It’s likely that each of us has failed to meet an obligation to a colleague or partner on at least one occasion. Perhaps we’d gotten caught up in the flurry of the week and missed an important deadline. Or maybe we’d double-booked ourselves and weren’t able to sit in on a conference call we’d promised to. In many cases, an apology and explanation is enough for our peers to understand the situation and move past our mistake.
But what happens when the mistake marks the end of a business relationship between buyers and suppliers?
While prior research examined the reasons that business relationships break down and how executives can navigate such situations, one looming question remained unanswered: what if the relationship ends? Is it possible to restore a relationship that has been fully severed?
Misty Blessley, associate professor of statistics, operations and data science at the Fox School, wants to help suppliers who have made partnership-ending mistakes repair their relationship with buyers who have taken their business elsewhere.
“If you’re a supplier in an environment where you’re competing against many other companies for business, losing a customer doesn’t have to be the end of the world,” Blessley says. “There are things that a supplier can do to restore that relationship.”
In her article, “Mending fences in buyer-supplier relationships: The role of justice in relationship restoration,” which was recently published in Journal of Supply Chain Management, Blessley draws upon organizational justice theory to examine how severed relationships can be restored. Restoration tactics—such as acknowledging a mistake, compensating for a mistake and offering a procedure to be followed in the event the supplier runs into future problems that could impact the buyer—were used to help buyers feel fairly treated after facing an injustice. In turn, this feeling of fair treatment facilitated an openness to restoring severed relationships with suppliers.
In her research, Blessley demonstrates the effectiveness of these restoration tactics by aligning them with three corresponding facets of organizational justice, each of which increased buyers’ perceptions of fairness to varying degrees.
For example, by acknowledging fault for a mistake that caused damage or losses, suppliers could increase buyers’ perceptions of interactional justice, or the feeling that they were being spoken to and treated fairly as an individual.
Similarly, by compensating for these losses or damages caused, suppliers increased buyers’ perceptions of distributive justice, or feeling that the financial outcome of the situation was no longer unfair.
Finally, by making their operations transparent to ensure that the same mistake would not be repeated, buyers increased suppliers’ perceptions of procedural justice, so they feel like that decision-making would be fairer in the future.
But as her research found, buyers didn’t value each facet of justice equally when it came to perceiving fairness. This meant that some tactics were more effective than others when restoring severed relationships. It also didn’t seem necessary to employ all three restoration tactics simultaneously to win back business.
“The two things that caused buyers to go back to suppliers were compensation and operational transparency,” Blessley explains. “Compensating took care of the feeling that there was a problem in the past, and transparency makes suppliers feel good about how they will be treated in the future.
“What didn’t really work,” she adds, “is just acknowledging the mistake. Treating the person with respect is great, but that alone wasn’t getting the suppliers anywhere.”
To successfully employ these restoration tactics, executives and sales-persons should understand their underlying mechanisms: why they effectively draw buyers back. Compensating isn’t just about paying for losses incurred—the voluntary act of compensating is what shows a supplier’s willingness to take responsibility for their firm’s mistakes. Similarly, by offering operational transparency, suppliers promise how a similar problem will be handled in the future.
Overall, Blessley’s research offers hope to suppliers who may feel despair after making a relationship-ending mistake.
“A relationship being deemed as severed by a buyer who has moved on to a new supplier does not mean that it cannot be restored. The supplier simply needs to know how to approach the buyer.”
This article originally ran in On the Verge, the Fox School’s flagship research publication. To check out the full issue of On The Verge: Business With Purpose, click here.