Sales Blog with Sales Tips

I’ve heard a variation of the following statement many times (not as much lately though).

“I had to pay $1,937,000 for my 850 square foot two bedroom home in California and it was 25 miles outside of LA! And it isn’t even a very nice home! The commute is horrible!”

Keep in mind; these individuals are boasting. They can hardly contain themselves. There are sales lessons we can learn from this kind of buyer behavior.

First, The Ironies
There are a number of apparent ironies when buyers express these sentiments.

• I can’t think of another area where people are so delighted by overpaying. Usually we brag about just the opposite.

• Spending too much money for something doesn’t normally make one look particularly intelligent, just pretentious.

• We all know that if people really have money, they don’t need to talk about it. Talking about it detracts from their intended objective of impressing.

Sales Lessons We Can Learn
The power of time frame. Until recently, homes in California were appreciating. Buyers felt that delaying meant an increase in price. This is a strong buying motivator.

While our products and services may not be dramatically increasing in price, opportunity costs are being incurred and benefits are being lost the longer a buyer waits. We must educate them on these costs and benefits (i.e. return on investment).

The power of perceived value. MBA marketing types spend their whole careers getting us to see value in a product beyond what is actually present.

When we package products or services in such a way that buyers are overwhelmed with the value (as CA realtors have historically done), this increases the got-to-have factor.

People understand they’re going to pay more for what they perceive as added value. Despite what neophyte sales professionals may think, price is most assuredly not everything.

The power of brand – yours and your company’s. Buyers associate themselves with the products they buy. They also associate themselves with the sales professionals who sell them these products.

Customers prefer to have a good feeling about the brand they’re buying and the person they’re buying it from. Who doesn’t like the idea of owning a cool home in California? Whether this feeling is based on logic has no bearing; it’s based on feeling.

Ever wonder why residential realtors dress so smartly and drive Cadillacs?  This is why.

Sales Tips Wrap Up
This sales tips post points out three important buyer behaviors:

1. Either gaining or not losing money will motivate a buyer.
2. When value (whether real or not) is aptly demonstrated, price becomes a secondary issue.
3. Buyers associate themselves with the products they buy and the people they buy them from.

Further sales tips reading:
Has Price Quoting Made You A One-Trick Pony?
Dress for Success and Watch Your Posture

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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 most trustworthy phrase in the English language is, “Everything is negotiable.” When our customers push us for better pricing, or some other concession, we can’t condemn them. Horse-trading has been around since Adam and Eve asked God if they could get a “do over.” We all know the answer to that one.

The Customer’s Perspective
When customers are negotiating with us, it’s how we respond to their haggling that can make all the difference. We forget the following when negotiating:

• Most customers have only primitive negotiating skills, at best.
• They’re just throwing stuff “out there” to see if we’ll bite on some of it.
• Their company requires them to ask for certain concessions.
• They intend to buy from us, even if we don’t give them a green light on their last minute requests.

In short, they think, “Why not ask? We have nothing to lose.” And they’re right.

Wrong Way Example
Customer: “Debbie, we’ve been customers of yours for three years now. We’d like to get a 20% price reduction on future purchases.”

Wrong Way Salesperson: “You know I’m already giving you the best price I can.”

This customer is now quite unhappy with this salesperson. Why? Because the customer doesn’t feel heard. They feel “blown off.”

Right Way Example
Customer: “Debbie, we’ve been customers of yours for three years now. We’d like to get a 20% price reduction on future purchases.”

Right Way Salesperson: “You know that I am constantly working to find ways to secure more favorable pricing for you when possible. I think you would agree that our relationship is good and I’ve been a reliable and high quality supplier for you. I don’t know if I can reduce your price by 20%, but I can reduce your costs on all of your purchases if you source more of your fluid power products from me. Can we talk about that possibility?”

Why We Like The Right Way Sales Professional’s Response
“Right Way” has many things going for her. She provides numerous sales tips for us in her response.

• She acknowledges the customer’s attempt at negotiation. The customer feels heard.
• She reminds the customer of the value she brings to the table.
• She agrees to some kind of price reduction, but the customer will have to earn it.
• Finally, she puts the ball back in the customer’s court.

Handling negotiation in this manner does not offend customers. It recognizes the customer’s right to negotiate while simultaneously treating them with respect. If we do it right, we avoid irritating the customer and set ourselves up for additional business.

Sales Blog Epilogue
Our strongest and most powerful tool as a sales professional is our tongue. It is a rudder that steers our relationships right into icebergs or safely around them. How we craft our responses to customer negotiation can either erode a long-term customer relationship or create new opportunities and strengthen partnerships.

Further sales blog reading:
A Classic Buyers’ Discounting Tactic
What To Do When You’re In A Weak Negotiating Position

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>©2009 Scott R. Sheaffer

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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

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>©2009 Scott R. Sheaffer

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The customer you start with is the customer you end up with. We have to establish rules, boundaries and limitations with our new customers immediately after consummation of the relationship. Like spoiled and ill-behaved teenagers, if we don’t follow common sense “parenting” principles right from the start, it’s hard to cure customer problems later.

Areas Where We Go Wrong
Here is where I see sales professionals get in trouble right from the outset with virginal customers:

1. Pricing. Train your new customers about your pricing; you aren’t the cheapest in town. You probably never will be, and there’s a reason. If price is their only concern, they need to look elsewhere.

2. Payment. Instruct your baby customers on the fine art of paying their bills. Let them know right from the first order that you are not intending to finance their business with your accounts receivable – and lost commissions.

3. Products. Educate your customers early on about your broad line of products and services. Let them know you intend to fill all of their needs with your products and services and won’t tolerate cherry picking.

4. Decision Makers. Help your newborn customers learn that you will be contacting decision makers at all levels of their company. Dealing with just the purchasing department won’t work for you.

5. Communication. By example, teach your newbie customers that you will return emails and voice mails within 60 minutes. You expect them to respond quickly to you as well.

6. Relationship. It’s impressive that one of the decision makers you’ll be working with at your newfound customer is a manager/director/VP/president/CXO/Intergalactic Lord of Nations/etc. However, you don’t really care about titles when it comes to how they treat you personally. You’ll treat them with respect, but you expect complete reciprocity in this regard. Can we say boundaries?

The Dance
When we initiate a relationship with a new customer, we begin a dance. A more sterile description would be to say that we are testing one another. A little push here. A little give there.

Sales Blog Epilogue
Confidence, authenticity and assertiveness will “break in” those fresh customers in all the right ways. If you let them grow up to be a teenager with a handful of bad habits and attitudes,  it will be difficult to fix the issues down the road.

The customer you start with is the customer you end up with.

Further reading:

• Ask Yourself, Am I a Pricing Wimp?
• Wrestling With Fear in Sales

>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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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