Sales Blog with Sales Tips

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Unintended consequences are things we don’t intend to happen. The federal government is infamous for this.

An example. The federal Cash for Clunkers program resulted in a net increase in car sales of only 125,000 cars – at a cost to US taxpayers of $24,000 per vehicle (see Further sales tips reading below).

I don’t mean to pick on the federal government (well, maybe a little bit), but the truth is that unintended consequences occur in all areas of our lives. They also, as you have already guessed, occur in sales.

Unintended Consequences In Sales Are Accidental, But Avoidable
We’ve all seen salespeople heading toward a customer three-car pileup with the best of intentions. You might see the danger ahead, but they’re completely unaware of what lies in front of them.

While they don’t mean to blunder, they could have avoided the unwanted problems by thinking ahead. By projecting where their current course of action is leading and consulting with the more senior members of their team for advice, a customer car wreck might be averted.

6 Common Unintended Consequences In Sales

1. Overdoing the “friendly” part of sales can frequently backfire on us. Customers hate disingenuous people. Customers realize you don’t care about them that much.

2. Asking prospects intensive qualifying questions can put them on the defensive. No one likes being backed into a corner. This occurs so frequently that I’m planning on writing a sales tips post about it in the upcoming weeks.

3. In order not to offend customers, we frequently don’t introduce additional products and services to them. “This customer is buying $35,000 per month from me of product X; I don’t want to rock the boat by pushing for more.” This guarantees they will be looking at your competitors to find other products that you’re afraid to sell them because it might be offensive.

4. Pushing for a close is so 1950’s. Again, no one likes being backed into a corner. When this happens, customers bring out the heavy artillery loaded with plenty of objection bullets.

5. Don’t most of us already know that talking badly about the competition always cheapens us and ironically gives more credibility to our competitors?

6. Selling to a non-decision-maker (e.g. recommender, information gatherer) makes us feel good because it’s easy and we feel we’re making real progress. Nothing could be further from the truth. We’re in fact wasting our time and alienating the real decision makers because: a) They don’t think we’re smart enough to figure out who the real DM’s are, and b) They think we perceive them as unimportant.

Sales Tips Wrap Up
I’ve identified six of the most common unintended consequences in sales. Believe me, there are a million more. Unintended consequences are costly to us. They are preventable if we take the time to stop and think where we are heading and frequently collaborate with the more experienced members on our team.

Further sales tips reading:
Cash for Clunkers Results Finally In

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>©2010 Scott R. Sheaffer

Scott Sheaffer’s New Book, “Comatose Management”
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Six Short Stories of Destructive Management Practices, Volume I
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Available in printed and Kindle edition on amazon.com
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The right of first refusal. Fancy sounding words for a sleazy practice in purchasing.

Right Of First Refusal Defined
Right of first refusal simply means that once you provide buyers with pricing, they will show this information to their incumbent supplier (i.e. your competitor) to see if they can beat your price. Not too competitive is it? Seems unethical to me.

If you’re in a business that does a lot of bidding (e.g. construction), you see this all the time. However, all products and services are susceptible to this practice.

Right of first refusal is like an iceberg. You just see the tip. There is significantly more “price sharing” going on than you realize. The majority of buyers never divulge that they are providing your competitor with your pricing.

The Reality
You’ll probably be in agreement with me when I say this practice should be illegal. It smacks of collusion, monopolization, restraint of trade and a bunch of other $1.95 words. Have I mentioned that it’s sleazy too?

Rest assured the Purchasing Managers Association is lobbying heavily to ensure this kind of legislation is never passed.

Unfortunately, right of first refusal has been around for a long time and isn’t going away.

Hang On A Second
Before we get too angry at  purchasing types, let’s remember it takes two to tango.  For this little game to exist there have to be sales professionals who too quickly reveal price information to buyers. This data is then added to the buyer’s pricing spreadsheet. Cut off buyers’ information sources and this little charade ends.

3 Sales Tips For Managing Right Of First Refusal

1. Just because a prospect asks for a price doesn’t mean you have to give it to them. Qualify them first.
2. If you can’t establish some kind of benefit for the prospect to do business with you other than price, move on.
3. Prospects that have strong, long-term, established relationships with incumbent vendors should not be given any pricing until you completely understand the competitive landscape. Don’t provide pricing to these prospects unless you can get them to see an advantage of doing business with you versus the incumbent.

Sales Blog Epilogue
Whenever prospects ask for price, they are usually comparing you against an incumbent supplier. If you’re less expensive, they will use it as leverage with the incumbent. If you’re more expensive, you’re history.

I know it’s hard to stand up to aggressive buyers who are insisting on quick pricing. But hold firm. You win more business ultimately by first establishing value, not by spewing out prices. Make prospects earn your price quote.

