The Case Of The Cheapo Company P

I had an interesting business case study which comprised of three business entities, of which the main perpetrator is the El Cheapo Company P, which is a client to a company that we work closely with, F. We represent the outsourced Rehabilitation arm for F.

So what that happened was F and P signed a service agreement which Cheapo Company P didn't sign up for Rehabilitation services and one of the their staff which had a hand injury, was referred to me requiring hand Splinting and Therapy services with me.

From the first session I had with this patient, the patient from cheapo company P had been asking about why we were so expensive and that a public hospital is cheaper, and why there is so special price due to the agreement between P and F. I explained that as there is no agreement or communications from F to us saying that there needs to be a special price given to P, there is nothing we can do.

So this patient from cheapo company P went and communicated directly with one of F's executive, and didn't check thoroughly if there are special packages for this specific company...yet this executive went ahead and promised the patient in email and CCed myself as well as a whole bunch of other executives from company F.

Then I was stuck.

On one hand, the executive was wrong on a couple of levels - not checking if there is an applicable promotion for company P with F, if agreement with company P and F warrants a special rate with us, not checking with us in detail about pricing structure, promising patient on our behalf that we can give a very low price (the executive offered a 70% discount) and putting it on email PLUS adding patient into the email thread.

On the other hand, should I correct the executive on email, it may reflect poorly on company F.

However, my own company comes first and I decided to send out a delicately crafted email to explain how there was a misunderstanding and we do no offer such a special price to clients.

In four hours the amazing El cheapo company P senior HR got onto the phone and the call was directed to me. This HR started to shout into the phone about how we were so expensive compared to another hospital and that if we don't offer them a good price because of the contract, they're very happy to seek another vendor. And he repeated this for a few times before he ended it by saying that "it's just feedback for you."

I informed the HR that the prices of the competitor no longer applies as we do our own market research and we are confident of our price structure. He then raised his voice again saying that he doesn't believe and waaaaa he's right and "oh by the way, it's just feedback in to us."

This series of events was enough to rile my blood so I brought up in an email that though I am very unhappy to be competing at pure pricing as we clearly provide premium one to one Rehabilitation services (competitors often use Therapy assistants etc so real one to one time is often less than 20 min but ours is at least 40-45 minutes one to one with our specialists) but I pulled our market research data and demonstrated clearly in writing how we were actually underpriced by 8-24% in terms of costs.

And how this immediately translates to cost savings for them.

And then do you know what the El cheapo company P sent back via email?

So the HR wrote back literally saying "Oopsie-daisy, my bad, I didn't know that they had upped their prices - when I was there, the price was lower."

El Cheapo Senior HR, it's still your fault that you didn't check before you stuck your foot in your mouth.

Then completely ignoring what I had written, the HR proceeded to address few executives in company F how they can "clarify" if there is a discount with Company F benefit card with us.

God, I wanted to pull my hair out and vomit.

You see, if a company wants to be El Cheapo by buying the bare minimum services, then that very company needs to live within their means, and in this case, live with the bare minimum they bought. Here what they wanted to do is to get the cheapest price possible, and then seeing that they need more services, start to ask, scream and beg for cheaper price "just because they are contracted."

Sorry. It doesn't work that way. There is "nothing" to clarify. The truth is that you didn't buy the coverage for that. That's it.

What I did was to consult one of my close business buddies on his opinion before I decided that serving this El Cheapo was one of the lowest levels of hierarchy, and I sent an email to an incharge at Company F, and suggested that:

• Internal clarifications need to be done before email to be sent out to clients and that clients should never be included in email
  
  
• Out of goodwill, I offered 10% for this particular client to honor Company F's relationship with them, but I informed the incharge that I am not keen for discountings with them
  
  
• For future management of such clients, clients can be given a percentile discount if and only if they sign a better contract agreement with F - if not, why would other companies sign the better plans with F when they can get it for cheap by just shouting and screaming? This way, everyone wins. Except for those being cheap, of course.

The incharge proceeded to apologize for the executive's error in including the patient in the email, and noted my suggestion for future discounting options to prevent such errors and problems in the future.

Now this may not be the best approach, as this El Cheapo Company P may in the end be a golden goose for clients, however, my risks are mitigated. Like what the HR said, "we can always go to another vendor."

Likewise, my stance is "Please, go ahead."

I've got my own clients, and I won't die seeing you, and I think I'll definitely be quite miserable serving you, Mr El Cheapo. So go on, go take a hike.

One the most important things to note from here is how:

1. We mitigated risks by diversifying out our referral and patient base, so we're not at risk of just one referral or patient source running out. By doing so, we do not need to accept unreasonable or non-target audience customers. We get better quality patients this way >> Means that you need to know your referral sources and diversify and multiply them.
   
   
2. We get to stay true to our focus of seeing a specific group of targeted audience, and we don't have to bend over to seek approval from an unreasonable client >> Means that you've got to know who your ideal and right client is
   
   
3. We honored Company F, whom we have a close working relationship by being sensitive and tactful during email conversations with the lower level executive and the higher level in charge, and to keep the working relationship strong. And just because we can, we also offered a percentile discount to ensure the working relationship between P and F works well >> Means that you've got to give where it's necessary, but play your cards right

And go out there and hustle. It is the year of the hustle, of overcoming, and of reigning.

Search In NigelChua

Hello, and welcome to nigelchua.com - I'm the founder and writer.

Also husband, father, Christian, entrepreneur and dividend stock investor and owner director of Phoenix Rehab Group Physio & Hand Clinics. 

Read more about me here.

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