Everyone Hates the MiddleMan
Do You Just Markup Your Vendors or Do You Add Real Value?
I’m sitting on the plane ride home from the BizBash West Expo, where I gave a 3 hour workshop called “The Business Accelerator for the Independent Planner: Best Practices for Building Your Event Company”. (The next one is in Chicago on August 18th, then in NYC on October 19th). I’m in the aisle seat and am having a bizarre episode with the man sitting in the middle seat next to me that is reminding me of an interesting discussion we had in our class on marking up vendors.
Maybe “episode” is the wrong word. Here’s the thing: we’re in a row of three seats, and the window seat is empty, and for some bizarro reason, this guy refuses to move to the window and give us both an empty middle seat. I gently give him more and more of my elbow on the shared armrest, but he’s dug in. Now I’ve highlighted this paragraph and doubled the font size of it, hoping he’ll read it and take the hint. But now he opens his smart phone and it’s all in Chinese, so I’m fighting the tide. If there were someone sitting in the window seat we’d have no problem, but because it’s empty, it’s driving me crazy.
What does this “middle man” have to do with my class? Well, when we got to the section on pricing models, we had a whole discussion about how to prove value when you’re marking up your vendors. One guy lamented that, “my resources are my biggest assets. What happens when my client wants to book them directly?”
That’s one of the biggest challenges of using the markup model. But it goes much deeper. I told him his first task is to really hone in on the value he brings to the table above and beyond just bringing in subcontractors, because if all the client thinks you’re doing is marking up a vendor, you’re just a middleman, and nobody likes a middleman.
Why? The middleman is perceived as an obstacle to efficient pricing and fluidity in the marketplace. Why should goods and services have to make a pit stop at the middleman on their way to the end user? Seems like a waste, which is why one of the best marketing slogans ever invented was “we eliminate the middleman.”
So if you choose the general contractor business model, you need to counter this perception. Here’s a few ideas we came up with that you can say to your client:
- “I don’t just find my vendors, I manage them. For every vendor proposal I forward you, there are 3 others I kick back to him because I know they’re not what you want. I filter out everything that’s off base, saving you lots of time and aggravation.”
- “I carefully evaluate and select each vendor for a specific job at a specific time. The caterer I chose for your product launch might not be right for your gala dinner. And they might not even be right for your next product launch in six months if I hear their chef left the company. Some vendors work well in certain venues and not others. Etc.”
- “I know my vendors’ idiosyncrasies. Some of them are always days late with their proposals, others leave key things out of their budgets, etc. We compensate for that and isolate you from these headaches.”
Of course they can’t be empty promises. You’ve got to actually DO all that stuff, but if you do, you will in fact be making a solid case for why vendor services are being run through you on their way to the client.