Losing A Large Contract – Part 1

We all dread that phone call from one of our large customers. You know the one. “We are sorry, but as of today, you on your official 30 day notice of termination.” While the feelings of panic were much greater during the early stages of our business, that call still stings. Lost business is rarely a good thing. You either picked the wrong customer, your service is bad, the economy is weakening, or perhaps a corporate mandate required them to accept the low bid. In this blog and the next, I want to tell you about two large accounts we lost in the last year, the lessons we learned, and how we plan to move forward.

The Background

2017 was a record sales and profit year for our company. While growth can be a great boost to a company, it can become a strain if it all happens at once. That is exactly what happened to us. Over the course of the year, we grew from about $15k/month to $145k/month in one particular city. Because of this rapid growth, we needed a branch office, area and project managers, a branch manager, and startup teams to kick off the 4-5 new accounts in the area. One of our managers was transferred from another branch; however, the rest of the local operation was built from scratch.

The Lost Account

During the 3rd quarter of the 2017, we landed an account unlike anything we had serviced in the past. This facility ran nearly 24/7, 365 days per year and was staffed with a janitorial team around the clock. Before we took over the account, they were servicing the entire facility using their own in-house team. While we petitioned for the entire project, then decided to give us the 3rd shift portion of the program, the most difficult piece of the pie.

While this portion of the account was nearly $20k/month, it presented us with many challenges. First, our 3rd shift workers were making less than the 1st and 2nd shift in-house staff, creating a recruiting challenge for us in this rural location. Second, partnering with the in-house staff and reporting to a daytime janitorial manager created a tension that seemed unresolvable. Finally, a strictly 3rd shift crew created some recruiting and retention problems for us.

Lessons Learned

At the end of the day, we just were not able to satisfy our client. There are a few reasons why I believe this to be the case; however, we plan to learn from these lessons and go forward stronger.

  • Too much too fast – If this nearly $2,000,000 in business had been spread out across multiple branch locations, keeping a more consistent operation would have been much easier. Going forward, we will be leery of accepting too much business in one concentrated area. We would rather serve fewer customers well than more customers poorly.
  • Don’t take the leftovers – We should not have accepted an account that forced us to do what the customer wasn’t willing to do for less than than the customer was originally paying.
  • Don’t partner with in-house staff – When in-house staff and outsourced providers partner on a project, there is always room for much tension and gossip. If at all possible, avoid situations where the in-house staff has a motive to disparage your company.
  • 3rd shift only is tough – When you have a large account that is comprised of 1st, 2nd and 3rd shifts, multiple layers of resources can be drawn upon. Additionally, shifts can cover for one another and balance each other out. When you only have 3rd shift, this can create some difficulties.

Taken as a whole, the above reasons caused us to lose the account. We hope to learn from them, improve our processes, and show ourselves stronger in 2018.


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