Of Loyalty
The following letter was written by Steve Shoultz to his daughter in an attempt to explain some points on doing business and customer/vendor loyalty.
Loyalty to your vendors will get you the best price most of the time and the best service always. As consumers, we tend to buy based on the lowest price. As you mature, you will discover that rarely is the lowest price the best price. For most products, there is rarely more than a 10% difference in price. If the price difference is more than 10%, then they are not the same order. In your case, the tshirt may not be the same, the quality of the screen printing may not be the same, or the way it is quoted may be different, ie one shop spread the cost of the screen printing set up into the cost of the shirts while another lists it separately or not all. There is a saying in business: Pick any two of the three, Lowest Price, Quality Product, Rush Production. You stated you had ordered shirts before for the same group. I understand that you were not in charge then, are not now and that you tried to get Tom the quote last time. But learn this for yourself, because most people never learn this lesson. If you shop a small order every time, you will ultimately pay a higher price over the long haul. You will be in a position to order from Tom in the future and if you use him regularly, he will always have a competitive price. BUT, MORE IMPORTANTLY, he will get you a quality product, on time, EVERY time!
Let me explain why. 12 tshirts at a cost of $20 is $240. Most businesses will have a profit margin between 8-12%. Meaning after all overhead is paid (salaries, rent, cost of goods, insurance, taxes, etc.) the business has about 10% left over as profit. Therefore, in your case, there is about $24 profit on this order. Now, you may be inclined to argue that these are tough economic times and the business may be willing to produce the order at their cost, meaning they can bid $2 less per shirt. That is a small possibility, but businesses are in business to make a profit, not break even. Therefore, the price difference from one vendor to another cannot vary by more than 10% unless the vendor is selling at a loss or more likely, they are using cheaper products.
Now let’s analyze it from the business owners perspective. A person call with a small order and let’s you know that they are shopping strictly for the lowest price and are shopping with several vendors. How much time do you think he is will to invest to make $24? If you are shopping with 5 vendors he only has a 20% chance of winning the bid. If he quotes 5 jobs like yours and sells one, he has spent his entire profit in the amount of time it took to quote the 5 jobs. Consequently, he is more likely to increase his bid on all 5 projects so that he does make a profit after quoting all five jobs. Therefore, when you shop, you are actually paying a higher price than you need to!
When you shop like this, you will always be working with the guy that is about to go out of business, the guy that has to cut corners in order to make a profit because he has under bid the job, the guy who uses the cheapest materials, etc. In other words, the guy with the lowest value! Your chances of being satisfied go down greatly.
Conversely, if you order consistently from the same vendor, he wins the order 90-100% of the time you have him quote, in short, show him some loyalty, then he will reciprocate. When you have a job you need done quickly, he’ll drop everything to help you because you are a loyal customer. When you Really need him to sharpen his pencil, he is more likely to cut his profit margin because he realizes you will be bringing him more business in the future. When you have big project, he is more likely to cut you a break becsuse he is not bidding just the one big order, but all the other orders combined!
If you buy on value, you will never be disappointed. If you are respectful of business owners time, you will be treated better in regards to pricing and service!
I have some ideas in order to hold your costs down on this. Try to order 25 shirts to receive a quantity discount. Screen print all in one color. Don’t have individual names on each shirt, list all the names on the back of the shirt. This means there is only one set up charge. Make sure you know the name and model # of the shirt you are quoting with all vendors. Hanes probably has 10 different tshirts to choose from that range in price from $1 to $10 per shirt.
Finally, I cannot say enough good things about Tom O’Connor and High End Concepts. I order all my advertising products from him and have for 10 years! I have shopped his pricing more than once and have never been disappointed. He is honest and looks out for your best interests in order to gain your business the next time. On more than one occasion Tom has told me he cannot get me good price on something and that I should look elsewhere. In many instances, he has told me where to go, referring his competitor! He makes great suggestions on how to lower my cost, what works with consumers, in sort, ideas that will satisfy my needs. In my opinion, your group is making a mistake if they do not place the order with Tom.
Steve Shoultz
Speaker, Family and Teen Driver Protection Expert
Charter Member of the Society of Family Insurance Specialists
Priority Risk Management
Phone: 317-713-2959
Fax: 317-536-3933
Filed under: General
