A few years ago, a customer in my software business paid upfront for a round of changes to their custom software application. It wasn’t an issue until the customer changed their mind.
I don’t mean the customer decided to change something in the original scope. The customer chose to execute the project with another company with little warning. After 18 months, the customer said they wanted a new confidentiality agreement. The agreement would prohibit my firm for working with other companies in the same field.
We tried to negotiate a reasonable arrangement, in good faith. Unfortunately, the customer was adamant. We could not sign an agreement limiting our ability to do business.
So, we proceeded to wrap up business with the customer. We turned over credentials and documentation to the software. We tried to do the right thing; make sure the next vendor could continue the project.
But, what about their upfront deposit? The obvious answer was we should refund it. However, I cannot say it was the easiest decision to make. Honestly, it was hard. I had worked diligently with them the last year and was looking forward to the future revenue. How dare the customer try to change the terms of our business arrangement midstream?
It was only after wrestling with the implications of not giving the refund that I made the right decision. Even if you are “wronged”, there are consequences of not acting with integrity.
The first reason I considered when making the decision was, how is this going to impact my relationship with my employees? They knew the customer had paid us a 4-figure advance.
If I was willing to short the customer, would I do the same to them? How could this influence how they viewed their job, their responsibility to customers and my responsibility to them?
In reflecting on the possible outcomes, I realized if they saw me act without integrity with a customer, it would diminish their trust in me. They might wonder if their next paycheck would be on time.
Also, it would reduce their enthusiasm for what we do. My team might cease to go the extra mile for the customer or simply spend more time on social media rather than serving. Intellectually, I knew this, but reflecting on the scenarios above helped me to get comfortable with the decision emotionally.
The second reason I considered was, how is this going to affect what is said about us? Obviously, this customer was not going to be a customer going forward. However, they will talk to other companies.
It is common sense that referrals are the preferable form of marketing. We often think of a successful customer talking to future customers. Yet, a customer who “switches” will also tell a story.
I wanted the story they told to be a positive one. It would probably go something like, we were not able to reach an agreement on XYZ. And, they will remember concluding the relationship with integrity.
Hopefully, their story will end like this, “I think they would be a good match for you because they always treated us honestly.” The reputation that proceeds from an ending can still be a good one.
The third reason I considered was, how am I going to feel about myself after this decision? If I am proud of the decision, it will strengthen my self-image. Otherwise, it will weaken it.
I might feel good for a while by making them pay. Over time, the feeling will fade, and I will be left with the voice of my conscience. If it is negative, it will haunt me. Sometimes, I do not consider the impact of a decision on myself. Whether I realize it consciously or not, it is there, and it makes a difference. Even if I tell myself I can live with it, in the long run, I cannot.
To function at my best, I need to remove any thought of acting unethically. If I do something without integrity once, it will be easier to do it again. And, it will influence my view of what success is.
The next time you are facing a challenging decision, ask yourself three questions. How will this impact my co-workers? How will it impact what customers say? And, how will it impact my view of myself?
How has acting with integrity helped you in tough situations? Please leave your thoughts below!
Kirk Bowman is the founder of Art of Value, a pricing consultancy in Dallas. He is the host of the Art of Value Show, a weekly podcast exploring the business model of value pricing for professional services. In 2010, Kirk changed the business model at his software company, MightyData, from hourly billing to value pricing and grew revenue by 55+% the first year.