How to Deliver Bad News (Part 1)

Posted on August 21, 2008 by Dave Stein

In business, sometimes apologizing requires a plan

In business, delivering bad news or apologizing for a mistake might require a plan

At one time or another each of us has had to deliver bad news to a customer. Sometimes it’s your fault, sometimes not. Here are some examples:

You made a mistake describing a specification or capability, leaving the customer angry and in a difficult situation.
You’ve lost an existing customer to one of your competitors. Another customer will be unnerved and concerned.
An article or analyst report critical of your company has been published.
There have been problems with your products or services that were made public.
A key executive of your company has resigned.
Your company has been hit with a shareholder lawsuit.
You’ve just found out that a project with a customer will go over budget. The customer doesn’t know yet.
Your company has or will shortly announce a financial loss.

I’ve seen sales leaders (and CEOs) build significant credibility with customers by the way they handle these adverse situations. The way you deliver bad news can become the foundation for a deeper, more trusting relationship with your customer, if done right.

When faced with situations like these, you have three choices: (1) Not discuss the issue with your customer, (2) improvise, or (3) create a plan and execute.

Should you even consider not discussing the issue? Your customer will likely learn about the bad news from someone in their company, from the media or worse, from your competitor—one whose intent in is to discredit you. That leaves you little choice. You’ll need to take control of the situation.

Improvising is a bad choice. These situations are far too critical for making things up on the spot. There is too much risk of things getting worse.

That leaves the third option. So, here is a step-by-step plan for delivering bad news:

Assess the situation. Before you can communicate the news effectively, you must consider many things:
- What impact will the bad news have on your customer?
- To whom should you be delivering the news?
- How might they receive it?
- In what position will this leave you?
- How will it impact your customer? Who will be embarrassed or hurt by this news?
- What resources will you need to convince your customer that the situation is contained or under control?
- Depending on the situation, how might you help your supporters within your customer’s company save face?
- If a meeting is going to take place face-to-face, or on the phone, which members of your team should be present, if any.
Communicate to your customer the purpose of the call or visit. “Jim, I have some information to share with you that is not what you are expecting to hear.” Here is where you can position yourself as having the courage and integrity to do the right thing and, at the same time, set yourself apart from your competition: “I want you to hear this information first, from me. I’m going to give it to your straight.”
Confess and tell your customer the bad news. “Jim, I just found out that I provided you with inaccurate information. We do not currently have a standard interface to your existing warehouse management system. It is important that you hear this information now, from me.”
Empathize. “Jim, I know how you must feel. I know if I were in your situation I’d be disappointed and angry and would feel exposed, having publicly sponsored my company as your vendor of choice.”
Apologize. If you or your company has done something wrong, now is the time to apologize. “I am truly sorry this happened.” Don’t dilute the importance of this statement by saying anything else. Give the customer a moment to absorb your sincerity.
Explain how this is going to impact them. “Jim, this will potentially push the project completion time back by a month. It will not impact your total cost of ownership, although there will be a bit higher initial cost. However, I’m still certain that even with this minor setback we’re still the right choice for your company based upon your requirements.” You continue, “I know we’ll have to work a bit harder now to prove that, but I’ll do whatever it takes.” And, “I know that your IT manager, Sam, is going to be angry with me and my team because of this, however, I figured out a way to make this a bit easier on him.”