In an attempt to out do the “X for Dummies” approach, Greg and I are going to use the “Whadya Stupid or Somethin?” brand and see what we can make of it.
This week I saw one too many RFPs stating something along the lines of, “in order to better control our costs, we are going to trim the number of outside firms we use.” Like my ranting post on the term “Loss Leader,” this was the proverbial last straw.
And like my Loss Leader post, I’d like to go back to Econ 101 thinking. In a market that has made a dramatic and lasting shift towards a buyers’ market, that also happens to be aligned with the biggest recession of the past 100 years, what’s the best buyers’ strategy?
- Take advantage of these market forces and get sellers bidding against each other along the lines of the good ole supply and demand graph? or
- Stifle that competitive force, cut out most of the sellers in the market and realize greater leverage with fewer providers.
The correct answer is 1. By definition, in a buyers’ market you already have that same leverage with every provider. Why would you want to eliminate competent competitors from bidding on your business, putting downward pressure on prices (a.k.a. your costs)?
My best guess: GCs (and their consultants) checked the ‘convergence cycle’ calendar and it said it was time to converge. I think they must have missed the “Spring Forward” announcements over the weekend.