August 6/13, 2018: Volume 34, Issue 4
By David Romano
I was talking to some of my peers and the conversation was centered around getting better deals from vendors. I heard about good deals, so I reached out to some of my vendors, but the deals I got were not that good. Do you have suggestions?
Dear Passive Owner,
I’m sure you know the saying, “You get what you ask for.” I look at it a bit differently: You get what you logically demand. Knowing what one deserves isn’t quantifiable or achievable, and what you ask may be farfetched, but a logical demand creates deeper thought a vendor must consider if they are to continue to earn your business.
Coming up with what you demand is more complicated than you think. It involves research, feedback from peers/staff, rehearsal time and confidence. Previous and forecasted purchase volume and payment history are all things that will come into play. More importantly, if you go into these conversations without the idea that you are going to get exactly what you demand, you are dead in the water because it is likely the rep on the other end of the phone is more experienced. Your job is to convince this person what you want is a logical decision and if they don’t succumb to your demand, it will hurt them.
Without a threat to your opponent, your words will be nothing but hot air. What you demand must be substantially better than the alternative, and the alternative must be better than your current situation.
Following are sources for substantial savings.
Credit card processing fees. These vendors are fierce competitors and will do whatever it takes to win your business. Provide a limited number of monthly transactional statements to some vendors and the battle will begin. When you get the best rate, go and demand they beat the rate of the lowest bidder.
Cell phone carriers. If you are with Verizon, shop AT&T, T-Mobile and Sprint. When you get the best rate, which is most likely T-Mobile, go back to Verizon and demand they match the rate or you will take your business to T-Mobile. You must be willing to pull that trigger if you threaten to leave. Make sure you research the cost of new phones and conversion costs.
Payment terms. If your payment history has been consistently on time, you should be successful. Think about it this way: If you have a commercial or builder account that gives you a million dollars of business a year, and they tell you that you need to increase your terms and offer them an early-pay discount, or they will use another provider, would you say no? I don’t think so, because losing this business would hurt you more than it would help them.
Company/auto insurance. This must be done each year as driving records, vehicles, number of submitted claims and laws change. There are websites where you can put your policy out to bidders and you will receive numerous quotes well below your current policy. Make sure the coverages are identical and be aware the policy offered may be only a first-year offer.
Accounting services. You may have been using the same accountant for a decade and consider them a friend, but business is business. Shop for other CPAs. If you find a better value, let your accountant know. If this relationship and as tight as you think, a better rate will be offered.
The combined effect of demanding what is logical from all your vendors can be the difference between earning a living vs. building wealth.
David Romano, formerly the founder of Romano Consulting Group as well as Benchmarkinc Recruiting, is currently the director of Dallas-based Romano Group. You can contact David at email@example.com.