Make it Easy to Spend Money With You
Why do some businesses make it so hard to spend money with you? I recently returned from lecturing in the Dallas/Fort Worth area at a clown convention. Now, I have to admit, this was my first clown convention and it is quite a site to see a room FULL of adults with white faces, orange hair, and rainbow colored clothes, but for most of the convention they were just plain old folks.
Okay, maybe there were some who were a little bit weirder than normal, but not as weird as some of the magicians' conferences I've attended. And no where NEAR as strange as some of my family reunions, but that's another topic.
The point is that there were some really good questions they brought up. One of them was about contracts and deposits.
Performers (and this seems to be true for clowns, magicians, musicians, jugglers, vents, and almost any other performing artist group I've talked to) seem to have a phobia about having people cancel gigs on them. So to protect themselves they want to have customers sign contracts and/or submit non-refundable security deposits.
The problems I have with this are multiple. First, performers are some of the flakiest business people on the planet. I've come to believe that the greatest threat to most performers' business is their own apathy and carelessness. The client has a much greater (and statistically more justified) fear of you not showing up than you have of them canceling for no reason at the last minute.
Secondly, unless you make it very easy to pay a deposit (such as accepting credit cards AND PayPal) then you just create one additional obstacle for your customers to traverse in order to work with you.
Thirdly, I wonder if anyone has ever, or would ever sue a birthday party mom over a cancelled party. I certainly wouldn't. I wouldn't sue a school or library that cancelled. And if I'm not going to sue, why would I create a contract anyway?
Lastly, you put a huge hindrance on working with certain types of customers and clients. Some of the people who are in charge of hiring you are not allowed to enter into written agreements and so the authorizations (and thus the buying decision) is then passed on to someone higher up who might not have the same priorities or relationship as the person who really wants you.
I'm not saying that deposits are bad or that you shouldn't use contracts. I even believe that having customers work a little bit to get your business isn't a bad thing either. But I do think that if you want to grow you business you should strive to make it easy for them to spend with you.
Please don't e-mail me with your thoughts on why you do or don't use contracts. I would love to hear other opinions but this is a BLOG. That means, if you have an opinion, click the word "comments" below this posting and post your own comment so that everyone can read it. You can do so anonymously.
posted by Julian Franklin @ 8:09 AM
3 comments
3 Comments:
I've decided to use deposits. I don't do it so much to protect myself as to give peace of mind to my clients and to keep the communications clear between us.
Generally, I "request" a deposit rather than "require" one. This allows my client to do whatever feels more comfortable to them, and elliminates dealing with "red tape". We can take it by credit card (all types) over the phone, or they can send a check or the info along with their confirmation or contract. I use confirmations (no signature) for birthday parties, and contracts for everything else.
If we haven't received a deposit (sometimes they send the check only) or the contract or confirmation within 10 days, we call to find out why -- not because we require it, but it keeps the communication happening and we can re-assess the validity of the agreement or make minor changes, as necessary.
However, I do insist on a non-refundable deposit for any event that will likely be cancelled if there is inclement weather.
I have to admit, though, that keeping track of deposits is time-consuming, due to the bookkeeping complications. Sometimes people forget about the deposit they've already paid (or they thought we were holding the credit card info, like car rentals do) and end up over-paying, in which case we have to arrange for a refund.
Bill,
It sounds like you make it easy to spend money with you and that's good. I also think that follow up and open communication is critical.
Don't get me wrong, I don't think deposits are inherently BAD, nor do I think that contracts are either. I just think that too often performers think only of protecting themselves, rather than on how best to serve their customers.
In fact, I just got a phone call yesterday from someone needing a performer to fill in for a magician who cancelled at the last minute. I'm going to create another blog entry about it...
Hi Julian -
For my birthday shows, I send a confirmation letter. I don't use a show agreement or contract. I don't require a deposit, but I do ask for payment for birthday shows in cash at the show.
The reason I ask for cash, and I explain it to them, is that I have been paid for a few birthday shows with cheques that bounced. So, I now have a cash only policy, and have had that policy for close to 10 years now.
Because I explain it at the end, there seems to be little problem with it. And of course, I tell them that my show is still guaranteed. I want to make sure they are happy before they pay me (they like me saying that, and I mean it).
For all other shows (non-birthdays), I use a show agreement along with an invoice, sent in advance. (By the way, agreement is a less-threatening term for contract -- even the cell phone companies prefer that term.) I do not require a deposit, and I accept cheques or cash at the show.
I have had a couple of customers cancel in over 28+ years I have been in business, but they were for perfectly understandable reasons. Some were even re-scheduled.
So, I didn't force the issue of the cancellation clause (50% if they cancel with less than 45 days notice, is what it says on the agreement).
I have no problem collecting payment, and no one changes their mind about the booking because I say I will send a confirmation letter, or a show agreement, to confirm the details for them, so that we are both sure we have all the details correct. It's about Win-Win!
There is one customer within the past 12 months who would no longer sign contracts (I had worked with this mall over 20 times in the past 10 years), but there were also other problems and demands upon our relationship. I did the next few shows as per our verbal agreement, and let them away with not signing the agreement. When done that group of bookings, I then simply explained that because of all the challenges, I could no longer them the special rates. In this case, I didn't necessarily "fire" my customer because of them not signing an agreement -- I simply told them I was no longer willing to do shows for the discount, and that the show agreement was one of the many pieces in the "challenge puzzle" I was having with them.
I try to be as hassle-free as possible, and end up with hassle-free customers back!
- Donald Dunphy
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