned from this experience.
The first, and most significant, lesson is the importance of following procedures. Procedures are useless if they are not followed. In this instance, having the customer sign for additional work before completing that work would have avoided some problems. While the failure to do so was understandable under the circumstances and certainly not the primary cause of the dispute, the dynamics of the situation would have been considerably different.
The second lesson is the importance of a good contract. For example, our contract calls for the customer to inspect the work at the time of substantial completion, and provides the customer with an additional 5 days to inform us of any uncompleted items. The customer abused this policy, refusing to inspect the work at the time of substantial completion (even though he worked at home) and then taking 2 weeks to inform us of uncompleted items. Further, our contract calls for binding arbitration in the event of a dispute. Not only does this prevent expensive litigation, when the customer implied that he would sue if I did not cave to his demands, I knew that his threats were meaningless.
Finally, this experience shows that BBB membership does not benefits. For the price of a few emails with the BBB I was able to resolve this dispute quickly. Apparently, the realization that an independent, third-party would rule on this dispute provided motivation for the customer to quit playing games.
For us, this experience provided a reminder that we have specific procedures for a purpose. It also reminded us that when those procedures are not followed, the results can be much different from what we want or intend.