In the world of sales, there are often no right answers. What would you do in this tough sales situation? Make the call below, and see instantly how your judgment compares. Final results will appear in LBM Journal. Be sure to check back next month for a fresh Tough Call.

Tough Call - Penny Foolish

Life’s been good to you so far as the second-generation owner of Eagle Lumber. With five locations operating locally and in nearby markets, Eagle Lumber has established a reputation for quality products, personalized service and for treating your builder customers as partners. You’ve never been the cheapest in town, nor do you aspire to be. Instead, you want to help your builder customers build good, solid homes as efficiently as possible. That strategy worked great for you, for your customers and for new homeowners. Until now.

Within the past two years, a major pro chain and a big box yard have entered your market. Both want what you have—the area’s top builders—but have been unsuccessful in getting them to leave you, their tried and true supplier.

Last February, Sam Penny, the top builder in the area retired, transferring the ownership of Penny Builders to his son, George. Once the transfer was complete, George made clear that it wasn’t going to be business as usual. He was right.

George (or son of Sam, as you now think of him) has made a practice of taking your bids to the competitors and asking them to beat the price—line by line. He actually takes the time to dismantle your bids completely, and comes back to buy just the products that you were lower on. With the competition anxious for the opportunity to finally secure a major local builder, they’re being very aggressive on price. As a result, you’re supplying just a few random low-margin products.

You’re tempted to just stop selling to George altogether, since his business is likely costing you more than it’s worth. The fact remains, however, that he is the area’s top builder. His company puts up as many homes as the next two builders combined. Cutting him off could alienate him, which could develop into a grudge against your company. And you don’t want that.

What would you do?

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