Do You Have the Winning or Losing Hand?

Do You Have the Winning or Losing Hand?:

The toughest challenge that business-to-business sales professionals and leaders face today is the battle against lower-priced competitors bidding alongside your offer. Top it off with a procurement specialist handling the deal rather than the user. Procurement professionals have gained significant stature in their companies based on their cost cutting success during the recent Great Recession. How you deal with that will probably determine whether your business thrives or dies.

Yes, the big guys seem to have all the advantages. They use their scale and marquee to squeeze the little guy. Vendors are not as powerless as it may appear. In fact, vendors have a number of tricks and tactics available to fight back, protect their margins, and keep the business. Negotiating in these is customer situations is not be a surrender. Remember, the bigger they are, the bigger their appetite. They may be as desperate as you are.

In the face of relentless calls for concessions by increasingly powerful companies—insert name of your least favorite multinational corporation here—sales leaders have responded by mindless discounting, hoping to make up any losses through higher volume. Unfortunately, discounting is a fool’s response. Those who live and die by discounting don’t live very long. The name of the game today is maintaining margins. To do that, you’ve got to outplay the economic buyer.

Sales professionals labor under the assumption that all the power is on the other side. That’s because the inevitable response is price discounting. Discounting becomes an addiction that actually undermines the long-term health of the business. It decreases profits and erodes the quality of customer relationships. The sad fact is that this happens even in organizations that provide significant value to their customers. This value is overlooked, underestimated, or flat out ignored when, in fact, it is the key to breaking free of the conventional wisdom of discounting.

To the extent sales professionals believe they must trade margins for revenues, they undermine their success and train their customers to expect a price concession each and every negotiation.

Consider the position of the Advantaged Player—that salesperson is at the negotiating table with a customer. There are probably other players and the buyer spends a lot of time talking about how their prices are much lower than the Advantaged Player. In fact, there may be some yelling going on about how our Advantaged Player has to lower prices in order to close a deal. Does he have to? Nope—it’s all a poker game. In fact, the more yelling that occurs, the worse the hand—for the customer. The Advantaged Player has the winning hand. He doesn’t have to discount, he just has to play the game and close the deal.

Compare that to the position of the Rabbit—that is the salesperson who is added to the bid list to drive the price of the Advantaged Player down. The Rabbit has no chance of winning the business. They have no contacts with the real decision maker and no chance to sell value. The Rabbit has the losing hand and is better off just not playing the game, especially if the time needed to prepare a bid is more than two minutes. It’s just a flat waste of their time.

If you understand your position in the game, you can play the game better—walking away from the table if you have a losing hand but out-bluffing the customer if you have the winning hand. It’s not that hard and it’s a heck of a lot more fun.