Negotiating in Life February 25, 2013

How Sellers Benefit from a Long Term Relationship Part One

An alert seller can gain most from a long-term relationship if the buyer is not assertive and painstaking in exercising his or her rights. There are many factors favoring the seller which buyers should be sensitive to.

The seller generally has greater access to the buyer’s organization than the buyer to the seller’s. A salesperson is expected to visit the buyer’s decision-makers and end-users. After an agreement is signed, he or she has easy access to the buyer’s engineers and production people. The seller can cement friendships with the buyer’s accounting and shipping personnel on an ongoing basis. Important secret information can be learned from these contacts concerning the buyer’s budgets, manufacturing processes and costs. An alert salesperson can also learn how dependent the buyer’s marketing strategy is on the seller’s product or service in satisfying the buyer’s end customer.

This point was once made clear to me by a woman who sold fragrances to soap and lotion companies. Competition is fierce in the fragrance business. Soap company buyers try to reduce fragrance costs by playing one supplier against the other. One day during a quiet lunch with a lower level marketing analyst for the soap company, she learned that soap manufacturers never dare to change a fragrance once a soap is accepted by the market. This insight helped her win new sales by bidding low on original requirements and increasing the price later.

The case of Jose, my gardener, is indicative of the perils of long-term relationships to a buyer. Jose gradually learned to cater to one part of my organization (my wife) in favor of the other (me). He learned that he could increase prices over time even if he reduced services. He understood that customers like me don’t like to change gardeners unless they absolutely have to. The two hours per week he agreed to spend on our garden gradually was reduced to one hour and forty-five minutes and eventually to one and a half hours. Who could keep track? My wife and I were working while he gardened. In the beginning he didn’t charge for small extra planting services. Later he did. That’s the way it works when customers are not alert or assertive about their rights and unwilling to change vendors.