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Careless Talk Costs Margins

Alan Smith

I love the sight of a Chinese lantern floating through a summer sky at twilight, though I doubt I will ever light one again.

Earlier this month one of these blazing lanterns lit up the Jayplus recycling unit in Smethwick, near burning Birmingham. The resulting inferno was visible from 80 miles away and damages were reported to cost £6 million. As well as this, there was a significant risk shouldered by the heroic fire service managing the disaster.

While it is true that we may not always be able to anticipate the end results of our actions, this does not mean that we should not even try.

One of my advertising clients was negotiating a considerable global contract with one of his company's largest clients. They were dealing with significant numbers and it was a lucrative contract but the margins were lower than those of other clients and my client was hoping for a small fee increase to allow his company to continue providing exceptional service and high quality work.

In their first meeting, the buying director told my client to "cut the crap".

One of the agency's client service people had apparently told one of his regional procurement officers how lucrative the client's business was and how vital it was to the agency going forward. They had even been told the agency's margin in supplying this client, which the client did not share.

Needless to say, this put a cat amongst the pigeons. My client was immediately on the back foot. While he managed to regain his composure, his expectation had been firmly set that the price was only going to go down!

I was asked what I would have done.

Without wanting to appear smug, my first question would be about my own beliefs. For example, it is a guiding principal of my business that we do not share such information with clients. This knowledge puts me in the powerful position of being able to identify such ploys. Complete faith in your colleagues across the organisation.

We would rather walk away from business that break that principal.

What are your organisation's key principals? How are they shared? How do you ensure new people are integrated into your corporate culture?

If we can't answer these questions, we must be constantly on our guard for Chinese lanterns potentially going off all over the place.

Alan Smith
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