What Price Loyalty?

Loyalty can be a double-edged sword. Loyalty based on consistent performance and reliable service is sound. Loyalty based on lowest price alone, kick-backs or a nephew in the business is folly. So what is loyalty in business, and what is it worth?

For the sake of this discussion I’m going to suggest three (3) approaches to purchasing, or to a client/vendor relationship if you will:

1. price at all cost
2. love me, use me
3. price for performance

1. I’ve known purchasing agents who measure their self-worth by the nickels they can squeeze out of their vendors. The most venal of these may play vendors one against the other until one cries “uncle” and decides that the business isn’t worth winning. The more “professional” squeezer will simply foster a reputation for requiring low-balling, and routinely reinforce that reputation.

THE RESULT: You get what you pay for. No vendor can afford to give more than is being paid for, so something suffers. The best vendors won’t even bid on this kind of business. Others will work in a manner that makes the reduced margin at least somewhat profitable, and so the purchaser gets something less than he thought he paid for..

2. This one is silly, right? Well, yes it is, but human nature being what it is there can be an element of this in some business relationships. Most often it’s based on a purchaser’s love of the vendor’s annual golf outing or fishing tournament or Vikings tickets. He’ll buy whatever’s being sold and the vendor, knowing this, will have a hard time not pressing that advantage.

THE RESULT: The business is unavoidably taken for granted by the vendor, and the client is unavoidably taken advantage of.

3. Of course, this is the preferred professional relationship. Price for performance. This is the gold standard — a vendor who treats you fairly, works on your behalf, executes your needs, and contributes to your success.

When you have a “Class 3″ vendor you have a golden relationship. Due diligence dictates that the relationship be verified from time to time, but when weighing in the value-added service of this vendor the verdict is always “high value.”

A Class 3 vendor will know your business and will work with you when budgets are tight. If you don’t think so, just ask him. That’s right … ask.

And that’s the point of this post. If in times of strife or tight budgets you don’t have a vendor who will work with you, you should shop around. You need a vendor you can honestly talk to and discuss the needs and limits of your project. After all, we’re all in this together.

Do you want a deal? Do you need a break? Just ask.