Stopping End Users from Shopping QuotesBy: John Honovich, Published on Aug 28, 2012
Nothing is more frustrating to an integrator than spending dozens of hours preparing a design / sales proposal and then having the end user take it and shop it to the integrator's competitors. This practice is increasing, fueled by the ease of sharing across the Internet. Many bemoan it as simply a fact of life. In this note, we look at three practices to help rectify this practice.
We will review each one in order:
- Charge end users for the design proposal, offer them a 100% credit on purchase of system integration
- Include terms and conditions restricting sharing the proposal to any third parties
- Combine these two options together as contrasting offer
Charge the end user for preparing and submitting a formal design proposal, including camera selection, location, network layout, etc. Often the charge is between a few hundred dollars and few thousand dollars, depending on the scale of the system desired.
If the end user chooses to buy from the integrator who designed the system, the integrator will offer a 100% credit against the system being deployed so the end-user essentially gets the design for 'free'. If the end-user goes elsewhere, the integrator at least gets paid for their design works.
The upside is obvious - it protects the integrator from doing free work. However, the downside can be significant. The end user may simply reject the integrator from the start and find one of the many other integrators willing to do design work for free to increase the chance of winning a deal.
Terms and Conditions Restricting Redistribution
Give design proposals to end users for free but include terms restricting end users from sharing the proposal with any third parties. This eliminates the barrier of having an end-user pay but increases protection for the integrator against being shopped around.
Raising this can be tricky as it is not something a user commonly expects. An integrator could:
- Formal contract: Put it in writing and make the end-user sign. This provides the strongest legal defense but will increases end user fear to commit formally.
- Verbal agreement: Simply explain and have the buyer agree verbally ('gentlemen's agreement'). While this weakens legal strength, it does set clearer expectations and can encourage the user not to shop. A follow up email from the integrator confirming the discussion can help reiterate the agreement without having to sign legal documents.
Most integrators would be better served with a verbal exchange rather than a signed contract, as it is more likely to be well received and it is imprudent to sue prospects anyway.
The Combo Option
The best approach may be to offer these options in combination, allowing the end user to either pay for the proposal, allowing them to shop it around or to simply agree that they will not redistribute it. What we like about putting them together is that it establishes a clear value for the integrator's design work without forcing the user to pay it. If an end user really wants to shop the design proposal, let them see that it has real value. Encourage the end user to see the design work as a critical differentiator and not something thrown away to get business. Indeed, even the user would be better off as a shoddy, poorly thought out design is likely to cause far more critical problems later.
We believe that many customers are either unaware that this is a problem or, at least, would be more respectful if integrators clearly but politely set better expectations.