By Paul Kuntz
Paul Kuntz is the owner of Wheatland Financial. He offers financial consulting and debt broker services. Paul is also an advisor with Global Ag Risk Solutions. He can be reached through wheatlandfinancial.ca.
I would like to take the view that there is always a way to have a win-win situation in a business deal. The opposite is the idea that the only way to be successful is for the other entity to lose. This type of thinking does exist. There are times when we feel like we must have lost because it appears the other side won.
In the business world, products and services must be sold at a price to return the company an amount that allows them to pay their bills and have some left over for growth and contingencies. As a purchaser of these products, we understand that if the product or service is continually sold at a price below the cost of production, the business will eventually fail.
Where the matter gets confusing is when we discuss how much extra is needed to sustain the business. If a product costs $10 to make, can the company sell it for $11? Or does the company have to sell it for $20? If the market will bear $20, some businesses will charge the $20 until they cannot anymore.
I recently had an experience with my internet service provider. A competitor called me to ask for my business. I wasn’t interested. This competitor kept calling and was insistent their service would be as good as what I currently had at half the cost of what I was paying. Eventually, I said I’d try this new service.
After I got the equipment hooked up, it appeared that perhaps this competitor had a decent service. I called my existing internet service provider to ask what the cancellation process entailed. They assured me it was a simple process, but asked why I wanted to cancel. I explained a competitor had offered service for half the cost. The customer service representative immediately said a new program was available that would cut my bill in half. My first thought was, “Really?” As soon as a competitor offers the service for half the price, a program becomes available for me to receive my existing service for half the cost? That seemed odd to me.
To add insult to injury, a few days later, my existing internet company called to say that although they wanted to just “flip a switch” and increase my speed, they would need to come out to install brand-new equipment, for free, to increase my speed. I asked about the special promotion to cut my bill in half and they assured me it was still going to happen.
This company, that I have dealt with for over 10 years, had the ability to increase my speed and reduce my cost, but yet they did nothing until a competitor came along. This frustrated me. My initial reaction was to punish my existing company and reward the new company, but as it turned out, the competitor was not able to match the service I was receiving. The internet service was very slow. I would have never canceled my existing internet service, but I will now receive faster service at half the cost I was paying before.
Why does that have to happen? Why do businesses offer an inflated deal but if you balk, then they cave to a much better deal? Why not offer the best deal upfront?
In my world of being a residential mortgage broker, we pride ourselves on always offering the best deal upfront. It is part of our licensing requirement through the Department of Justice that we always act in the client’s best financial interest. It is the law that we offer the best deal all the time.
We can have a meaningful discussion about a problem, or a disagreement in pricing, but still be honest and respectful. The key is that we, as the consumer, must feel valued and the business representative must seem sincere.
Financial institutions will often offer their best rates on a mortgage, be it for farmland or a house, when you first get the deal done. All lenders are eager to provide great rates and service. Where the wheels start to fall off the wagon is at renewal time. If a lender has a five-year special for 4.5 percent, they will not offer it to existing customers. They will have a higher rate for renewals. The reasoning: they think it is too much hassle to move your mortgage for a small difference in rates. They have your business, so they don’t need to earn your business. Instead, they’ll offer a better rate to a stranger rather than a loyal customer. This, in my opinion, is wrong, but it happens every day, all the time.
When you get a mortgage renewal, call your lender and ask for a better rate than you were offered. You will almost always get a better deal. The question I have for those lenders is: why do you make your existing loyal customer beg for a better deal when you would give that reduced rate to an unproven new client?
In the agriculture world, there are many similar examples. Machinery dealers argue warranty claims to get out of paying the repair bills when the item in question is clearly under warranty. Chemical prices magically become lower when you threaten to buy somewhere else.
Grain buyers can be another group that seem one-sided. I deliver grain to a company that has buyers who are always looking out for me. They always do their best to help me out. Another company down the road has grain buyers who will use every excuse possible to downgrade or increase dockage. I understand both have a job to do, but you can still perform your duties and have the farmer’s best interest in mind.
There must be a win-win attitude on both sides in order to accomplish a utopian world. Perception is very important through this transaction. As the consumer, we cannot be talked down to by the business or service provider. There cannot be any condescension. We must feel valued. My preference would be full transparency. When I call out a business for having a fee that is too high, I would like that business to admit they were trying to get as much profit as possible, but now that they are being challenged, they will lower the cost. Do not insult my intelligence by telling me that a program just became available right at this moment that will allow me to get a better price.
As producers of commodities that are priced outside of our hands, the cost of the supplies we purchase can be cause for concern and even anger. We are told that supply chains have been compromised, there are shortages of components, shipping costs have increased, and a myriad of other excuses as to why the cost of what we need has risen. We are not offered the same courtesy when we sell our products. We have to take what the market provides. This is where we, as agriculture producers, have to be the bigger person in our transactions.
As you go through your day-to-day interactions with suppliers and buyers, take a moment to see the win-win attitude among the people you deal with. You will begin to notice who has it and who does not. We do not always have choices as to where we can do business, but I would suggest doing as much business as you can with people who believe both sides can win and there does not have to be a loser.