Case Study

Posted: 10/1997

Case Study

How to Keep Your Customers from Asking for a
Lower Price

At a trade show a few months ago I heard a line that captured
my entire philosophy about selling long distance: "Price is
an issue only in the absence of value." These 10 words
neatly summarized what we at the One Plus Agent Association
(OPAA) have been preaching for years now through this column.
Don’t worry. This month’s column isn’t another sermon, but a case
study in providing such value to a customer that they would be
too embarrassed to ask you to lower your rates.

A business customer of mine recently decided to move his
company out of the 3,000-foot office they were in to a new,
10,000-foot office to accommodate recent growth. Since I’ve
regularly kept in touch with him, when I learned about the move I
told him I’d be happy to coordinate the move of his telecom
services and wiring. As he didn’t have an in-house telecom
manager, he was happy to take me up on this offer.

While it seems daunting, planning a telecom move to a new
space is relatively simple. It’s no different than setting up a
table in preparation for eating dinner. Simply count up the
number of people who will be eating and then set a place for each
one of them.

Once we had figured out all the wiring requirements, we turned
to the phone system itself. Three years earlier the company had
purchased a well-known system with voice mail for about $30,000
cash. It had been configured 14 X 24 (14 company phone lines, or
trunks, enabling calls to and from the outside world and 24
stations or actual phones). The company had been adding people at
a pretty steady pace so it wanted to expand the system to
accommodate an additional 12 phones. We didn’t think the company
needed any more company trunks, since no one had ever complained
of getting a busy signal from the outside or not being able to
access an outside line from the inside.

With the system expansion and move requirements defined, we
first called the company that had sold them the system because
the system was still under warranty for another 10 months. For
two additional cards, an expansion cabinet, the extra phones and
the move itself, the telecom company wanted well over $11,000.

Well, no one minds a padded quote at the opening bell as it’s
assumed that the price negotiation will follow, but the telecom
rep was bound and determined to hold his price. Fortunately, we
had six weeks to go before the move, so I had time to bring in a
little "value" of my own.

My first step was to determine the "street price" of
the items on the telecom company’s quote. Telecom Gear (T.G.)
catalog was my first stop. T.G. is chock full of providers of
new, refurbished and used phone gear of every conceivable brand
imaginable. It’s where your local service providers get their
stuff before they mark it up to you. Well, I quickly determined
the telecom company’s prices were double the street price. All we
had to do was order the equipment ourselves.

The next stop was to find someone to install it. To the local
Yellow Pages. Under "telecommunication telephone equipment,
repair" I found over a dozen businesses qualified by the
telecom company to work on the particular phone system. Half the
providers wouldn’t install parts you didn’t buy from them (at a
50 percent markup), but half would at around $60 per hour.

Then I sat down with my client and explained that for around
$5,500 we could do for ourselves what the telecom company would
charge $11,000+ for. What did we have to do next? Call for
references. We narrowed down our choice to one guy named
"Skip" who owned his own company after working for the
telecom company 15 years, and whose customers swore that Skip
"walked on water, saw him do it."

We had two choices: Have a guy who lives on referrals and owns
his own company do it or give the job to the telecom company and
have some union hourly guy do it "his way, the company
way," no matter what. (We’ve run across more than one
technician who wouldn’t do anything that wasn’t approved in
writing by three different levels of his own management team.)

So the choice was made to save over 50 percent for practically
guaranteed "right-the-first-time" service instead of
paying double for what would most likely be lackluster service
with a bad attitude on the side.

What was the telecom company’s reaction? It told us the 10
months left on the warranty would lapse because we had someone
besides a the telecom technician touch it. This wasn’t all that
big a concern since the system was well made in the first place
and nothing had broken in the previous three-plus years. The
system was expanded and moved by Skip without a hitch.

Who were the big winners? The customer, as he saved more than
$5,500 (and it was a real savings, too, as they had budgeted more
than $11,000 for the move). The customer also got a new system
vendor he trusted and liked more than the telecom company.
Finally, the customer got more than 50 hours of
"complimentary" telecom consulting from me. (I actually
sent the customer an invoice for $2,500 for the 50 hours, but
waived it because the customer bought long distance through me.)

I’ve been saying for years that anyone with the ability to
"think outside the box" can be a telecom consultant.
All it really takes is the Yellow Pages opened up to the telecom
section. Those guys listed there are great at providing telecom
solutions. They just can’t sell worth a darn.

That’s where we come in! To learn more about how to make easy
money this way, check into our web site at www.opaa.org and come
to our trade fair in Chicago this month!

Million-Dollar Bonus Idea

Since you were so kind to read our entire column this month
you get a free idea. Send out a broadcast fax or direct mail
piece to all your prospects that reads, "you can now buy
your long distance at wholesale prices by becoming a telecom
agent." When they call in, simply explain it’s like becoming
a real estate agent to buy their own home. They get to keep their
own commission. Then sign them up as a subagent under you since
you’re the "real estate broker" under whose license
they operate.

Dan Baldwin is president of the One Plus Agent Association
(OPAA) a non-profit corporation dedicated to agent professional
development. He can be contacted at dbaldwin@opaa.org
. Support the agent marketing channel by joining OPAA as an agent
or vendor member. Call (619) 685-3465 or surf http://www.opaa.org
today.