I recently renewed my car insurance. It had been a few years since I’d changed the policy, and the cars were now half a decade older, so I decided to call GEICO to see if they could save me some money; after all, they promise new customers that 15 minutes can save them 15% (or more) from their bill. I was underwhelmed with the call. It turned out they could offer me very little, even though the policy had declined in value due to the lower value of the vehicles covered. So I decided to shop around with competitors, and lo and behold, Progressive could save me – a new customer – $400 a year on my plan.
What did I learn from this experience? That rates from insurance companies are fluid and if I don’t shop around for the best deal every so often, I’m likely being taken for a ride. Shopping around for the best deal is not something I relish spending my time on. Ideally, companies I deal with would simply give me a fair market price (the same as everyone else gets, whether they shop or not) for the value they deliver; I would like to be a Relationship Buyer. Insurance is one of a few purchases where I know if I spend the time, ask for a discount and threaten to leave if I don’t get it, I will save a significant amount of money. They have turned me into a Poker Player.
Think about your business practices. Do you let your tenured customers continue to pay over market price until they specifically ask for a reduction? We talk a lot about professional procurement folks using tough tactics to get sellers to concede discounts, but often poker playing tactics come from situations like those described above. Relationship Buyers trust you to deliver value and treat them right without constant supervision. Once they realize that you have been abusing that relationship to extract higher prices, the trust you’ve developed over the years disintegrates and they’ll start to shop around, either to check out other vendors or to find rabbits to extract price concessions from you.
The moral of the tale is you need to treat your Relationship Buyers right. They have better things to spend their time on than monitoring the market price for your goods, and you have work to do in meeting their needs! Don’t needlessly create poker players, treat your relationship buyers well and a relationship based on trust will deliver your customer the value they need and you the fair prices you deserve.
Want to hear more about buyer types and how they get applied in the field? Join us for a webinar this Friday, March 1: 12-12:30 p.m. EST.