Beware of the Company You Keep
When it comes to questionable business practices, sometimes the free toys just aren't worth it.
- By Derryl Steib
I used to work for a small, privately owned company that did business for years with a nationwide computer manufacturer I'll call Arch Computers. While we never made a bulk purchase with Arch, we'd routinely give them hundreds of thousands of dollars in PC-related business over the course of a year.
As the end of the millennium approached, our company decided to use Y2K as a justification for replacing a large number of remaining DOS and Windows 3.11 systems. We haggled with Arch Computers for the best price given that we were buying more than 50 systems, with the goal of trying to beat the price on their Web site. The Arch sales rep we had worked with for years informed us that the Web site price was the absolute best they could do for us, but that they'd give us a slight discount on the shipping. As we had done business with him for years, we took his answer in good faith.
'Stress Boxes' Started It
Sometime later, a new order guy received a nifty little toy via FedEx from Arch marketing. It was small, soft, squishy and in the shape of the boxes they ship computers in, complete with an interesting cow design. Arch called them "Stress Boxes." We had three other people in the department, and the little toy became a real item.
Then, an interesting e-mail conversation developed between Arch and my engineer, who used to be the order guy.
Us: "These are great Stress Boxes; can you send us some more for the other folks in the department?"
Them: "No. They are shipped from our marketing department and we don't have access."
Us: "We did $500,000 worth of business with you last year. How much business do we need to do with you to get a couple more Stress Boxes?"
The conversation went rather dry after that, but eventually we all did get a Stress Box.
As our company grew, we started to look at server systems, not just the workstations and notebooks that we were purchasing from Arch. As I priced those systems out, a different company, which we'll call Valley Computers, had server-class systems that consistently ranked in the top three. So we deployed Valley servers and never considered Arch for servers. Valley did ask us if we would consider their workstations and notebooks, and so we got a quote.
When Valley asked if they were in the ballpark relative to competitors' pricing, without giving them specific numbers, we told them that they were slightly higher than Arch, so we would continue to use Arch. Valley then declared they really wanted all of our business and would give us a decent discount -- around 15 percent -- if we'd switch to them. With the discount, their offer represented a reasonable cost savings over Arch. We knew that Valley had good servers, with several computer magazines frequently ranking their notebooks in the top five.
Too High a Price
We had no choice but to switch. Arch had provided to us for years, but we knew their pricing plan. The bottom line was just too important to ignore. Several weeks passed, and our transition was going rather smoothly when Arch called. They were curious as to why we had not placed an order. We told them that we were not going to order from them since Valley had a better price.
The sales rep was incredulous. He claimed we didn't give him a chance to bid his price. My engineer got on the phone with them because he had originally worked on the 50- plus PC sale. He asked why he would need a bid, if we already were assured that we were getting the best price. I believe his exact words were: "Which is it? Either you were lying to us then, or you're lying to us now."
Arch's business practices came into question after that, and we never did business with them again. I have a feeling the folks at Arch got more use out of those Stress Boxes than we did.
Derryl Steib is a manager with Ergon Inc.