Date: Fri, 7 Apr 2000
From: "Michele George" <email@example.com>
Subject: Re: AMS-Forum TRUE STORY
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Andy Orlin wrote:
>Michelle, Do you advise your customers that 60%++ discounts (whether current or frozen rates) and waiving the 104 exceptions are hurting their chances at realizing their goal of consistent quality? What kind of response do you get?
My experience is that the small to midsize accounts recognize the direct relation to pricing and quality, but that the mega accounts tend to be negotiated by third parties or comptrollers that want to squeeze as much as possible from all of their vendors, including moving companies.
Actually, we have never had discussions with accounts advising them to have such a high discount. As a matter of fact, we were successful in having a couple of large accounts (500 plus moves) put the 104 back in place after "a certain auditing company" advised them to have the 104 waived. I do know that your own agency has many deeply discounted contracts. Pricing however, to a large company is a far more complex issue than you may think. The heads of purchasing are usually not to sympathetic to movers (their job is to save their company money). Case in point. We were consulting with a very large NA that had an EFFECTIVE discount of over 70% with some carriers. When we evaluate a customers contracted discounts,we use the 104 of each carrier to find the true discount to the customer (your actual discount will always be different than what it is to the customer) In this case, the account's current contract has waived the 104. This created a disparity in rates as much as 5%-12% in some of the pricing models between van lines. The NA knows his discount is deep but there is never a shortage of movers calling on him for the work and his service level is actually not that bad. Some of his movers actually told him he had a "cherry" account and they loved the contract (2 carriers to be specific). Meantime, the other carriers who understood reality told him there was no money in the contract. According to the decision maker, these were the same movers offering him ski trips and taking him to lunch in a Mercedes. Here's the point. He doesn't really know who to believe or trust because of the difference in equivalent discounts and stories being told. Even if we tell him (and we did) his discount is too high, how do you expect this person to lessen his discount? How does he tell his Boss that although they get "good" service (as per his mover's own reports) and there is no shortage of movers who want to handle his moves, that they should concede hundreds of thousands of dollars back to the movers? Its just not that easy. We have been at the "tables" with many, many NA's and this is a consistent theme. Part of the problem is the disparity in the base tariff and the rates filed by the carriers. The 400 does not accurately reflect the majority of van line's filings and creates an "air" of mistrust. It is difficult to explain to an account why van line "1" has filed schedule "D" in Atlanta and why van line "2" has filed schedule "B" while the ATC's range from $1.75 to $4.85. This explains why a lot of NA's are now asking for the 104 to be waived. We have been creating new tariffs with standardized rates, taking into account the "true" needs for the area. It has been very successful. So Andy, this a long answer to a short but intelligent question. Please feel free to call me to discuss further. Those who know us and our service understand our position.
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