Turning a profit in any business is difficult these days. You work hard to drive sales, deliver your product, and keep the customer happy. So why should you give up part of your revenue or profit?
Early in my career I realized that I was giving away a lot my profit because I was being lazy and didn’t even know it. I worked with the sales rep from Cisco and was spending over $1 million a year on their product. The sales rep was always friendly, supportive and willing to help with any problem that I had. He even regularly worked to help identify new ways that I could use the Cisco hardware at the high discount of 40% off list price which was much better than his other customers.
A wise mentor suggested that I should consider issuing a request for proposal (RFP) for the next large purchase and we did. We issued the RFP to three hardware vendors leveraging each vendors top business partners. Cisco still won the business from us but at a nice discount of 60+% off list price. I had been giving money away to Cisco when they were willing to lower their price. Ouch!
Since that day I’ve learned to issue an RFP for all large purchases and came away with these key points each time.
1. Identify the top vendors you want to respond to the RFP. Do your research and identify the best vendors and their partners. Create a short list of companies to receive the RFP. These companies already know each other well and they will respond more aggressively when they realize who they are competing against.