Let me ask a question: What ever happened to "partnering," "loyalty," and "trust?" When did we all become so skeptical of each other when it comes to business? I have heard stories from "the elders" of the business negotiations training - my mentors - of a mystical time in a far away land where clients were actually loyal to their vendors and conversely the vendors to their clients. And get this, there was confirmedly something called a "valued relationship!" Can you believe it? I jest of course, but I really believe I am not far off the mark.
I don't know when it happened, but, it seems, somewhere along the line it became the status quo to take negotiations training out to bid. At the rate we are going, companies will soon require an employee who needs a ballpoint pen or a roll Scotch Tape to put out an RFP (Request For Proposal) and get 3 bids. And the lowest bidder wins!
More importantly, everyone involved in the bid negotiations training - vendors, clients and the manufactures - lose. Sure the client may have saved a few bucks on the front end by going with the least expensive bid, but let's take a look behind the curtain to see what is actually going on during the bid process and why it is a lose-lose situation for everyone involved.
I had a client of mine one time actually get upset with me when I refused to respond to a bid negotiations training. I just flatly refused. They were dumbfounded! The client did not know what to say when I refused. They could not understand why I would refuse an opportunity to bid on their project. Let me tell you why I refused and why I do it routinely.
First of all, I value my time (which we all know equals money) and I value my negotiations training and my companys reputation (which we know also equals money). That being said, I and that client both knew that my response to the bid was not going to be the cheapest due to the fact that I did not drop my profit margins to get bids.
Therefore they, the client, would not be allowed to select the company I work for because they had based their decision solely upon price. The client also knew, however, that our work would be of the highest quality and that the company I work for would probably be called by them in the future for service work. THIS IS EXACTLY WHAT HAPPENED!
The bidding process was a big waste of time, resources and money for everyone. Does this sound familiar? Do you see why the bid process doesn't work?
It has been my negotiations training that clients end up with a cut rate product due to the fact the chosen vendor has had to cut corners in order to stay within the agreed upon budget. The vendors who are not financially sound and who "bought the business" (which means to underbid the project at such a low margin as to guarantee you get the business) most times are not around to service the project after the sale. So the client again loses and ends up having to call another vendor to come in and either finish the project or fix all the corners that have been cut to satisfy the low-bid. The client is stuck with more "down time" to fix whatever problems still remain, which costs the client money. Round and round we go! So much for good value!
In the bidding process, negotiations training vendors have to drop their profit margins so low to compete with all the other vendors who are doing the same thing that some of them actually price themselves right out of business. Let me just stop right here and make a very important point: No matter what business you are in, big or small, Fortune 500 or just the little guy on the corner, you should NEVER EVER devalue yourself and your business by dropping your profit margins below what is fair or what is needed for your business to survive and thrive in order to get business. If you are in business and selling your products and services "on the cheap" in order to gain clients, believe me it will catch up to you in the long run. You are doing whatever field of work you are in, the client and most importantly yourself a disservice by conducting business that way. The old adage holds true even today, "You get what you pay for!"
The last piece to make the never ending bid cycle negotiations training is the manufacturer of the product. They are getting squeezed by the vendors to slash their prices in order to be competitive because the vendors are required to slash their prices. Therefore, the manufacturers pay their employees less to compensate for the loss of revenue. Everyone down the ladder suffers. But I digress. This article is not about economics, although maybe one to follow after writing this. Stay tuned.
I truly believe that the bid negotiations training have done irreparable damage to the very core of what makes the wheels of commerce turn... VALUED BUSINESS RELATIONSHIPS! I do however, have a solution: RE-EVALUATE THE BID PROCESS! You might just find that in building better business relationships with your vendors, you'll actually get more "bang for your buck."