Beware of the Gold Digger


She was the best-looking woman in town—heck, she might have been the best-looking woman in a five-state area.  When she walked into a room, conversation stopped and even other women would stare.

Men went crazy competing for her attention.  Diamond rings, boats, vacations, even houses, were hers for the asking.  Accepting the gift, she would stay with her benefactor until a better offer came along.  Fortunes were lost as men made decisions against their own self-interest to keep her for just a little while.  The relationship lasted as long as the money and then would be swiftly over.  She was the very definition of a gold digger; when I saw her, I couldn’t help but think of my friend Doug.

Doug worked for a roofing manufacturer and was successful until a gold digger caught his eye.  Not a woman, this gold digger was a large wholesaler of roofing materials.  He dreamed of how his life would be if only he could win this one customer: he offered special pricing, large discounts and payment terms.  He courted the company’s executives as one would court a beautiful woman: elaborate meals, fine wine, sporting event tickets and fishing trips.  He, and his boss, made decisions that were against the best interest of their company but so great was the prize that to them the risk was justified.

After cutting a deal with his new customer, Doug informed me that all of my purchases would now be through the wholesaler.  When I said no, that I wanted to continue buying direct, he responded that was no longer possible.  I told him that I hated to terminate a long-term business relationship but my future purchases would be from his competitor.

Like all gold diggers, within a couple of years the wholesaler struck a deal with one of Doug’s competitors.  Having burnt the bridges connecting him with his other customers, he had no business to fall back on and ended up broke and looking for another job.

Large accounts are as attractive as beautiful women.  Being able to sell millions of dollars of product to one customer is as alluring as Chanel No. 5 on a summer breeze.  To acquire, maintain and keep such an account, like winning any gold digger, requires an investment that will drain the suitor.  As an alluring woman understands the power she holds over a suitor, a large customer understands the demands that its suppliers will agree to: low margins; rapid service; extended pricing and payment terms; and, an expectation that vendors will grant credit on their terms.

Since a gold digger cares only about money, relationships mean nothing.  Similarly, the link between a gold digger customer and a supplier is meaningless.  No matter what the sacrifice, the terms, the favors, the dinners and fishing trips, once a better offer comes along, they are gone.

Albeit, sometimes later rather than sooner, most people know when they are going to be taken for a ride.  So why would any sane person attempt a connection with a gold digger?  With men and women, it is about possessing beauty, while in business it’s about gaining market share.  The belief that the larger the market share, the more efficiency gained, the better the margins and the greater the profits.

The truth is, gold diggers don’t care about anyone other than themselves.  A gold digger customer doesn’t care if its an efficient buyer; if your company’s margins are good or if you are making money.  Its management’s only concern is the bottom line and if moving to another vendor will enhance it, they will do so.  The gold digger will never allow a vendor recover the investment made in gaining its favor.  Consider this, it’s not to the gold digger’s advantage to allow a supplier to control a market.

A consultant I once worked with use to say that all businesses were basically the same: they buy, sell, keep score and endeavor to make a profit.  Endeavoring to make a profit, the last piece of the preceding formula drives the other elements of the formula.  Profit is the reason businesses exist.  It is a folly to chase a strategy that allows the hunger for market share—the allure of the gold digger—to replace the desire to profit.

Quote

The one sure way to conciliate a tiger is to allow oneself to be devoured.”-Konrad Adenauer

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