Management Articles


 

It's Easier to Replace a Customer than a Good Supplier

By: John Malmo

John Malmo began an advertising agency on a cardtable above a delicatessen in 1967 and built it into the largest in the mid-south. He also owned a travel agency, a clock shop, and a snack food manufacturing company. He is president of Koenig, Inc., Management Consulting, specializing in marketing, and he writes a weekly business commentary column for The Commercial Appeal. His 45 years of marketing experience encompass, virtually, every business category. Email him at: jmalmo@archermalmo.com

Some businesses treat suppliers as though good, dependable suppliers are expendable.

Yet, without dependable suppliers it is impossible to sustain any enterprise, and to hold onto or obtain any customers. It's difficult for many executives to grasp, but it's often easier to replace a customer than it is to replace a good supplier.

Even in business-to-business categories the pool of potential customers is far greater than the pool of high-quality, competitively priced vendors that give good service.

So it's puzzling when companies treat their loyal suppliers shabbily.

In every city and every business category suppliers know which these difficult companies are. They know the ones that don't return telephone calls or e-mail. They know which ones disregard payment terms.

Vendors know which buyers call for "rush," complex proposals, then don't have the courtesy to respond, and won't answer weeks, even months, of queries about the proposal.

Suppliers know who uses their estimates simply as shopping criteria.

And these buyers, these companies that treat their suppliers without the semblance of courtesy or professionalism pay for these practices, and usually don't even know it.

In the early 'Seventies the owner of a small advertising agency told the agency's media buyer and bookkeeper what he expected.

"There are only three television stations in town, a handful of radio stations, and one newspaper publishing company. Representatives of each must be treated with respect. You must not waste their time, and their bills must be paid promptly, even if we have to borrow the money.

"Otherwise we will make enemies of the companies on which we depend for our clients' advertising."

Those media representatives became the agency's best friends. When the agency needed a favor, a sharper price the media responded.

When media reps heard of an advertiser in search of an agency they recommended the one that respected them and paid its bills on time. That agency's suppliers became its number one source of new business.

There's a guy who has made millions in recent years from books and seminars that teach professionals how to negotiate. "You get only what you can negotiate," he says.

When it comes to prices and terms that is certainly true. On the other hand, if you're not careful this kind of hard-nosed attitude can lead to a "them vs. us" relationship that serves no one.

No successful buyer was ever a "patsy" for suppliers. Vendors expect tough negotiations on prices and terms. They are far more likely to respond to companies that demonstrate common courtesy, respect and professionalism.

Treating suppliers as important partners is such fundamentally good sense that it is astonishing when you see a company that does not.

You don't stand out by treating your customers with respect. Most companies do. You stand out when you treat suppliers the same way you treat your customers, and the benefits often are greater.

© Copyright 2001 John Malmo

Other Articles by John Malmo

The author assumes full responsibility for the contents of this article and retains all of its property rights. ManagerWise publishes it here with the permission of the author. ManagerWise assumes no responsibility for the article's contents.

 

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