Further reading:
Has Price Quoting Made You A One-Trick Pony?
Stop Being A Wimp And Start Defending Your Sales Price
Training Your Customer, Part 1 of 2

>You can automatically receive Sales Tips Blog by Scott R. Sheaffer >by email< or >by RSS<.
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>©2009 Scott R. Sheaffer

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“Scott, I really like your sales blog and the people in my office do too. The reason I’m writing is to ask you about something a lot of my customers are doing. They are eliminating vendors by just picking a number of us to get rid of. One will say they’re getting rid of 25% and the next will say 60%. I’ve lost three good customers because of this. What’s going on and what do I do? I feel like throwing in the towel. Bryan K.”

You’re Not Alone
Bryan, thanks for this excellent question. First, I want to tell you that you are not alone in your concern. This trend is rampant and is being encountered by many of your peers. I’ll provide some ammo below on how to fight back.

What you’ve asked about is called supplier reduction or vendor consolidation. It’s been around for years, but has become popular lately. It’s a process in which companies segment their buying areas and limit the number of vendors or suppliers that can service each of those areas.

Why Companies Implement Supplier Reduction Programs
Reasons for initiation of a supplier reduction program run all over the map.

It’s trendy. Who doesn’t want to be doing what his or her CEO is reading about in the Harvard Business Review?

It’s metric heaven. That’s right; everything has to be measured these days. I’m not sure the information is actually used, but it’s measured nonetheless. What Purchasing Manager can keep track of hundreds, or even thousands, of suppliers? You may have noticed that some of your customers are providing you with a supplier performance report. Reports take time.

Having fewer suppliers means lower administrative costs. Companies hate their own purchasing departments. All they do is spend, spend and spend. On top of that, they have to be paid a salary to buy things. If the number of suppliers is reduced, the company can shrink the size of the purchasing department.

This next one is nothing but simple math. If a company is buying $10,000 per month from ten suppliers and reduces the number of suppliers to two, they are now buying $5,000 (versus $1,000) per month from each of the remaining suppliers. The company now has much more leverage over the survivors.

We’re in a recession. Companies want to rely on suppliers that are financially stable and well run in their eyes. Small suppliers are finding it hard to make the cut in this environment. Heck, people are buying Fords because they think GM is wobbly. It’s tough out there.

Sales Tips For Selling In A Supplier Reduction Gone Crazy World
Remember, there is nothing new under the sun. This concept has been around for a long time and there are things you can do to respond.

One of the first things you can do is wait. Recent research has shown that the pendulum is starting to swing the other way. Many companies went a little too far in their reductions. Too much of a good thing, I guess.

Be proactive. Instead of waiting for your customers to tell you how you’re doing, you go first. Create your own performance reports and meet with the customer once a quarter to go over their results. There are numerous software packages available to help you with this.

I’ve always preached cross-selling. If there ever were a time to cross-sell, now is it. The more you sell to your customer, the less likely they are to give you the boot. They will ultimately depend on you. If you’re a shrink, a patient who is dependent on another person is a bad thing. If you’re in sales, customer dependency is great.

If you work for a big established company, then make sure you advertise that. If you don’t, then make sure you look professional and stable.

Ensure you are investing 80%+ of your time with your customers that are providing 80% of your income. Now is not the time to be messing around with high-maintenance low-volume customers.

Sales Blog Epilogue
Thanks again for your question, Bryan. You don’t have to be a victim of this trend. Use the sales tips above and get back in the game.

Further reading:

• 8 Reasons To Think Twice Before Selling To Really-Big-Companies

>You can automatically receive Sales Tips Blog by Scott R. Sheaffer >by email< or >by RSS<.
>Follow >Scott R. Sheaffer< on Facebook, LinkedIn or Twitter.
>©2009 Scott R. Sheaffer

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Are you satisfied with your sales results?
Kay Ray can show you and your team how to reach
your objectives and unlock the door to success.
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There is a universal buyer behavior shift that quietly started about 1997. It is a change that is profound, permanent and growing. It has already affected every sales professional reading this sales tips blog. One of the least endearing characteristics of this transformation is how it is concealing itself inside our current economic circumstances, while its effects become increasingly far reaching.

I call it Buyer 2.0™.

Malcolm Gladwell, author of The Tipping Point writes that “The best way to understand the dramatic…changes [we see in business]…is to think of them as epidemics. [Seemingly insignificant] ideas, products, messages and behaviors spread just like viruses do.”

The Foundation For Buyer 2.0™
Let’s review some buying trends over the last few years that don’t appear to be abating whatsoever in consumer or business sales.

Walmart’s continued strong growth is one of the biggest indicators. It is the largest corporation in the US and by far the largest discount retail store. It has achieved this status not through any kind of traditional value selling; they’ve done it through pricing. There is no “buying experience” or added value at Walmart.

