Have you ever wondered why a particular customer’s pricing continues to drop? Have you ever asked yourself why certain customers of yours continually get one concession and demand met after another? If so, then this is a must read.
Surprisingly, it’s not always about the customer, but more about the secret deals your B2B salespeople make with your customers because you've given them no other option.
Let's Make a Deal:
Granted, it may simply be that the salesperson in charge of the account has a hard time standing his or her ground when faced with customer demands. They may lack the ability to match a concession for a concession. However, it could be that he or she has no choice but to make secrete deals with your customers because your company is inflexible, your product offering is overpriced and or outdated, or more importantly, your company isn't able to grasp your customers’ real needs.
In most instances, your salespeople are having these secret negotiations because they've no choice. They may have tried to tell you about some of these aforementioned issues, but you've either chosen to ignore them, or have simply made it too uncomfortable for your salespeople to tell you what you need to hear – not what you want to hear. You've put them on the defensive and they’ll no longer put forth the effort to tell you what’s wrong because you have refused to listen.
It doesn't matter if you’re a sales manager, a Vice President of Sales, a Director of Business Development or a business owner. If your salespeople don’t feel they can give you an honest assessment of what’s going on in your market, then you’ll continually force them to make these secret deals to keep the sales they've worked so hard to close.
Think about how hard sales is in today’s economy. It’s hard enough trying to win business when everyone wants the same smaller piece of the pie. It’s hard enough dealing with customer rejection. In the end, sales is hard enough as it is.
Unfortunately, you've made it nearly impossible for your salespeople to give you real-time market data on competitor strengths, pricing and product offering. You've shut them off. Your salespeople can’t give you any voice of customer (VOC) data simply because you’re so convinced what you have to offer is the best possible solution. So, what kind of secret deals are they forced to make?
1. Price Reductions: This is the most common secret deal. It often coincides with a salesperson hearing about lower pricing from other customers. That salespeople knows that their best customer will eventually hear of the lower price and might simply decide to go with the new offer. So, instead of losing that business, your salesperson offers the new price to the customer upfront in order to avoid the potential competitive offer.
2. Terms: Another strategy is to push your company for extended terms. This is often the case when the salesperson can no longer reduce pricing because the profit margins are razor thin. So, instead of reducing pricing, your salespeople claim the customer needs extended terms. They then offer that extension to the customer to appease them.
3. Product Offering: It’s common for a competitor to have a stronger product offering that forces the incumbent salesperson to reduce pricing and or offer an extension on terms. They may even decide to add an “extra” product as part of their appeasement strategy. This could involve claiming the customer received a defective product and needs a replacement, or might include stating that the customer didn't receive their entire order.
4. Shipping and Freight: In some cases, your salespeople may offer to reduce your customer's freight on that all-important shipment. In this case, they use the cost of freight as a negotiation ploy. Your company covers the cost of freight so the customer can save money. The excuse put forward by the salesperson is that your company is late, your customer will buy from competition or that your competition is now offering delivered pricing.
If you've made it nearly impossible for your salespeople to be honest and straightforward with you, then these are likely the most common secret deals your B2B salespeople will make with your customers. However, it may not even be you that’s making it difficult for your salespeople to tell you the truth. It could be that you’re a level removed from them.
You might be a Vice President of Sales and have several sales managers managing individual sales representatives.
In other instances, you could be the business owner who has the people below you filtering out all that vital market and customer information your salespeople keep sharing with their direct reports.
It’s essential that you take the time to understand why these situations keep happening and be open to what your sales team tells you. Their job is to continually feed you with pertinent market data. If you make that difficult for them, then they have no choice but to go it alone.
The following video is provides insight into five critical B2B salespeople cold-calling mistakes. To learn more about simple strategies to making that first call, please go to the following article.