Suppliers who steal business from you – how to stop them!

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This has certainly happened to me and not a pleasant experience at all – but you live and learn paying your school fees.  I found this article quite useful and hopefully next time I won’t be “shafted”!
Enjoy
Julia
Ruby Original

The urban term “shafted” prompts this moral high ground addition to our event manager blog. Here’s a post that aims to rally ethical businesses, champion professional respect, and stare down suppliers who toy with the idea of stealing customers from the very businesses that recruited them in the first place. 
For those not accustomed to uncouth jargon, “shafted” is the act of being ripped off, cheated, treated most unfairly by people, getting screwed out of a deal, or to get screwed over. (Thank you kindly Urban Dictionary)

Increasingly, friends in the creative and events management industries are sharing horror stories involving underhanded practices by the people they trusted – their employees and contracted suppliers. In many instances our friends have engaged professionals under contract as a means of boosting their project or event delivery resources. Only, the engaged supplier later forms a direct agreement with the client at cut-rate price, squeezing the original business out of the picture.

Everywhere we turn, small business owners are being shafted. More often than not by less qualified, less experienced, and less capable operators. Call us naive, but it’s not fair!

Let me clarify that this scenario isn’t about a business (take a small events management company for example) preventing a portable toilets provider or caterer from supplying to a client. Those are categories of supply (in this scenario) that don’t compete with the event management company’s offering. Rather, I refer to suppliers in the same class of goods or services (eg an event management company that sub-contracts another event management company with specialist skill to augment an event delivery team). If the sub-contracted event management company finds a loop hole to breach their agreement with the principal contractor, and moves in for the client-steal to replace the principal contractor, that’s when you’ve been shafted.

6 TIPS FOR PROTECTING YOUR BUSINESS AGAINST CLIENT THEFT 

There’s a clear distinction between increasing your market share by ethical methods and downright stealing your competitor’s customers. To help other businesses avoid the muddied situations of skulduggery described above, here are some pointers to stop suppliers from circling your clients.

1. Tighten your supplier and contractor agreements: Contract clauses in your agreements should rule out the supplier’s ability to deal directly with or be directly engaged by the client. It should also prevent the option of dealing through an alternative third party intermediary, as a means of disguising the relationship that bypasses your business.

2. Strengthen the agreement with your client: Conversely, the contract clauses in your agreement with your client should rule out their ability to engage the supplier – either directly or through an alternative third party.

3. “Clean uniform” rights in your supplier agreements: We see “clean venue” rights being requested at venues by mega event brands such as Olympics, Commonwealth Games etc. Consider applying a similar rule to same-service suppliers that you contract to boost your delivery team. Negotiate for their workforce to present in unbranded apparel so as to reduce confusion over who is the principal contractor.

4. Know where your client relationships stand: Easier said than done! Complacency breeds trouble so stay in touch with your clients, ask for feedback, and make time to understand what your clients’ needs and priorities are. Needs change; stay on your toes and be ready to respond at any moment to be sure the relationship is well and truly alive.

5. Health check your contracts: Never assume that the next contract is in the bag. Even though your service performance may be faultless, your price competitive and a long relationship formed, for many reasons clients will look further afield. Review your contracts regularly to check whether clauses reflect relevant working relations, and inspire maximum benefits for both parties.

6. Don’t roll over fees: Consider the market you operate in and whether your fees need re-jigging. If your industry is challenged and the competition fierce then the market may demand that you review your pricing and/or payment structure.

WHY CHEATERS WON’T PROSPER 

There does appear to be hope for ethical business folk, judging by how disturbed readers were by the suggestion of downright illegal methods posted in the blog for start-ups “8 things to beg, borrow or steal from your employer before you leave to start your own business” on Smarta.com. Check out the 8 comments at end. It is deeply satisfying knowing trash talk is condemned by members of the business public. Good for you Shellyeyeslden, Monty and Burning_rain_prom. We concur “nasty and sly”, “sneaky and dishonest”!

Similarly advocating that cheaters never prosper was the Forbes.com article by Judy Begehr, “Why Stealing Customers Doesn’t Pay”. However, it was more the following comment from contributor, Roger Dooley that struck a chord with me than the article itself:-

“… an account that you managed to steal is no doubt more likely to be stolen from you at some point. While there are often legitimate reasons for a firm to change vendors, some are more likely to do so because they are perennial price shoppers or have difficulty maintaining a mutually beneficial relationship with their vendors.”

REMEMBER, NOT ALL BUSINESS IS GOOD BUSINESS 

At the end of the day, a client who espouses corporate values of respect and integrity (and actually honours them) will not allow their business to be wooed by a second-rate supplier who price slashes. A smart business knows what a brand reputation risk this presents.

If the client does bed the sloppy seconds, then perhaps it is time to—as put so articulately by Karl Stark and Bill Stewart in their strategic advisory article “Stop Contractors from Stealing Your Customers”—know when to lose a customer.

On this note, I leave you with Stark and Stewart’s advice:

“Some customers are bad for your business, and it’s okay to let them go. If they don’t value the product or service you are providing–such as an independent, lower-cost option–you can’t sustain a premium price. Release this customer to go find a better (and cheaper) deal and focus your efforts on finding and attracting customers that value your premium offering.”

Source:  Jo Jordan – http://j2ideasandevents.blogspot.com/2013/12/suppliers-who-steal-from-you-6-ways-to.html

 

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