One thing I’ve learned over the years is that, if you tip after you’ve received great service, you’re not “paying” for great service any more.

You may need to think about how to apply this to business, but it probably falls into the camp of thinking ahead rather than being wise after the event.
On holidays, I always tip the guys who find you sun loungers by the pool on the first day and I make it a substantial amount (in the scheme of things that is, e.g. £20). Unsurprisingly, for the rest of the holiday, they tend to spot me as I arrive at the pool, find or point me to sun loungers they’ve already reserved and, if at all, I only need to tip them minimally again.

Perhaps I’ve been lucky, but this system has never let me down. In my opinion, it’s more efficient than giving the guys a few quid, hoping each day that they come up trumps (especially as they don’t know who you are and have no reason to remember you) and then rewarding them at the end of the holiday when they can do nothing more for you.

How I’ve applied this in business has been similarly effective. Customers have often dangled small pieces of business in front of me with the promise of bigger, better business to come. Invariably, they want the first piece to be cheap with you showing them how keen you are to secure the next supposedly better part. Not only have you set a bad precedent regarding your price (and therefore profitability) but you may never receive the big prize anyway.

In addition, given that the first part is a marginal piece of business, you’re hardly likely to rally the whole company round it, throw extra resource in (given the lack of profit attributable to it anyway) or prioritise it.

One way I’ve awarded business much more effectively has been to give the first part at a great margin of profit to the supplier. This lets them show you at full strength everything they’re capable of. It endears the supplier to you rather than creating resentment from “having to do this piece of business for no profit” and gives you a positive lead in for the future.

Importantly, when you’re negotiating the price or fees for the bigger piece of business, you have more leverage to reduce the price you’re paying as you can say “I’m a great customer, come on!”, “You’ve made profit from me before” and “You know how we work now, so you’ll be able to figure out where you can reduce costs (without cutting corners) and still make a profit”.

You can read more from Mark Mills in his book, ‘Natural Born Entrepreneur’, available for free download at: https://www.mark.tv/natural-born-entrepreneur/free