When Lending a Hand is Profitable
A customer with a need for a non-available part to repair a larger component raised a good question… why not help out?
The customer has a widget that is in need of repair. To repair it we need to replace bearings. The bearings are not available from the manufacturer because they want you to buy a whole new widget. So, the customer does a search for replacement bearings and finds a guy who has a relationship with the manufacturer to buy the bearings and rebuild the widget. BUT he won’t sell the bearings, he will only rebuild the widget. His price to rebuild the widget is the same price I am providing to the customer for a re-manufactured widget direct from the manufacturer. The guy is located in another part of the country so competition is not an issue and the customer does not understand why the guy won’t just sell him the bearings. Good question.
If the guy sells the bearings he makes money. If he does not, he retains his exclusivity and gets no money. Meanwhile, I sell the re-manufactured widget and make money.
What is more important, exclusivity or money? When is it a profitable time to help out?
I can see the customer’s frustration, he wants to save money. For me there is no issue, because in this instance I make money either way. If the customer can buy the bearings and ship them to me I get paid to install them AND, more importantly, I do not have to warranty the bearings. If he can’t buy the bearings I get to sell him the re-manufactured widget. Either way I’m happy which is very important. The customer, on the other hand, not so happy. BUT it is his prerogative to repair or not to repair.
So, would I have sold the bearings if I had them? Probably not. Retaining exclusivity is difficult but profitable. In the end, he makes more money if he rebuilds the component and remains the go-to-guy for rebuilds. For price shoppers and do-it-yourselfers he makes perfect sense and it’s a great market for him. Businesses and customers using existing businesses are NOT his market, and he knows that so he remains true to his business model. I respect that.
Do I ever help out? Sure, but only when it is profitable for my business to do so AND only when it is in alignment with my business goals.
Best regards for a profitable day.