Getting a Big Company to Choose Your Services: How to Make Yourself More Valuable Compared to the Competition
“But they need me,” Deanne whined. “I just know that if I can just get in front of the right people I can get a big contract.”
Deanne runs a general staffing company. She’s a one-woman shop based in Houston. Her annual revenues were close to $1m. Not bad for a woman-owned business. Not at all, given that only 2% of women’s businesses reach that mark. Deanne’s customers ran the gamut from small companies to larger ones, and she handled every kind of personnel request imaginable. A one-stop-shop, she liked to think of herself.
However, she had hit a wall.
Claim Oil (not the real company), which had reached $16 b in sales due to rising gas prices, wasn’t interested.
Deanne was beside herself.
She had met one of their supply chain executives at a conference the previous spring. That executive had shown a lot of interest, and promised to do what she could.
Deanne had an impressive story indeed.
Deanne was a minority. She’d pulled herself up by the bootstraps from being hardscrabble homeless, living in the back of a car with two kids, to hiring a number of employees whose circumstances had mirrored her own. She’d gone through all the hoops to get certified as a minority and woman-owned business. In every way she was a superb success story, a competent business woman. And, a local hero, for good reasons.
Why couldn’t she get a contract? What on earth was the matter with these people? I thought they were committed to diversity in their supply chain.
Claire (not her real name), the supply chain executive, had been deeply impressed with Deanne’s story. In fact, so much so that she had rushed back to her office, excited about the possibility of creating potential work. Claire was still new to her job, and was eager to bring in high-potential suppliers to meet the company’s stated intention of doing business with protected classes. After all, she knew that Claim Oil did plenty of business with personnel agencies.
She approached the buyer who had the responsibility for these agencies and asked why Deanne wasn’t being brought in for an interview. The man smiled and motioned for her to join him at his desk. With Claire looking over his shoulder, he pulled up the list of potential suppliers:
Twelve hundred companies.
“There are 20,000 personnel firms in the United States,” the buyer explained. Some 40,000 offices, and that’s just in America. Many more world-wide. Everyone wants a piece of our pie. The problem is that everyone claims to be able to ‘do it all.’ When Deanne can show us that she specializes in the oil industry, and has the deep knowledge that comes with that specialization, then perhaps we can talk. Otherwise, she’s just like everyone else on this list.”
The term for this in supply chain is an “overcrowded commodity.” That means that the lane is so jammed with competitors that it’s nearly impossible to get in the door. That’s especially with very well-established, much larger companies having already locked in prime Tier One status (a company that deals directly with the company, but can offer work to subcontractors, which are Tier Two suppliers).
Personnel is probably the most crowded, in part because the barrier to entry is low. Unlike manufacturing, for example, which takes considerable capital investment, this kind of service allows people like Deanne to leap right in and build a business. Which, of course, is why there are so many of them.
The buyer points out the essential piece that so many of these companies are missing: specialization. With thousands making identical claims to guarantee the best people, best fit, best skills, it becomes a cacophony of one notes. Nobody stands out.
Except for one thing: an agency that does nothing but oil and gas.
And here’s the piece.
The staffing company that chooses a single lane, learns the business, the people, the players, the personalities, the challenges, the trends of that business transforms who they are and what they can offer. Suddenly they are working with Claim Oil as an informed business partner. They can anticipate trends, help Claim locate the best people, cherry pick as necessary and act as a high-level consultant and strategic business partner. That’s because they’re staying up on the news even faster than many managers inside Claim can, because Claim Oil is a bureaucracy. A good firm is twelve steps ahead at all times. They can advise Claim on potential retirements, needs for engineers and highly skilled folk which are going to be in high demand.
Let’s say for example, such a specialized staffing firm only operates in the East Texas/Louisiana area, and focuses primarily on oil rigs. Imagine how a buyer might react to a supplier who can say this:
We’re the only oil and gas staffing firm that specializes the regional oil drilling personnel needs of Louisiana and East Texas.
Imagine that this particular buyer is plagued with those very issues. Just how fast do you think said buyer is going to ask this firm to get into their office to discuss the potential of a contract? Precisely. This kind of thing is music to the ears of those with pressing issues: when you can speak directly to their needs, understand their world and get them measurable results. Your value isn’t measured on whether or not you’re a minority owned firm, but whether you can deliver much-needed solutions.
Let’s be frank here: cost savings and profitability will likely trump the PR factor of doing business with protected classes almost every single time. Deanne has a great story. It’s irrelevant to profitability and results. It’s great local article fodder but that’s only after the company has been hired on the basis of her value to the bottom line.
Because each industry is so massive, it’s impossible for a company the size of Deanne’s to make the claim that they can “do it all,” which is very common in the industry. That’s the majority. When a staffing company commits to building the knowledge base, expertise and relationships which allow them to get a company the size of Claim Oil to secure the very best people in the business, they are priceless.
While that’s not the only strategy (capacity is another, but I’ll get to that in another article), specialization is key. This is particularly true in very crowded commodities.
How crowded? Here’s an example: at a speech I did in Detroit on this topic, a senior executive at one of American’s top car makers said that he had recently put a message on his phone that stated flatly:
If you are a staffing company, hang up now.
That should be sufficient evidence that your business lane is so competitive that you need to find a way to do something nobody else is doing. (Again, fodder for another article. Stay tuned).
This isn’t to say don’t try- but let’s be clear. If you are a one-woman boutique firm hoping to be a Tier One staffing supplier to Chevron, I might hasten to dissuade you from your ambitions. Not only will that never happen but you will go bankrupt trying. What this shows is an extraordinary lack of sophistication and understand of your market, their world, and what it takes to play at this level. (I’ll outline a strategy in another article. Looks like I have my work cut out for me here….)
Are contracts possible? Of course they are. But as in Deanne’s case, she is making excellent money in her current lane. If she harbors the conceit of doing business in the F100 sphere, it’s going to take years and commitment on her part to build the highly-specific expertise that could potentially make her invaluable to the company.
Otherwise, it might make better sense to continue to be successful where you are, and expand into different, but similarly-sized markets. The F500 isn’t for everyone. But there is plenty of business to go around if we point ourselves in the right direction.