A VARIATION OF THE 80/20 RULE/Treat Your Supplier Like They Were Your Customer:
This theory is more directed to business philosophy and practice rather than direct selling but if practiced, can lead to customers in areas you would otherwise overlook.
The 80/20 rule as considered by most in business is nothing new. To my knowledge, it is taught in Business 101 at most colleges. I say “to my knowledge” because I did not major in business in college. No sir, I acquired my Masters degree in Business Management from the School of Hard Knocks. Anyway for those of you who might not be familiar with it, the 80/20 rule is this:
If you analyze you sales over a given period of time, say a year or more, you will most likely find that 80% of your business sales come from 20% of your client base.
What this means is that of all your sales over a given year, 80% of your volume will be from repeat customers, or from referrals of existing customers. The importance of this rule is to stress the importance of customer service and service after the sale to keep your clients happy and in a high trust relationship.
My variation of this rule that I would like to discuss takes the 80/20 rule a step farther.
Consider this question: If 80% of my business volume comes from 20% of my customer base, then is it possible that I could very well be in the 20% bracket giving my suppliers 80% of their business? (Did you follow that?)
With that in mind, there may be a day where a company who is a supplier to my business may need my product or service. Secondly, it is very possible that someone might inquire one of your suppliers for a referral to a company offering your product or service and if you are in the 20% bracket giving your supplier 80% of their business, there is a better chance they will come to you or recommend you over your competition.
Now I am NOT saying to run with this and start to make large orders of supplies you do not need.
It is important to realize that your business volume you give your supplier will not necessarily guarantee you a referral, but your relationship with them will very well increase your chances.
There is a natural instinct to have a relationship with a supplier based on the theory that it is the supplier’s job to keep you happy. After all, you are the customer. However, if you treated your supplier with the same respect that you treat your customers, you will have their respect and a stronger relationship. This will lead to the possibility that they mention you if someone comes to them for a referral.
How do you treat a supplier like a customer? Respect is paramount. When you make demands on your supplier and they “jump through hoops” to fulfill your order, making a dead line or giving you the special attention that your account with them requires, acknowledge your appreciation for it. This can be done in more ways than just simply thanking them at the time your order is delivered.
For instance, if you run a credit account with a supplier, make it a priority that the account is paid on time or even early. Give the creditor the same respect you would give an employee in making sure they were paid in a timely manner.
Secondly, let’s say you have ordered a load of lumber and and included in your order to have the lumber surface planed to a given thickness. If you are picking up the order, be on time. Your supplier’s time is just as important to them as your time is to you.
Think of the frustration you would have if one of your customers ordered a custom made piece from you. At the time of ordering, they specified a time they needed it. You work late in your shop, and miss out on something important in your personal life, or even turned down another order, because you were worried about making the dead line. You have the order ready on time only to have the person come three days late in picking up their order.
Believe me, I have had this happen to me plenty of times before.
One occasion that comes to mind is the order I received for the casket pictured below. Caskets are an item that are usually needed within 3 to 4 days of being ordered. The order was strictly custom concerning the interior lining and finish. I did not have a model in stock that came close to the specifications they ordered, so this casket had to be built from scratch
When the funeral home owner placed the order, he stated the day he wanted it delivered with instructions to only allow him to sign for it upon delivery, and even specified the time of day to have it delivered.
In order to meet his order time and date, I immediately got to work in the shop, I worked late into the night for 2 days, and all night the 3rd day ensuring it would be complete and delivered on time. Then after driving 40 minutes one way to his funeral home, his staff informed me he was out of town for the rest of the week and the casket was ordered for display in their show room.
Then to add insult to injury, Two weeks after I finally delivered the casket, I inquired how the casket looked in his showroom. He stated he still had it in storage as he had not taken the time to place it in his showroom.
Don’t get me wrong, I am very appreciative of all my customers and the sales i make. However, if I knew his delivery schedule had some wiggle room, it would have made things less stressful on me at the time, not to mention I would have taken the opportunity to fulfill the lost sale I turned down.
My point being: If the order you place with your supplier has some wiggle room in the delivery date and time, let them know this at the time of the order. You might very well get a better price, and if not, will definitely go a long way in earning the respect of your supplier.
Often times as a casket manufacturer I am asked by people for a referral to a funeral home. It is a sad statement that of the 15 or so funeral homes on my frequent customer list, I have only named two of them to people seeking a referral. The two I have referred to others are the ones who treat me with the greatest respect. They are the ones who treat my relationship with them as a partner rather than a supplier. One of the funeral homes always pays for their caskets upon delivery, even though I extend them 30 days credit because they know I am a small company and the timely payment is well needed.
What is even sadder than the idea that I have only referred two out of 15 funeral homes is I have two family members who are funeral directors. Their funeral home is not one of the two I frequently recommend. Why? Because if I am going to recommend another company, my recommendation will reflect on me, so I recommend the ones I have the strongest relationship with and trust.
When it comes to my business and lively hood, I don’t follow the “friend” or “family” mode. I follow this rule: Business is business, if I want a friend, I will get a dog!!
-- Michael Mills, North Carolina, http://www.scicaskets.com