I Hate Limbo

It was 1992 and the place to be on Tuesday nights was Fries Roller Skating Rink in Concord, NC. Of course I showed up, it was the only place any respectable 10 year old would be on Skate Night in Cabarrus County. Laced up in my white leather skates complete with hot pink wheels (a birthday gift from my dad), I would participate in "All-Skate," "Couples Skate," "Wipe Out" and yes...even "Limbo." I always hated Limbo. How attractive is it to ride on sakes in front of all your peers putting your face to the smelly wood floor and fall on your butt? I hated Limbo in 1992 and I hate Limbo now.

The kind of Limbo that I dislike today is the Price Wars Limbo- "How low can you go?" In a fight to tighten up spending and retain profits, businesses are doing some pretty crazy things. The craziest I've heard lately is something called "Reverse Auction." A businessman calls his vendors and tells him he will job out his materials to the lowest bidder. Whichever vendor can come in the lowest gets the "prize." How humiliating and non-cost effective is that strategy? Moreover, this strategy undoubtedly yields a dissatisfied customer.

What are your options when you find yourself in the middle of a pricing war? One option is to be the lowest bidder - but let's go ahead and scratch that option since we all know that being the lowest is 100% headache and 0% profit. The next option is to pass on the bid and the third option is to sit down and have a talk with your customer. Since passing on the bid will not increase your profits, let's examine the later.

In a recent article entitled "It's Crazy Out Here!" in Quick Printing Magazine, David Fellman encourages small business owners to first find out WHY the customer wants to find the lowest bid-- Is it because of your performance? If the customer admits that your performance has been great, then you have leverage for a convincing conversation.

Fellman writes, "If that's the case, (good performance) let's do something that could result in a 'win-win' instead of a 'lose-lose'. Obviously I stand to lose your business if it comes down to bidding for the lowest price, but you could lose, too, if a cheaper vendor can't deliver the same level of satisfaction...Let's look at everything- how it's used, how it works, the quantities you order...let's see if we can find some cost savings or performance enhancement in all of that."

By engaging your customer in a problem-solving dialog, you establish that you are willing to get dirty to make their business more viable. Most importantly, this dialog will lead you to discover new ways to meet client needs.

Remind your customers that they face a giant risk in switching vendors- especially when looking for the lowest bidder. Make them feel safe and secure by offering them the service they are used to with an added savings on the side.