Sales Training Article: Part One - "Let the Seller Beware... "
By Gary Walker, Co-founder of CustomerCentric Selling®

I was cleaning up my hard drive recently when I came across an old article that first appeared in Wall Street & Technology back in February 2003. It was titled, "Let the Seller Beware: How to Get Better Deals from Software Vendors." The article was written by a 'software industry veteran' who, during the article's introduction, offered that he had "learned and refined many techniques to get as much of your money as possible," and that "very few buyers of enterprise software and related services are as expert at buying as most vendors are at selling." For that reason, he had "switched his allegiance" and was now assisting enterprise software buyers in structuring the best deals and terms with their software vendors.

My immediate reaction to this article and his 'insider tips' was simply: interesting. Nothing particularly earth shattering. As a matter of fact, I felt one of his tips was somewhat dated. Suggesting a buyer try to leverage the 'cost of goods sold' (i.e. diskettes, CDs and documentation) as an approach to minimize the legitimacy of the seller's asking price, is one that I used to hear from some purchasing agents back in the mid 80's. As for his belief that very few buyers of enterprise software and related services are "skilled buyers", I would challenge that opinion. After having been sold more products than they legitimately needed to meet the "Y2K threat" that didn't do what the sales person claimed, didn't meet their needs, were a nightmare to install and now sit unceremoniously on some shelf collecting dust - I've found that these buyers, or should I say burn victims, have made it their business to become adept at working over high technology salespeople to structure the best deals and terms for their company. Buying committees that include senior executives, outside consultants and representatives from purchasing and legal have become the norm, not the exception. Our buyers and our marketplaces have become far more sophisticated every day. No one should think for a minute that you're going to 'put one over' on a senior executive or that your sterling personality is going to carry you through a demanding and thorough enterprise software buying process.

For that reason, I think it is vitally important to share with you a CustomerCentric Selling® sales executive's perspective - mine. If you haven't participated in one of our workshops yet, we're happy to share these tips with you. For those of you who are reading this and are CustomerCentric Selling® practitioners, let these serve as reminders of those things that you can do to help you obtain the price you deserve. The first two have been highlighted in past editions of our newsletter:

1. Differentiate yourself from your competitors:

2. Leverage your 'unique' capabilities:

3. Understand the 'value' of your offering to your customer.
Most salespeople can tell me what a particular opportunity is worth to them - revenue against quota. Everyone knows the price of their offering. However, very few salespeople can articulate the potential value of their offering to their customer.

I had a client who sold software that enabled petroleum engineers to analyze seismic and geological data to make informed oil and gas exploration and drilling decisions. The cost of the application was $15,000. They struggled to sell it and when they did, it was often at a deep discount.

Even with little knowledge of the oil business, do you think it would cost more than $15,000 to drill a well? If you could prevent the drilling of an unproductive well based upon a low probability of finding gas and oil deposits, do you think it could save at least $15,000? Inversely, if you could select the most promising sites and enhance the probability of drilling a productive well, what would a typical well be worth? Do you think that would be worth a $15,000 investment?

It was this type of conversation that their sales people learned to have after attending our workshop that allowed them to begin to understand the value the customer could realize from a relatively small investment. They had an epiphany! As a result, they began prospecting and selling to VPs of Exploration, changed their packaging to five (5) user increments, raised the price to $75,000 and enjoyed record sales. More importantly, when the customer demanded a discount at the time of purchase, the first reason the salesperson gave for not being able to entertain the request for a discount was the enormous value that the customer indicated they would derive from purchasing and using my client's offering.

If your product or service offers real value in good economic times, it offers even greater value in today's uncertain economy. Knowing the potential value that your customer will receive through the use of your offering will give you confidence, courage and a legitimate business reason to say 'no' to a request for a discount.

4. Prepare for negotiations in advance. When questioned, most sales people will agree it's their customer's right and obligation to obtain the best possible deal for their company. As a matter of fact, it's a key performance measurement of many purchasing departments. Nevertheless, I'm amazed at the number of sales people who don't prepare in advance. They walk in expecting to pick up a purchase order and find themselves seated under a bare light bulb getting beaten with old phonebooks. They're lucky to escape with the fillings in their teeth!

With the help of your manager, prepare a 'Negotiation Worksheet' in advance. Try to anticipate where they will attempt to obtain concessions. Will it be price, terms, services, etc? Prepare at least three legitimate business reasons (polite 'no's') as to why you won't give them what they're asking for. Would it surprise you if the first could be value? And maybe the second could be the need for your unique capabilities? If you are prepared to do anything additional, know what it is that you are willing to give in order to close the business. Know what you want from your customer in exchange for your concession. Don't agree to provide your customer with anything until such time as they have agreed to your condition first. And finally, don't be afraid to call a halt to the proceedings in order to call and consult with your manager.

5. Never negotiate unless you are the selected vendor. Customers will attempt to get you to make concessions simply to allow you to stay in the game or compete for their business. They don't know the value of your offering, you don't know the value of your offering to them, and they are trying to treat you like a commodity. Only bad things can happen to you if you fall into that trap. If it's at the appropriate point or step in the sales process before indicating whether or not you are prepared to negotiate, the question we suggest you ask is:

"Are you telling me that I'm the selected vendor and the only thing you and I need to do in order to bring this purchase to closure today is to agree upon price?"

If they answer 'yes', and you understand them to be the decision maker, proceed to attempt to close the business. If they answer 'no', we recommend the pricing that you have provided remain your price. If you make a concession now it will be the starting point for further negotiations later on in the sales cycle - if you get that far.

3 additional tips to be continued...