This is obvious,  yes?  If we do work for a customer, we charge them for it.  Ok, so the customer  would rather get work done for free.  It helps their bottom line after all, doesn’t  it?  Maybe not.

It was two different worlds. Most of the organization, which was struggling with low quality products and services, was “helping” out the customers by sending out expensive engineers to the customer’s site, for free. We had service agreements in place for charging for our services, but for various reasons we rarely charged our customers. One department, however, continued to charge for their services.  Seeing the difference between this department and the others was enlightening.

I took over as the new manager and stumbled upon  this situation (I had been promoted from a project manager  to a line manager). The first I encountered the situation was when our third largest customer gave me a call and asked that I put an engineer on cleaning up one of his computer servers. The logic was that since we were the experts and knew more about these servers then they did, then we could do it quicker and better. When could I get someone on it, he asked?

I was a bit taken aback. I was the new guy in this position and didn’t want to offend one of our biggest customers. OK, I thought, I’ll  do this, but then I dove into what the heck was going  on. Maybe it was just a customer taking advantage of my new guy status.

Nope. It seems this was normal. If a customer has a problem at their computer center, which ran our software — along with a lot of other vendor’s software — they would give us a call to send out an engineer. Gee, they would say, we think the problem is with your system so it is something you will do without cost to us.  Over time it became common to just make the request with no discussion on cost. We seemed to think we got “good relations”  when we assigned our staff to work for free (according to our account and project managers).

This was normal, except for one of my departments. This department’s manager always charged the customer when one of her engineers went to help a customer.  It was known by our customers that if they needed help from her department, they would incur a cost per our written service agreements.  I saw, for example, an involved checklist that one of our customers had developed and used when anything was associated with her department. There were procedures to check typical problems before giving us a call.  It was well organized and I could tell the checklist had evolved over time to handle more of the normal things that could go wrong.

What about my other departments? I never saw an equivalent customer checklist or procedure being used by the customer. I just saw sticky notes with our number on our customer’s cube walls. This was a problem. Our business was based in part on providing a service that we charged for. We were not charging for it very often.

The first time an account manger came into my office and said we needed to send an engineer out, I said OK, have the customer acknowledge the hourly rate in a short note back to us, and we’ll send the engineer out. This procedure was set out in our service agreement with them. The account manager balked. It might be our problem the account manger said. We don’t want to charge them for fixing our problem! I said, great, we’ll not charge them if it is our problem. No deal, said the account manager.  No engineer, I said.  I got a call from the CEO. He politely suggested we needed to support our customer in solving their problem. I sent out an engineer, at no cost.

The second time an account manager came into my office and said we needed to send out an engineer, I said OK, have the customer acknowledge the hourly rate ….  I got another call from the CEO. This time he suggested that we share the cost. We’ll only charge the customer half our going rate. This was because it was in our best interest and we might learn something. I sent out an engineer, at half the hourly rate.

The third time an account manager came into my office and said we needed to send out an  engineer, I said  OK, have the customer acknowledge the hourly rate ….  I did not receive a call from the CEO. Seems he didn’t like giving away our services any more than I did. It seemed to be acceptable when the person in my position gave it away, but the CEO didn’t like setting the  example himself. No engineer went out.

The fourth time an account manager came into my office and said we needed to send out an engineer, the account manager also said “and they’ve acknowledge the hourly rate!” An engineer went out to the customer site, and we were paid for his services.

Several other things happened as a result of this change in approach. When we were not charging for our services, we often had a challenge finding someone willing to fly out to the customer location. Too often, we ended up sending whomever was willing to go rather than the best person for the job. Going out on these support calls was not a popular activity. When we began to charge for our services again, it seemed to become a desired activity.  What was up with that?

Let me characterize the difference between when we didn’t charge and  when we did charge:

When we didn’t charge for our services, it started out normally enough when our engineer would show up at  the customer site. The customer’s technical staff would often appear surprised  or at least not quite ready to work with them.  It was not unusual  to be told “hey, take a seat in that empty desk, we’ll get around to you a little later.” When they finally got to working with our engineer, it was not unusual for me to get a call saying something  like “your engineer hasn’t finished everything he needs to do, so I need him to stay for at least another day.”

Once we started charging, the environment was noticeably different. The engineer would arrive at the site and the customer’s technical staff would be assembled in a conference room (sometimes including other vendors). There would be a plan laid out on a whiteboard, including who was going to do what — all organized by a project manager. It was not unusual to get a call from the customer saying “we got finished sooner than we expected,  so we are sending your engineer back, but there is something he said he could do for us, could we get that ….”

It was also the case that when we charged for our service, we often got our best engineers asking to be sent to the  site. I believe it was a combination of the customer being better prepared, the better treatment received and the understanding that their time was being billed that made them now want to do this kind of job.

Personally, I would rather not be charged for working out or around problems with a vendor’s product.  However, I now realize that if I want to improve my own organization as well as get consistently better service, I might want to pay for it.

Can you see how charging a customer can help us be a better service provider and them a better customer?