Hi Michael:

Indeed, this can be a problem. I think brokers have it especially tough, as it's such a competitive arena, and you want to keep people happy and attract new business. I think importers feel "entitled" to free advice from brokers more than from attorneys and consultants.

As an attorney / consultant, I guess I have it easier. Hourly billing is our norm, so most customers are not shocked if their phone questions show up on their bill. (Many tines, I don't bother billing for simple things, as billing is more hassle than answering the question was, but certainly bigger issues warrant billing.)

I think the only thing you can do is spell out the relationship with the client as well as possible, and let them know up front that you will treat such questions after a certain point as consulting business and bill them for it. This may offend some, but I don't know of any other way to limit this situation. Your information and advice are valuable commodities. It's your option to give it away freely as a customer relations move, but also your option to charge for it.

Finally, you have expenses and responsibilities that must be met. And in the event your advice or answer turns out to be incorrect, the importer will blame you just the same for any bad outcomes, whether the advice was free or paid for.

So I guess I have no answer other than if your business drifts into consulting, then the billing practices eventually have to follow. I hope this is somehow helpful.

Don

posted 2 months ago

Hi Michael,

Talk about a question striking a raw nerve!

It seems that the number of these free advice seekers has increased ten fold in just the last year.

Our import export business web site deals with a lot of different resources and up until about 2 or 3 months ago I followed the thought process that Robert Dugger talks about of trying to give in the hope these people would ultimately turn into customers.

Unfortunately, the 10 fold increase and tracking of these type of calls has provided clear evidence to me that the conversion to an actual customer of these freebie seekers is nil or none.

One of the resources we offer is a database of USA, Mexico and Canadian businesses - we promote on our web site and pass the inquiries to the database owner who pays us a commission on sales. He has gotten so many of these "freebie" research calls in the last 3 months that he now charges an upfront $250 research fee which he advises the "potential" customer will be applied against their first order.

I was just talking with another gentleman who advertises on our web site who related to me how many "free" market reports he has been doing in the past few months and how the majority never turn into actual customers. I apprised him of the database owner's new $250 research fee to be applied to their first order and he thought that was a great idea and is going to implement it.

I had forgotten about this method over the years but it was originally introduced to me by the owner of a vitamin manufacturing company who would receive innumerable for free samples from "potential" importers in other countries. He related that this problem was finally resolved when he began advising this people that samples were available upon request at the wholesale price plus shipping and that their sample order up to $500 (I believe it was) would be applied to their first full order when they became an actual customer.

I really believe this is a reasonable request to make and it really does seem to save time and tends to "separate the wheat from the chaff" as the old saying goes.

Ron

posted 2 months ago

You're right. It's a tough call. You almost have to look at the free advice as a marketing expense. Some calls will come in from folks that have absolutely no intent of using your service, but its hard to distinguish between the freeloader and the potential client on a first call...and you definitely don't want to cut-off the opportunity sell your services by eliminating calls for advice because there will always be another broker out there that will take the call and he'll end up with the business from the callers that are actually looking to pay for your services.

However, in the case of "chronic freeloaders" it's just necessary to be frank and expect them to understand the costs of providing the time/research/advice and indicate that future consultations will not be provided without a consulting fee or expectation of using your brokerage services.

It's a personal preference and a case-by-case decision, but sometimes those free consultations help to develop relationships that will pay out generously in the future.

posted 2 months ago

Having been on both sides of the transaction it's definitely a thorny issue. Of course, an existing client would always get an answer from me. However, it has always caused me to question why brokers charge a "flat rate" per entry as opposed to a retainer/hourly billing model. The houlry model may be of benefit to many importers. We all know that various importers have a "degree of difficulty" in their entries. Usually this isn't really recovered. Sure a textile importer might pay more for entries, but is it really porportiante to the workload?

Now that I am on the import side, I only fish with existing relationships and it's usually to further investigate an opinion from one broker that I don't necessarily agree with. If I were asked a basic question that really requires no added thought beyond the phone call, I'd answer it. If somebody out of he blue were to ask me classification advice, that would be a different conversation.

Best of luck,
Matt Erion, LCB

posted 2 months ago