Getting Honored for Giving Value through Relationships

Lorne Gaffe, Guest Author -- Foodservice Equipment & Supplies, 4/1/2008

Lorne Gaffe Principal Hamilton Store Fixtures Ltd. Hamilton, Ontario Canada

I am pleased to be part of a third-generation, 73-year-old family business. My grandfather set the foundation on which we operate. My father set the values that guide our decisions. My strategies have allowed us to grow honorably and profitably.

Despite my pride in our family business, I am forever perplexed by an industry that honors poor business practices. While many dealers complain that margins are unacceptably low and that something must be done, it appears that we reward those that operate with the lowest margins and achieve the highest volumes. At a recent buying conference, a supplier approached me to ask why I wasn't on the podium receiving an award for our company's success. I claimed that the answer was simple: Our margins are too high. Not only are low margins and high volumes publicly recognized, many manufacturers design programs around that same philosophy. Recently, I had a heated discussion with two vendors claiming that our dealership was just short of reaching their elevated special rebate program levels. My response to each of them was that our company could have easily reached their levels had we chosen to sell their products at unacceptably low prices. I even pointed out specific examples where the lowest prices received the orders.

Does selling at a zero margin make good business sense? It certainly does not support our business model, which is why our company does not sell on price alone. Had we chosen to do so, our company would have achieved the manufacturers’ recognition mentioned above. Thus, it seems apparent to me that their programs reward for low-margin high-volume sales instead of profitability and offering extreme value to the customer. Something is not right. How much value can a low-margin high-volume player offer an industry?

Our value-based strategy is to create unique relationships with each customer. The growth and profitability of our business is based on customer intimacy. Our salespeople are trained to work with, understand and guide each customer as if they were part of our family. Our team must appreciate every facet of their customers’ operations to ensure that we offer value based on our knowledge of products, systems and people. Consequently, we stock inventory, purchased at the right price, to both support our customers and stay competitive. Relationship building is not done in a day — it takes years. However, the results are always positive. Our customers do not receive fluctuating pricing and our quotes remain competitive. Knowing our customers’ businesses so well allows us to continuously introduce new tools that suit their needs. Our partners know that we are not there to sell them today. We require them to be customers tomorrow and in five years from now. By being honest and creating true lasting relationships, our customers can cope with our mistakes — and us with theirs.

I often wonder if our strategy works, while witnessing my competitors get the big orders, receive the honors, and obtain rewards for volume. This past March at the CRFA show, Canada's premiere foodservice trade show in Toronto, I finally realized that our approach is effective and successful as customers flooded our booth. I watched as industry professionals stopped by to hug, and even kiss members of our team. I was overwhelmed by our customers’ approval and by the amount of people who came up to me just to say “thank you.” It was apparent that our competitors were recognized by their name alone — there was an obvious lack of personal association that comes when you sell only on price. It was then that I realized that relationships do cultivate a business and that our industry players should be rewarded based on honesty, integrity, good business sense and professional offerings.