Keeping money as the main motive for venturing into entrepreneurship is like putting the cart before the horse. The right outlook should be “making money as a consequence of supplying a good product or rendering a good service”. If this attitude becomes the motto, every sterling quality needed to become a successful entrepreneur will follow suit — commitment to quality, timely delivery, after sales support, guarantee and warranty.
Relationship with customer is never built in a day. Every business needs the right mix of long standing satisfied customers and a regular streaming-in of new customers. Price could be one of the clinching issues when you are negotiating your order with a new customer. A customer comes to you for the first time because they hope to get something cheaper from you or something better from you. Many times, the first order from the new customer may prove to be a less profitable or even a profit-less proposition.
A shrewd businessman weighs the pros and cons of the probability of establishing a long term fruitful association with the new customer and rightly makes the compromise in his first order.
As a successful entrepreneur, I have always made it a principle to forgo profits or settle for minimum returns in negotiating my first order. I also make it clear to the prospective customer: “I am for long term relationship with you; I am accepting this price/ rate because I am confident that once you see the benefits of utilizing my services, you would definitely think of coming back to me again. At that point of time in the near future, I can’t afford to offer the same rates, but I am hopeful you will be convinced”.
I have at least a couple of long standing customers who proved to be extremely tough negotiators when I took my first order from them. To day as I look back, it is highly satisfying to see how our relationship has matured to such a healthy level that price is hardly a point of contention in discussing a project with them.
While personally I make sure that I do not make a loss in any transaction, I have a customer, an entrepreneur himself, who has a more daring policy.
He says, “With customers who have been supporting me for years, I follow a typical strategy whenever they are in need of a new, highly specialized or an out-of-ordinary equipment. When such a requirement comes up, I dare to offer at a loss the equipment they want, which is something I had never made earlier! By this approach, I take a huge risk, but I tempt my customer with a price they can’t refuse and this leads them to finalize the order on me, overlooking the fact that I had no prior experience in supplying the special product! It also helps me learn something new and add a new product-line for offering to the same or other customers in future!”
“How will you compensate the loss then?” I asked him.
“It is to do with my judgment about the customer; I would go to the extent of selling even my head to satisfy them on their risky purchase. I make it also clear to them that I made a loss in the transaction. Customers are after all human beings. They would not like to see a trust-worthy supplier lose by serving them sincerely. When a future requirement comes up, it is me that they think of first and they make sure that I am compensated reasonably in the new transaction.”
Initially when I heard this from him 2 years ago, I was a bit skeptical. But today I know very well thathe is quite right. He has been coming back to me again and again to design newer and special machinery for the same customer in the past 2 years, each machine getting bigger and much costlier, more than adequately compensating him on the loss he made originally.
Yes. Money is only a consequence of supplying a good product or rendering a good service.