The other day I engaged in a short discussion with someone at work. I had just closed a sale - one that I really wouldn’t have done ordinarily, because the customer had driven a very hard bargain. She showed me a quote from a competitor with a price that was very close to our cost. We normally would not go after such business, but this time my boss and I decided that we could win that business because (1) we were having a few good runs the past quarter and could afford to win a few businesses close to our profit margins, (2) every new business we win from this particular competitor was one less they would otherwise win. We were hoping that by winning business off this particularly competitor, we were hoping to either drive them out of the marketplace or to reevaluate their cut-price tactics. Ironically we had to stoop to their level and low-ball them in the process, something that I did not particularly enjoy. Finally, (3) the vendor was offering extra incentives for each new business won that month by way of rebates and marketing credits. We decided that the sacrifice of profit margins to gain vendor favors was well worth it.

My friend and I were discussing the ethics of winning business via cost-cutting tactics. I was voicing my frustration with the affair as I did not believe that this was the right way to form business relationships, neither from the customer nor from the supplier perspective. The customer loses even though temporarily they gain tremendous savings in their initial investment. However, as it turned out, they were expecting such deep discounts in the subsequent services, and when I refused they decided to take their business elsewhere. They have lost the opportunity to work with our consultants, who are some of the best in the business. I did not mind losing them in the end, because I really could not sustain cutting my prices just in order to retain them as a customer. I believe business is a value exchange, and in this case, I really thought that the customer had not appreciated the value they were receiving from us.

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