A paradox: Why do we still buy cheap?

May 9, 2000
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The warning alarm went off at Kent Mechanical. It sounded like the submarine Seaview’s signal to dive — and it sent off a Chinese fire drill in the office area.

Workers were scurrying to hiding places like ants evacuating a demolished anthill. An outsider looking in on all of the commotion would be hard pressed to figure out that all of the frenzied ants were trying to escape from the mild-mannered young man approaching Kent’s front door.

Tim Blues, the outside salesman from Hvac-n-Things, did not appear deranged. In fact he was well groomed, dressed in Dockers, a sport shirt, and a tie.

He stopped by the receptionist to see who was in. As Glinda looked up, smiled and acknowledged Tim, she inwardly cringed. While the rest of her cowardly associates were heading for the high country, she sat there trapped like a rat. If she did not catch a break, the prospect of getting any work done in the next half hour was zilch.

Getting the picture?

Yes, Tim was a work inhibitor. He loved to talk, thereby preventing any work from getting done.

Just as Tim began his favorite pastime with Glinda, Jim the service manager walked around the corner. Seeing Tim brought him to the full realization of his current predicament: stuck on fly paper like a doomed winged insect. Although, unlike his fellow associates, he would give Tim a few moments.

It was a ritual that took place every week.

Tim would ask how it was going and then pass out brochures. After this it was all small talk. The fact of the matter was Tim wasted time and, like his employer, provided no value.

Why, then, did Kent purchase most of its supplies from Hvac-n-Things? Because they were the cheapest vendor in town.

Jim didn’t want to think too much about this relationship, but he always did. It drove him nuts. And every time it drove him to a perplexing business paradox: Kent Mechanical emphasized the value it provided for its customers, thereby justifying prices that were always higher than competitors’.

Yet the company purchased supplies from Hvac-n-Things which added no value, because they were the cheapest in town.

What he's missing

Personally, Jim would buy from the vendors who did add value — and be willing to pay a little more. He knew that a dollar more he paid for a programmable thermostat allowed the sharp wholesalers to help him become a better businessperson.

The sharp ones offered quality-training programs; marketing, sales, and product support; human resource; and safety education. They realized a well-oiled contracting machine, one that educated customers, understood cash flow, and provided a learning and fulfilling environment for employees, would become a strong strategic partner.

When the wholesaler had groves of well-nurtured contractor-trees, the fruit would be plentiful for years to come.

Jim heard words drifting from Tim’s mouth but with them came no meaning. He was thinking of the changing landscape of this business and inevitable doom for wholesalers like Hvac-n-Things.

When contractors eventually got around to learning what the Internet was all about, companies like Hvac-n-Things would be slowly gouged by the stroke of a keyboard. No more dealing with companies that could not add value, no more dealing with uncaring counter personnel who could never help when you needed it, no more lines, no more salesmen wasting your time, no more busy signals and being put on hold.

The concept seemed simple: Add something to the business transaction that helped to satisfy needs, keep the customer returning, retaining their loyalty. Yet many wholesalers just wanted to move things. And if they [wholesalers] can’t add value, they have to be cheap.

As Tim’s jaws were still flapping, Jim couldn’t resist the urge to dwell a little more. On the train tracks of being cheap, lurked the biggest, baddest train that wholesalers had ever encountered — Home Depot.

They were stoked and picking up speed. They were also picking up other wholesalers. Pretty soon they would be knowledgeable, trying to figure out how to add value and guess what? Still cheap.

Between the Internet on one end of the tracks, Home Depot on the other end, and contractors like Kent Mechanical playing with the switching gear, wholesalers like Hvac-n-Things were soon to be extinct.

After Tim left, Jim sat down at his desk. Looking out the window, he pondered. The answers to Hvac-n-Things’ problems were locked up in the needs of contractors. They had to get at those needs and address them. Needs that involved contractors solving the needs of their customers.

If they didn’t, Jim thought, there would be one less business paradox at Kent for him to worry about.

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