A seller asked me this week: “A lot of my customers and prospects are transaction buyers. They shop their business; my company and others bid on it. Usually, it goes to the lowest price and best terms. But isn’t it true, if we keep showing them value and sharing ideas, that they’ll eventually come our way to recognize the value we’re bringing and stop shopping the price down?”
Ah! I love optimists. Come to think of it, so do leopards. Nothing like a vigorous romp through the grass, topped off with a warm meal.
My answer is, “Not likely.” There are two general categories of transaction buyers: those who are hard wired to shop price (I live with one of those) and those who shop price when it suits them. You’ll never change the first. The second will shop based on value other than price and convenience ONLY IF (1) your products/service can’t easily be found elsewhere and (2) your product or service is strategically critical to them.
For example, an investor who prefers to buy and sell shares of stock on line at the lowest cost per trade is not likely to be a good candidate for a high service level, consultative financial services provider UNTIL one or both of these dynamics change. For example, the death of a spouse or the birth of a child may raise the “strategically critical” score. Or, perhaps there are issues with an aging parent that require your expertise or your firm’s expertise that can’t easily be found elsewhere.
At THAT point, and perhaps just for that issue, the transactional buyer may change its spots to, say, a nice set of stripes. (This can be VERY exciting for the leopard, you know, a little experimental stripe dressing never hurt anyone.) However, it’s likely that the leopard will revert to spot buying (transactions) unless you can find another issue that is high-critical, high-not easily substituted.
“BUT,” cries my optimist friend, “in most cases we have to start a relationship by bidding low for a transaction, then expanding into a broader relationship.”
Broader relationship doesn’t necessarily mean higher margins or more profits for you. Your leopard could still be shopping or threatening you with a shop to hold your prices down. If you want to be paid higher margins, you have to earn them by doing or offering something different from other providers. If your leopard won’t share different information with you, you’ve little chance. The leopard may play with you a little, and the leopard still wins.
So: Stay in touch, demonstrate you have good ideas, look for issues on which the leopard might value your consulting and expertise, and be close at hand when the change happens. Just don’t expect that your good looks and earnest offerings will entice the leopard to change spots to meet YOUR requirements. It’s the leopard’s call.