Still continuing my reading on Agile Project Management and ran across W. Edward Deming’s famous “Fourteen Principles of Management” again (for the hundredth time it seems). I read through the principles again and was amazed, as always, at how applicable these principles are in the modern world, even though they were conceived more than 60 years ago.
As I read through the principles, I found myself continuously going back to Principle #4, which reads:
End the practice of awarding business on the basis of price tag. Instead minimize total cost. Move towards a single supplier for any one item, on a long term relationship of loyalty and trust.
Although this principle is targeted at the ‘buying’ side of an organization, it can easily be transformed to the ‘selling’ side of an organization. My transformation of Deming’s Principle #4 as applied to the “Sell” side:
- Don’t compete on price alone. Show your client the value of your product/service. Build a long term relationship based on mutual trust and loyalty.
If a salesperson (or consultant) were able to build a relationship based on trust with their client(s), the client(s) will continue to come back to that salesperson/consultant for additional business regardless of whether they are the ‘low cost’ provider. I truly believe that a person who uses trust based selling techniques and builds real relationships with their clients will find themselves in a much better situation than those organizations who try to sell their services based on being the ‘low cost’ provider.
Of course, there are those organizations that only award contracts based on price and really don’t care to have a relationship with their suppliers. I’ve worked with organizations like this and I cannot think of a single organization that has awarded a contract based on the lowest price and has not suffered in the end. Whether it is poor quality, delays or some other issues, there always seemed to be a problem when dealing with the ‘low cost’ provider.
Take a look at the rest of Deming’s 14 principles at Ends of the Earth: Deming’s 14 Points & 7 Deadly Diseases of Management.