Consider this example. You are considering two supplier proposals: one that has a higher price but a rebate at the end of the 3-year contract/program and one that has a lower price but no rebate. When factoring in the rebate and analyzing both proposals using a net present value equation, the supplier with the rebate has a slightly lower total cost of ownership (let’s say slightly less than 1%).
Everything else being considered equal, what would you do?
I know what I would do.
I would either select the supplier not offering a rebate or would ask the supplier offering the rebate to re-price its proposal without the rebate.
That rebate is essentially the “two birds in the bush.” It may never be paid. Too much can change over three years.
Think of an airline industry contract signed before 9/11. Or an automotive industry contract signed in early 2008.
Do you think those two-birds-in-the-bush obligations were all kept?
No, I don’t either.
I’ve always felt strongly about this topic but hadn’t thought about it for a while. But a customer service incident at TGI Friday’s reminded me why you can’t count on future obligations.
(BTW, the procurement lesson of this post is over and I’m gonna rant about bad customer service. So, if you want to stop reading here, it’s OK. I won’t be offended if you walk out at this time 😉 .)
TGI Friday’s at one time had been one of my family’s favorite restaurants for a good, kid-friendly meal. We were part of their “Gold Points” loyalty program and actually ate there enough to accumulate quite a bit of points. I can’t remember how many, but I know that we had at least enough to get a free appetizer and may have crossed the threshold to getting a free entree.
Now, we hadn’t been there for several months – there are no shortage of restaurant choices in the Robinson Township and Moon Township areas – but we decided to return and cash in our points on that free appetizer. I got our Gold Points card right away and asked the server whether she needed to see it now or when she brought our check.
She was new and was unfamiliar with the Gold Points program, so she took our card to the back. She returned to say that the program was no longer in place and that our card could not be honored.
I gently expressed my displeasure, but we went on with our meal.
When she brought our check, I told her that I wanted her to tell the manager to take the charge for our appetizer off the bill because we earned a free appetizer and it just wouldn’t be right to not honor the program. She said she’d get the manager and she did.
The manager, Rich Wolfe, came over and said that he couldn’t honor the card and couldn’t comp our appetizer, but TGI Friday’s had a new loyalty program that we could sign up for online that was “better.” Acting like a typical customer (without extensive negotiation expertise) I asked him why he thought we’d sign up for a loyalty program when TGI Friday’s obviously doesn’t honor the incentives that its customers earn. I repeated my desire for the appetizer to be taken off of our check.
I couldn’t believe how this guy continued to resist comping our appetizer, acting like it would bankrupt the establishment. It’s six dollars that I was asking for! And that’s my price, not his cost!
So, it was time to shed the facade of being the typical customer and putting on my professional negotiator persona. And, of course, the appetizer was taken off of our bill.
Sorry, I – nor any other customer – should not have to turn up the heat to get a measly six dollar appetizer comped in this type of situation.
So not only will I not trust the two-birds-in-the-bush loyalty programs of TGI Friday’s – I simply will never step foot in another TGI Friday’s in my life. With so many great restaurant choices, there’s no reason to bother with a restaurant with terrible loyalty programs and non-customer-centric values.
Perhaps I’m just jaded by my recent vacation to Disney, where every employee buys in to the goal of giving the customer a magical experience.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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