DaVinci—or maybe it was Michelangelo—anyhow, one of those long-since-dead guys who knew a whole lot about a bunch of things said, “Give me a lever long enough, and I can move the world.” Although that may not be exactly what he said (whoever he was), it’s close enough to make my point. Levers, or leverage, is the most potent tool any decision-maker has.
But what does leverage mean? It means the power an acquirer has that may cause another person to perform a service or provide a good based upon the terms and conditions the acquirer defines.
Why the focus on the word may? Because all too often, decision-makers leave leverage in their quiver and never pull it out—let alone fire it. Additionally, vendors will do all sorts of unnatural acts to convince you that you don’t have any leverage at all.
Listen closely: If you are in the market for a product, you have the ultimate leverage. Why? Because you have the power to use a simple, but important word—one that you must wield frequently when dealing with quota jockeys. That word is: “No.”
Case Study I. A Lesson in No.
What the vendor says: “OK then, let’s do this. By the way, how’s lunch? Prime rib done just the way you like it? Great, that’s great. So listen: At no cost to you whatsoever, I’ll bring my team in and we’ll set up a 30-day demonstration system in order to do an efficiency study designed to analyze your company’s workflow processes. The deliverable of this study will be a customized report detailing operational inefficiencies and offering suggested methodologies for reclaiming asset leakage.”
What the vendor means: “Give me one week inside your shop and I’ll have you so wrapped around my finger I can sell you one of my machines for every employee you got! President’s Club on Maui, here I come!”
What you say is: “No.”
See what I mean? Leverage: the power to set the terms of an engagement, to allow or disallow.
If the word “No” is new to you, or if you’re not used to saying it, practice. Find opportunities to say No. (But don’t try it on your kids, because No never works on one’s kids. It’s not all that good on a spouse, either. Why not? That’s probably a question for Dr. Phil.)
So is that it? Leverage and No? With these two tools you can make vendors do whatever you want? Uh … maybe.
Like most things that start out simple, Leverage and No don’t stay simple long. You see, to one degree or another, vendors also have Leverage (reverse leverage) and No. For most vendors, leverage is grounded in the principle of scarcity. That is, if you need something and there is only one place to get it, the leverage the acquirer has is diminished. And they are typically more skilled at using these tools because they have more opportunities to practice with them.
Case Study II: Reverse Leverage.
A hundred years ago, when the automobile was taking root, we had lots of cheap oil and plenty of places to get it. So we built refineries to turn oil into fuel, and then we built Route 66 so we could cruise from Chicago to LA whenever we wanted. The Middle East? In those days, it was nothing but a bunch of semi-primitive, unimportant countries filled with feudal, nomadic peoples who spent most of their days trying to find something useful to do with all that sand.
So what happened? Scarcity.
As things in Pennsylvania, Alaska, and west Texas dried up, Middle Eastern countries discovered there was oil under all that sand. And once they realized the entire socio-economic engine of the Western World was powered by oil, they banded together, formed OPEC, told Jimmy Carter to take a hike, and made us sit in gas lines that stretched for miles.
How? Reverse leverage. They had oil. We needed it, and couldn’t get it from anyone else. And it’s going to stay that way until we come up with something else to power our cars that we have plenty of; i.e., rabbits droppings maybe (I don’t know about where you live, but in Plano, there are way too many rabbits running around). For heaven’s sake, though, let’s not figure out a way to run cars on sand because I, for one, am tired of depending on the Middle East.
This principle of scarcity is something vendors know and use well. It’s taught in every Sales 101 class there is. Firms like Cisco (technology), Starbucks (overly-acidic and highly-priced caffeinated beverages), NIKE (anything they can get Tiger Woods to wear), among a lot of others, effectively use marketing and apparent technological differentiation to give the impression of scarcity, or perhaps exclusivity, in order to try and take leverage away from the acquirer.
Give even the slightest hint you’ve decided to buy—you give up leverage and are now in a position of hoping to get what you want rather than being able to demand what you want.
So from now on, when vendors try to take away your leverage, you know what to say, right?
OK then, I’ll remind you: “No.”