The proliferation of “big box” stores like Sam’s and Costco has taken the Walmart concept and put it on steroids. You go, you buy bigger quantities than you need, you pay cheap prices and you leave. You’ll have to carry your stuff out in your hands (literally) if they run out of trash boxes to give you to carry your purchases. These stores are everywhere.

The “cattle call” airlines like Southwest only offer low prices, a bag of peanuts and a destination.  Their load factors and profitability are better than the more conventional airlines.  They offer a bus ride with wings that cheaply gets you from A to B.

Shopping.com and Amazon.com have made shopping for price almost stupidly easy. These websites do all the work of finding the cheapest price and their traffic is growing rapidly.

Car companies are increasingly moving away from the $30,000+ car segment and focusing on the less than $20,000 car buyer. These cars were being designed before the current recession. How do we know that? Some of these inexpensive cars will be available within the next 12 months; car companies take at least 3 to 4 years to design and build a car. Automobile manufacturers have to be hyper sensitive to buyer trends – obviously some do a better job than others do.  Simply stated, some car manufacturers are already aware of Buyer 2.0™.

Ski resorts are starting to charge skiers according to the condition of the snow. Good snow – higher price. Bad snow – lower price. Skiers are more interested in the price of the skiing, not how cozy the ski lodge is.

There are sports venues that adjust ticket prices according to the standing of the visiting team and importance of the game. Playoff game – higher price. Preseason game – lower price.

Buyer 2.0™
As sales professionals we have historically viewed price objections as the most commonly stated objection. While this is the objection we hear most frequently, we also know that research indicates it actually falls to number 5 behind availability, risks, service and quality on the list of the buyer’s real decision criteria.

However, are we seeing a significant renumbering of these criteria that pre-dates the recession? Is price no longer number 5 and covertly moving up in the rankings? My answer to both questions is yes.  This is the essence of Buyer 2.0™.

We’ve Been In Denial
There’s nothing new here; it was inevitable. The Internet has taken all of the sales professional’s pricing secrets out of the closet. Burglars like to operate at night because they’re more effective when undetected. Our current recession provides a perfect cover for this swiftly building trend, which started over 10 years ago. It was around 1997 that the general population was becoming familiar with the wealth of pricing information available on the Internet. This was the genesis of Buyer 2.0™.

Sales Tips For Responding To Buyer 2.0™
The first thing we must do is understand that this is a change or evolution in sales, not the commoditization of all products and services. Sales has changed dramatically in the last half century. This is but one more of those changes. We are not all destined to become unemployed salespersons or lose our jobs to e-commerce websites.

However, to continue forward as if nothing is changing would represent a dismissal of reality. Companies and sales professionals can adapt and thrive by recognizing the following:

Companies will be required to get very serious about controlling costs and increasing efficiencies. In other words, provide the same product/service but at a very competitive price, much like our global competitors are already doing.

Sales professionals will legitimately need to understand and demonstrate ROI (Return on Investment) and TCO (Total Cost of Ownership). Buyers are increasingly demanding performance metrics from vendors.

Differentiation of your products and services in the market will become more important and heavily supported by marketing.

Marketing departments will play an increasingly important role as the town criers of value and price competitiveness. They can no longer merely print nice and colorful product/service collateral materials.

Bundling, kitting and packaging of products and services will be a way to recover lost margins in a discounted pricing environment.

Purchases will be pushed down to lower-level decision makers. Sales professionals will have to more effectively deal with purchasing departments since Buyer 2.0™ will mean a swing back that direction. This is a change that is already being seen in many companies.

Contractual purchasing agreements will become more common, even for smaller customers.

Selling service can be a safe haven in many selling situations. I’ve always felt that no 2 companies offer the same service. This makes it difficult, if not impossible, for customers to shop price when it comes to service.

Sales Tips Wrap Up
It was unavoidable. The Internet has put the seller in a more difficult position when it comes to pricing. The recession has made it seem that this is a recent phenomenon, but it is only hastening a pre-existing trend.

Further reading:

• Attention sales representatives, the Internet is not replacing you
• Has Price Quoting Made You A One-Trick Pony?
• Collateral Material, Sales Brochures, What a waste!
• Kits, Assortments, Bundles and Packages as Selling Tools
• Service Providers – Don’t be so Quick to Discount

>You can automatically receive Sales Tips Blog by Scott R. Sheaffer >by email< or >by RSS<.
>Follow >Scott R. Sheaffer< on Facebook, LinkedIn or Twitter.
>©2009 Scott R. Sheaffer

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Are you satisfied with your sales results?
Kay Ray can show you and your team how to reach
your objectives and unlock the door to success.
thekayray.com