Masonry Magazine August 1970 Page. 10
SMOOTH SELLING
by George N. Kahn, Marketing Consultant
DON'T LEND MONEY TO BUYERS
The salesman who tries to carry on a sideline of lending money is asking for trouble. In fact, this article could well be entitled "How To Lose Customers." That's exactly what will happen to the salesman who becomes a soft touch for his buyers. When a customer wants to borrow money from a salesman, the answer should be a polite but firm "no."
At first thought it might seem that the salesman is jeopardizing his relationship with the buyer by refusing. Quite the contrary. The salesman who grants the loan is running a far greater risk of hurting his situation with the customer. I know of no buyer who has ever canceled an order or dismissed a salesman because the latter turned him down for a loan. But I know of many salesmen who have regretted lending money to customers. One of these was Fred Jason.
A Bad Debt
Fred, an industrial scales salesman, was one of the highest paid men in his field. He also was one of the most liked. One day a buyer, with whom Fred had dealt for years, casually asked him for a $50 loan. "I'll have it for you the next time you call," the man assured Fred. Without hesitation, Fred took $50 from his wallet and gave it to the man.
Fred called at the account a month later and got a strange reception. He cooled his heels in the reception room for an hour after being told the buyer was "busy." Previously, Fred had been whisked into the man's office upon arrival. When the buyer finally did emerge he was brusque almost curt. He gave Fred a routine order and dismissed him. Neither of the two mentioned the $50 loan.
On his next call Fred was treated even more coolly by the buyer. The latter reported through his secretary that he was "tied up" and could not see Fred. By this time Fred began to suspect that something was wrong. He insisted on seeing the customer, however, and was finally admitted.
The salesman asked the buyer for an explanation of his behavior, but the man only mumbled a thin excuse. When Fred pressed him further the buyer flew into a rage. "Look," Fred said, "if it's the $50, I can wait." This made the buyer even angrier. He denied the money had anything to do with it. Whereupon, he quickly wrote out a check for $50 and threw it over to Fred.
Well, Fred got his money but he lost a customer. The buyer refused to see him again and the salesman's company had to assign a new man to that firm.
The Guilty Buyer
You must understand the motivation of the debtor. When a buyer borrows money from a salesman their relative positions change. Before, the buyer had considered himself in a superior position to the salesman. He was the one to whom the salesman had to come. He (the buyer) could dispense favors. The salesman depended on him for his bread and butter.
After the buyer has hit the salesman for a loan the relationship alters. Now the buyer feels himself in an inferior position. He is obligated to the salesman and this fact changes his feeling toward him. This feeling is heightened if the buyer can't pay back the loan when he promised. He may seek to avoid his creditor. When he is forced to meet him, he will be cool, almost hostile.
Lending Ruled Out
A midwestern work clothing company has issued a standing order against the practice of salesmen loaning money to buyers. It has instructed its salesmen that they risk losing their jobs by making such loans. The rule was imposed after one of the firm's top salesmen lent $450 over a period of several months to the buyer for a leading department store. The latter had been deeply in debt before he tapped the salesman as the result of gambling losses. He studiously avoided the salesman, going so far as to lie through his receptionist that he was out of town. The salesman eventually lost the account. Fortunately, it was only temporary. The buyer's employer found out about his habits and fired him.
Don't Borrow, Either
Some salesmen might ask me: "How am I going to refuse a loan to a buyer I've known for 20 years and accounts for a third of my volume?"
Admittedly, this puts the salesman in a tough position, but not in an impossible one. There is absolutely nothing wrong with telling the man that it is your policy not to lend money to customers. You might even explain your reasons. If he is at all reasonable he will understand and even admire you for your stand.
If the buyer won't see it from your point of view, there is little you can do. If, however, your refusal to make a loan causes the buyer to freeze you out of orders, you are perfectly justified in reporting it to your sales manager. Only a small minority of buyers would abuse their office in this way. I know salesmen in the $50,000 income bracket who have a firm policy of not lending money to buyers. Obviously, their principles have not stood in the way of their success.
The Art of Saying No
A business relationship should remain just that. The buyer is not your brother or father-in-law. He is not there to bail you out of your financial troubles. You will lose his respect by putting him on the spot with a request for a loan. You will be much better off going to your supervisor or someone in your organization. At least it's kept in the family so to speak.
When you ask a buyer for money, it's also bad publicity for your company. Your firm expects you to conduct your personal affairs to reflect no discredit on it.
Are you conducting yourself properly with regard to your relations with buyers? Take this quiz and see. If you can answer "yes" to at least five questions you have nothing to worry about.
1. Do you manage your money so you don't run short?
Yes No
2. Do you refrain from borrowing money from customers?
Yes No
3. Are you concerned about your image with buyers?
Yes No
4. Would you refuse a steady customer a loan?
Yes No
5. Would you explain to him your reasons?
Yes No
6. Are your relations with all your customers satisfactory?
Yes No
7. Can you say that none of your customers owes you money?
Yes No
8. Do you believe a relationship with a buyer could be ruined by lending him money?
Yes No