I was discussing the OMG Partnership opportunity with a gentlemen from Hong Kong, who objected to our reasonable licensing fees, refusing to pay any fees to a US company. This is when the conversation began to resemble a sales call. He did what a lot of buyers do to salespeople and began to boast about how well-positioned his company is to market OMG in Hong Kong and what a huge opportunity this would be for OMG. He expected me to waive the fees in exchange for the great opportunity he described.
Most salespeople - 74% to be exact - not wishing to jeopardize a great opportunity, start negotiating or worse, agreeing, to the unrealistic requests. There are ripple effects to this, for example:
- It creates precedent, making it difficult to uphold terms with new and even existing customers
- It makes whatever deal they sign very short term. It is only a matter of time before someone else offers a better price and the business goes away before it has a chance to generate enough volume to make up for the discounted pricing.
- It threatens the profitability from the account. If you reduce or waive fees and/or prices once, the customer expects to negotiate and win every time, making it more difficult to achieve profitability.
- In OMG's case, the potential partner would have no skin in the game - removing the urgency for them to generate business, and further eroding the potential for a profitable partnership
Weak salespeople mistakenly see the compromise or discount as the value when, in fact, selling at a premium actually establishes the value. This is so difficult for most salespeople to comprehend. They think they are doing everyone a favor when they acquiesce, but in reality, they are setting everyone up for failure.
Most executives think that this is a training issue, but they would be wrong. While training can provide a number of strategies and tactics for dealing with prospects and buyers who behave this way, it doesn't change the misguided salesperson at all. At best, these salespeople have new words, but still execute with the old beliefs.
The root cause appears in the way that salespeople make major purchases for themselves. If they have always shopped for the best price, that behavior becomes the norm. When a prospect wishes to do the same, the salesperson views that as acceptable - appropriate even - and finds a way to accommodate.
This particular issue is one of the many hidden weaknesses that OMG identifies when we evaluate sales forces and assess candidates. It can explain why margins are poor, why salespeople are unable to sell value, and why business is lost because of price. Listen carefully to this entire audio clip, taken from a sales training webinar, where a salesperson ambushed himself as a result of this very weakness.
How many of your salespeople have this hidden weakness? How many candidates have you considered that have this hidden weakness? How would your business change if none of your salespeople had this issue? What did you learn from the audio clip?