***C-Level Relationship Selling Eliminates The Need for Low Price Bidding – A Case Study

Here is a true story to go along with Wednesday’s Blog on Eliminating Low Price Bidding.

Recently a semi conductor client of mine wanted to move one customer’s (A) production from one facility to another in order to make room for another customer’s (B) production. It was a special fab with ...Here is a true story to go along with Wednesday’s Blog on Eliminating Low Price Bidding.

Recently a semi conductor client of mine wanted to move one customer’s (A) production from one facility to another in order to make room for another customer’s (B) production. It was a special fab with technology that B needed and A’s could be produced fine in a standard fab. However to do this, A (not B) would have to pay $260,000 for new tooling. And to make matters worse A’s unit price would go up because the standard fab was older and more labor intensive.

My client met with A’s operation’s and purchasing people, and they went postal. “No way,” they said. “Do you think we’re crazy? Besides, our boss will fire us.” My client asked for my help and I told them to get to the GM and find out what was critical to his success. So we strategized about getting a meeting with the GM and what questions to ask when they met him.

Well, they found out capacity was the key success factor for the GM. In semi conductors when business is good, customers go on allocation and the GM knew it. His most important issue was to get his products to his customers or else his competitors would.

So knowing this my client’s people went back and came up with a plan to guarantee “A” his capacity in return for paying the tooling changes and incurring a higher unit cost. Sounds crazy, but A went for it. The General Manager, who was responsible for P&L, felt the capacity guarantee was far more important for him than the extra expenses.

Had my client not uncover how the GM really felt, they would have failed negotiating and could have lost Customer A. Had they stuck with the operations or purchasing people, they would have done more harm than good.

Conclusion: It’s all about the C-level or leader who’s responsible for what your products or services do for his / her organization. If you can’t tie into success factors, you’re one-of-the-bunch and the low price bidder will be selected or you’re not needed.

And now I invite you to learn more.