During the early 2000s, I dealt with forestry companies. Primarily with their engineering department as well as the forester’s themselves. These companies were very motivated by pricing and loyalty was as good as your pricing. They changed suppliers at a drop of a hat. However, later I did find out they did have loyalty.
They use a particular commodity that would retail anywhere from $0.81 – $0.95. There were a 100 units in a case. The average order for this commodity would be anywhere from 5-20 cases at a time.
We bought this commodity by container loads from China. From time to time we would run out of a particular color, there were many colors available and would have relationships with other competitors where we would be able to buy from them, obviously at a premium, until our next shipment arrived.
One day I got a call from one of these competitors where I was buying the stock until ours came in. Yes, we sold it to them when they ran out at the same price they were charging us. The competitor informed me that we were being cut off because we were using their product to outbid them and winning the business.
When I asked: “Which one?” they informed me of a major RFP from a major forestry company which included this commodity. I stated: “We went in at $0.83/unit. What did you go in at?” They had gone in at $0.85/unit. There was a grand total of 10 cases involved. Please, keep in mind, this company were their clients and we took them away using their product. For this particular order anyway.
Shall we do the math; the difference of $0.02/unit translates to $2.00/case with the 10 cases that is $20.00 on a proposal over $35,000.00.
“Were they ever your client?” I asked after going through the math with them.
I was determined to make them my client and build some loyalty. The first thing I did was visit them in their camp which was; have you ever heard the expression ‘middle of nowhere’? You would need to go at least another 30 km past nowhere and then hang a sharp left to find them. This was all on a logging road which took just over an hour to get to. I started to help them with challenges in face to face meetings. I would look at their needs and anticipate what would be required. I built bonding and rapport with them and developed some close business relationships. The competition never went in. Why would they? One reason is that it could have cost them some eight to ten tires as it was a logging road. I always carried two spares just in case and on one trip had to use both.
Approximately a year later the companies’ purchasing agent called me regarding a major purchase of the commodity, 125 cases and stated: “Joe, **** quoted $0.83 and you’re at $0.87/unit.” My response was: “That is correct Ken, $0.87/unit.” This was the only item on the RFP.
I was not worried, because I had done something no one else had. I had developed loyalty by developing trust and you can only do that by going the extra step and do the bonding and rapport and treat them as they would want to be treated. Such things as visiting beyond nowhere and having conversations and most importantly take care of their wants and needs as well as anticipate them.
Ken’s response: “Okay just wanted to make sure. Your PO number is *********.
Are your clients, truly your clients? Maybe not!