The quotation of AAK Hydraulic Valve is based on 3 DO Principles and 3 DO NOT Principles, and won the appreciation of the World Top 500 Companies with Pattern and Thinking

China [CN]

A hydraulic valve giant came to talk business with you. Have you started to panic? If the other party places a large order of 1 million US dollars, which is a big business and also a big customer, what should be done to him, such as credit and price reduction? It seems to be not calm. From the perspective of quotation, I listed 3 DO principles and 3 DO NOT principles for myself and our sales department:

1. We do not pursue windfall profits, but take reasonable profits.

2. We do not do market common goods, but only benchmark SUN, HydraForce, HAWE, Honeywell and other first-line hydraulic valve brands.

3. We do not give rebates, but only provide hydraulic cartridge valves with the best cost performance

In fact, many people don't understand the concept of cost performance. They think that cost performance means cheap. To understand it simply, we can use a formula: product unit price/product life=cost performance. For example, for a certain hydraulic valve, the price of Factory A is 100, and the service life of the hydraulic valve is 12 months; The price of AAK is 120, and the service life of the hydraulic valve is 24 months. The cost performance ratio of Factory A is 8.3; Similarly, the cost performance ratio of AAK is 5. This is the root cause of AAK hydraulic valve's insistence that "although the price is 20% higher, the service life is twice that of its peers". Of course, price negotiation is not only a mathematical calculation, but also requires pattern and thinking.

Let me start with myself. 13 years ago, I produced hydraulic cartridge valves for trade and earned 100,000 US dollars. Of course I was happy. Later, after several years of accumulation, I made a total of 1 million US dollars, which is even more pleasant. If, after a few years or over 10 years of hard work, I have earned 10 million or 100 million yuan. Although I can't earn this money at present, think about it. As Jack Ma of Alibaba said, "Dreams must exist in case they come true". Let me take this order of magnitude as an example to analyze. When you make 100,000 yuan, what is the scope of your thinking if you buy something? What is the scope of your thinking after earning 1 million yuan? By analogy, with 100,000 yuan, the way of thinking must be different from that with 100 million yuan. When you have 100,000 yuan. would you like to buy a yacht? No. When it is 10 million or 100 million, the idea will be different. A basic truth is that when we talk about business and price, it is actually related to the cognitive pattern and is determined by the money we earn.

10 years ago, Honeywell, one of the world's top 500 companies, came to talk about hydraulic manifolds with me. They were satisfied with the first 2 trial orders, and were ready to increase the purchase from AAK hydraulic valve. The buyer specially emphasized that the delivery date should be accurate and the quality of the hydraulic valves should be good. I asked him how to understand the good quality of the hydraulic valves, and he said that just the current quality, same quality as the trial orders. The quality shall not fluctuate. It can not be the case that the first batch is good, but the third batch is not good. I don't require the quality to be best, but cannot fluctuate. At that time, I realized that the customers of industrial products wanted stable quality with fewer failures, rather than the best quality. For example, the hydraulic valve is of good quality at the beginning, but a few months later, some screw thread was adjusted, some seal ring was replaced, and the manual assembly was not in place sometimes. Although these are minor faults and can be solved as soon as possible, they are very troublesome. This refers to  reliability, and they will not need to be reported for repair within a year or even longer.

When talking about prices with key customers, what pattern and thinking height we should have. Take this buyer of Honeywell as an example. Because I had done business with him 3 times, I prepared some kickbacks for him privately according to the convention. He said no, really no. He said, I purchase more than 100 million yuan a year totally, and just more than 1 million yuan a year from you, why should I take rebates? When 1 million yuan of business is given to you from the Fortune 500, if you think this is a big customer, you should offer a low price,  give rebates or something others, you think too much and think wrong. For the Fortune 500 or the global first-line brands, in fact, they are most concerned about your quality and service. As for the price, as long as it is not exceed their authority, it will be OK.

If you used to do small business, it is difficult to do big business. Do not use the thinking of small boss to measure big customers. If a customer only purchases 2 million hydraulic valves a year, and 1 million are purchased from you, he will pay close attention to price negotiation. This has no comparability with the purchase of more than 100 million yuan a year totally but just 1 million yuan from you by the Global Top 500 companies. In his eyes, he didn't raise his eyebrows for 1 million yuan, and he didn't want to bargain with you, which is also the reason for doing business with a high-quality customer. 

In the process of our enterprise development, we will certainly encounter big customers to talk with you about business. Don't think of an elephant in your mind, because fixed ideas are flawed and difficult to eradicate. In general, if we often talk business with small customers and small bosses, our pattern and thinking will be limited. When encountering a big customer, we will not be confident and are afraid of big customer running away, and blindly compromised. In the end, the quality was not guaranteed, and the business with the customer died.

Enterprises move forward in waves, from high to low. This is also a problem for small enterprises. For small boss, once business is good, the whole world seems to be mine. Once the business is poor, the end of the world is coming. He will be thinking hard about whether his price is too high and has more requirements for customers, so he starts to feel uneasy. Of course, this psychological quality also depends on whether you earn money. If you earn money, your psychological quality will be better. If you can't earn money, your psychological quality will be worse. Nothing can be insisted on without a sense of achievement.

AAK hydraulic valve, adhering to the 3 DO principles and 3 DO NOT principles, originates from the support of the world's top 500 companies. 

https://www.aakindustry.com/info-detail/hydraulic-cartridge-valves-416