In business, everything is open to negotiation. But when customers ask for a rate reduction, it generally pays to remember the value of your offer rather than capitulate, suggests retail sales and operations consultant Ben Wain, the founder of Wain Consultancy & Coaching …
Recently, I found myself having a conversation with the owner of a growing maintenance business who was facing a dilemma many furniture retailers will recognise.
One of their largest customers had approached them asking for a reduction in rates. This wasn’t a customer representing a small portion of their turnover either, it accounted for around 80% of their work. Losing the account would have a significant impact on the business, so understandably, the owner was concerned.
As we talked through the situation, I asked the obvious questions. Had service levels slipped? Had there been complaints? Had they failed to deliver on their promises?
The answer to all three was no. In fact, quite the opposite. They answered the phone, turned up when they said they would, travelled long distances when needed and consistently delivered a high standard of work. The customer simply wanted to improve its own margins and had suggested there were other companies willing to do the job for less.
My advice surprised them. I told them not to reduce their rates.
Now, before anyone throws this magazine across the showroom, I’m not suggesting retailers, suppliers or service providers should never negotiate. Of course they should. Every successful business regularly reviews costs, tenders contracts and looks for opportunities to improve profitability. But this wasn’t really a conversation about price. It was a conversation about value, and it’s a conversation I believe our industry needs to have more often.
Of course, the same principle applies throughout the supply chain. Furniture retailers regularly receive cost price increases from manufacturers and suppliers and, whilst nobody enjoys those conversations, they should create an opportunity to ask important questions.
What is driving the increase? Has the product improved? Is there additional investment in service, stockholding or support? Does the supplier add value beyond simply delivering furniture?
The strongest retailer-supplier relationships are built on transparency and mutual understanding. Equally, retailers shouldn’t be afraid to review product performance when repeated increases begin to push a range beyond what the market is willing to pay.
Sometimes the answer is accepting the increase because the value remains strong. Sometimes the answer is having a difficult conversation. And occasionally, it may mean replacing a product that no longer represents good value for either the retailer or the customer.
Furniture retail has always faced pressure on pricing. Whether it’s customers asking for “a little bit more off”, competitors launching another sale event or online retailers pushing aggressive promotions, the temptation to compete on price is ever-present. In challenging markets, it can feel like the easiest lever to pull. Reduce the margin, secure the order and worry about the consequences later.
The problem is that this approach rarely creates long-term success.
Many years ago, I heard a phrase that has stayed with me ever since – you can have it cheap, you can have it fast, or you can have it perfect, but you can only pick two. If you want it cheap and fast, it won’t be perfect. If you want it perfect and fast, it won’t be cheap. If you want it cheap and perfect, it certainly won’t be fast. Yet many businesses spend their lives trying to deliver all three and, inevitably, somebody ends up paying the price.
More often than not, that somebody is the retailer. Margins become squeezed. Teams come under pressure. Investment in training gets delayed. Store standards begin to slip and customer experience suffers.
Ironically, the very things that customers value most are often the first casualties. Over time, businesses find themselves working harder, taking more risk and earning less money. It’s a race to the bottom and, in my experience, very few businesses win that race.
The strongest furniture retailers I’ve worked with understand something important. Customers don’t always buy the cheapest option. More often, they’re buying confidence, trust, expertise and peace of mind. They’re buying from businesses that consistently deliver on their promises and from people who make the process easy.
Think about your own customers for a moment. How many return because you were the cheapest? And how many return because they trust your advice, your service and your team?
Some of the most successful retailers in our sector have spent decades building reputations based on experience rather than price. They’ve invested heavily in their people, their showrooms, their delivery standards and their customer service because they understand that value extends far beyond the product itself.
Customers may compare prices online, but they still remember how they were treated. They remember whether promises were kept. They remember whether problems were solved. They remember whether somebody genuinely cared.
At the beginning of any business journey, there are times when you need to work harder than everyone else. You travel further, stay later and go the extra mile to build a reputation. That’s how trust is earned. That’s how credibility is built. But once you’ve established that reputation, don’t be too quick to give it away simply because somebody asks for a discount.
There comes a point where every business owner and retailer must decide what they stand for. Not arrogantly. Not emotionally. Professionally. Because if you don’t value what you do and what you offer, don’t be surprised when nobody else does either.
The strongest businesses aren’t built by winning every order. They’re built by understanding which orders are worth winning.
Find Ben on LinkedIn here.
