Treating partnerships as business investments

We’ve had issues in the past with ‘partners’ taking advantage of our willingness to work with them, in order to have everyone come out ahead … the customer, the partner, and us. This approach to partnership means all sacrifice a little, but everyone wins.

Unfortunately, it also requires that everyone behave in an honest manner, honor their agreements.

We are treating all discount requests as a partnership request. A customer wants a lower price on something. Fine. What are they willing to exchange for that lower price? Can we afford to give them the price? Will it so negatively impact our business that it becomes a bad decision to pursue? Basically we need to see the business justification for this action. Show us a model that will work for us, and we will consider it. Demand something for nothing? No, not gonna work.

For resellers and groups wanting to work with us to help grow their business, and help them differentiate their offerings (not many companies can do what we do), this is also an issue, but easier to codify in a reseller agreement. We can pre-define what happens in “if-then” scenarios. Provides something of a saner model.

But thats not what I am talking about here.

Suppose you have a customer, and they want your product. But they don’t want to effectively “trade” you something of value for the discount. Something that you would find equally as valuable as the value of the cash discount itself. Suppose they simply want to pay a lower price, and give nothing back. And suppose that your pricing is already quite aggressive.

Well, we try to help them understand that we will provide discounts in certain specific situations. All of these situations have value to us, and they can exploit that value to provide for a lower effective price.

Suppose that the customer “agrees” (notice the scare quotes). Says that they will do this.

They proceed to buy … but you notice that they aren’t quite living up to their end of the bargain. Customer finds some fictional products to try to leverage more discount, and your internal warning lights go off. Will this customer actually honor their commitment? Or are all they interested in is a lower price?

You have treated this as an investment. You put money down on the bet that the customer would in fact act honorably, would live up to commitments, would not use terms such as partnership or relationship without understanding that they have responsibilities along side their usage. You will withhold further ‘investment’ if they don’t. And you will let them know when they don’t.

But in the mean time, you still provide over the top service and support. You pull their proverbial chestnuts out of the fire on multiple occasions. You do so even though they aren’t paying you for this, though you have indicated that you will need to bill them for doing so.

Which you do. And then they balk. And the real intentions become clear.

They want something for nothing. They have no real intention of living up to their end of the bargain. They continue, at every opportunity, to try to throw fictitious products out as competitive and costing less (despite the fact that we know that they don’t exist).

Cold business decision time. They won’t live up to their end of the bargain. Your investment present and future value is worth zero. Do you invest any more?

No.

Nothing.

They can keep buying, and they will pay the same price as everyone else who doesn’t provide anything of value back to us to help us offset our costs. They’ll howl in protest.

And you have (small) loss to write down.

They can always go buy the fictitious product.

And they can forget about future ‘investments’.

There is nothing personal here. No animus towards them, they are nice folks, and you like working with them.

Its simply hard to justify providing something for nothing in a business sense. Or justify providing something for the hope of something else, which you can see is pretty much a fictional hope.

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