His company, Omnicell Inc., provides systems and software solutions to increase patient safety and operational efficiency in health care facilities, and it had incorrectly installed a product for a customer.
“We botched up an install of a new product, and it was totally our fault,” the founder, chairman, president and CEO says.
The customer had spent between $700,000 and $800,000, so it wasn’t chump change he was dealing with. While most leaders may point to the fine print of a contract to get out of making right on the situation, Lipps did the opposite.
“They spent a lot of money with us, and I called them up and said, ‘Hey, I’m sending your money back. We didn’t do what we said we’d do. You can keep the products. You don’t have to return anything, but I’m giving you your money back. … You might say, “That thing is botched up,” but you can’t say that Randy Lipps wasn’t fair to you.’”
He sent them a check — nearly $1 million now gone. The customer kept most of the equipment, and his team worked diligently to deliver on what it had promised originally.
While it was an expensive choice, he knows it was the right one for both the customer and employees.
“Employees see that and they know, ‘Hey, we got to deliver what we’re talking about because if we don’t, we can’t go back and point to a contract,’” Lipps says. “We do have contracts, but it’s really not the basis of doing business. It’s just a backstop.”
It also set the right tone for the customer, and as a result, while it was a short-term loss, it became a long-term gain.
“That customer has stayed with us,” he says. “I just recently had some discussions with that customer again. I think they’re going to move toward us. They’ve got some products coming up for renewal, and I think we have a chance of getting that business.”
Focusing on the long term is key to building successful customer relationships.
“There are a lot of customers we tried to win 10 years ago, and we tried to win five years ago, and both times, we went to the customer, and we lost the deal to the competitor,” he says. “But on the 15th year, after going to the customer, we won the customer. Every three business days, we get a new account, and every five days, we get a new competitive account, and that’s because we’ve taken the long-term approach — not because we’ve taken the short-term approach.”
Lipps says he’ll continue growing the $214 million business by taking the long-term approach to building customer relationships — here’s how he does it.