Putting the 'Green' into Evergreen Sales
BY Susan Greco
How one small company assessed the risk and payoff of setting up a strategic partnership with a customer.
Big customer approaches little supplier to set up a close ser-vice relationship. It's an enticing scenario, but before a small company jumps into a partnership, it should assess the risk and the payoff with "big brother." Such tactics paid off for John Argitis, president of G&F Industries, a maker of plastic parts.
A key customer requested a dedicated G&F salesperson to serve as an on-site inventory manager and technical troubleshooter. "I didn't think I could afford it," confides Argitis. He was accustomed to using commissioned outside reps who generated little growth but also little risk. Would the new arrangement produce additional sales?
Argitis told his partner what he'd need to cover costs, and he got an informal (read: unwritten) guarantee of $500,000 in business over the next year. Argitis installed the in-plant rep; after six years the partnership contributes about $2.5 million to G&F's coffers. In assessing similar deals with other customers, Argitis considers only accounts worth at least $1 million. Three major partnerships later, the Sturbridge, Mass., molder has grown sales from $3 million in 1987 to $15 million in 1992.