After reading through a recent post on this site, entitled Direct Title Solutions - Deceiving Vendors, I typed out some advice for the author of the post, Mr. Bruce Murch, and then promptly canceled the response (I hit the cancel button far more often than I do the submit button).  He was not seeking advice, from what I could tell, but merely posting a warning to other abstractors about the company's tactics.

So, I thought I'd post regarding Mr. Murch's concern in a separate post here.  The problem with customers with whom we once enjoyed a high-volume relationship, but now only send the unprofitable search orders, seems to be a growing one.  The abstractors have once again become the victims of cost-cutting measures.  While I don't question the necessity of our customers to lower their costs, it does necessarily present the abstractor with some challenges - and decisions.

Our company recently lost a customer, a local title agent, whose original agreement with us was based on the idea that we would tolerate a slim profit margin for work in our less profitable counties, with the expectation that we would make up the difference with volume in our primary foot print.  This arrangement worked splendidly until the customer discovered the magic of the internet, and the el cheapo information they could obtain for our home and surrounding counties.

Now, the bread and butter were gone, and we were left with the crumbs.  So, naturally, our customer gave us a call to suggest a lower fee for the remote county work.  We declined and they found an abstractor who would appreciate the crumbs more than we did.

While it is almost never desireable to part with a customer and their money, it really doesn't feel so bad when you calculate the cost of doing business with an unprofitable customer.  It makes it easier to say good bye. 

I expect we will be saying good bye to another customer or two in the near future.  We won't refuse to do business with them.  We will simply adjust our prices to a level where they become profitable customers.  At that point, they will either agree with us as to the value of our services, or they will find the cut-rate abstractor who doesn't understand the profit concept.  Either way, we will increase our ratio of profitable widgets produced versus widgets produced for the sake of producing widgets.

Next question to be answered:  What do you do with a volume discount when the volume goes away?