How Carriers View Your Business: Credibility Matters
Editor’s Note: Originally published in Parcel Media. This is a web exclusive that delves more into one of the main topics Glenn covered in his recent article, titled Tips to Thinking Like a Carrier, which appeared in Parcel Magazine’s January/February issue.
Negotiating with the national small parcel carriers is no easy task. To be successful, you need to follow several principles — some of which might even seem counterintuitive. For example, often a client will walk away from their incumbent carrier’s “last and best” offer, just to receive an even better proposal later. What should they do in this situation — follow through and switch carriers or stay with their incumbent?
It may sound crazy, but I always encourage clients to follow through on their word, even if the newest offer is a better deal. Doing business the right way will benefit you more in the long run than saving money in the short term, because it builds integrity and credibility. Here’s what the carriers see:
Option 1: Stay with your incumbent
If you flip-flop to your incumbent’s newest offer, your credibility in the marketplace will take a hit. The decision shows your incumbent that you aren’t serious when you threaten to leave, and it shows the non-incumbent a lack of sincerity. That makes it harder to negotiate next time, because both carriers will remember your actions and will not take you as seriously.
Option 2: Follow through with the non-incumbent
If you turn down your incumbent’s better offer and follow through with your new contract, you will set yourself up for success. You’ve negotiated fairly with all participants, communicated expectations and are steadfast in your decisions. Future bid participants will not question your credibility – you will have established yourself in the marketplace and it will pay future dividends.
How Do You Rebuild Credibility?
If you’ve already made this mistake, how can you rebuild your credibility and position yourself for better future negotiations? My biggest advice is this: Be consistent and be transparent. Maintain a relationship with the participants that didn’t win your business. Explain the reason for your decision. Identify ways to address switching carriers now to build credibility in the future. Like any successful relationship, success with your carrier depends on clear, consistent communication and integrity.
Glenn Gooding is Executive Vice President of iDrive Logistics and an industry-leading cost model expert. He spent more than two decades at UPS, where he engineered the cost and pricing models for the world’s largest enterprise shippers. Glenn now leverages his knowledge of carrier cost-model methodologies to help shippers of all sizes optimize and reduce shipping costs. Glenn can be reached at firstname.lastname@example.org or 678.567.6847.