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Lessons from the Lion Tamer: Power, Bearing, and Why Johnny Can't Sell (Part 4 of 5)

by Michael Webb | Comments (0)
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Last week I showed you a simple example of how a salesperson's "bearing" helps wield power in an environment where they have territory exclusivity. This week I'll show you how it can work even in an industry requiring competitive RFQs.

Power Exists Even in an RFQ Environment
Brand positioning, power, proof of credibility, and bearing play a role in a company's sales process. Even if your company does not have exclusive territories, you probably have a lot more power than you think. And, if you haven't thought through your company's sales process with this in mind, you might well be squandering that power.

For example, about fifteen years ago, the president of a small engineering company recruited me to be his sales and marketing manager. I was reluctant to take the job, partly because I knew I did not have the technical skills I thought were necessary. He insisted, however, saying he had more than enough technical skill and needed the sales and marketing skills I had. Thus I took the job.

His was a project business, which required us to provide detailed quotes to win projects (the quotes usually included task and schedule information as well as pricing). Quotes are time-consuming and expensive to prepare, of course, and we certainly didn't win them all. Sometimes the prospect used our quotes to create his budget for the next year. Other times they leveraged our quote against competitors to drive the pricing lower. 

Over the course of a year, a mill owned by an Asian company had requested ten quotes on various projects. Yet we had received no orders. On the next RFQ, I armed myself for a different kind of conversation. I showed the purchasing agent that without other customers, we won four of every nine quotes (on average). I showed him how his company's record was not just worse; it was the worst record of any company we called on by a wide margin. I explained that because we weren't making money on him, we could no longer afford to respond to his RFQs.

When he saw that I was serious, that we were walking away from his business, his jaw dropped so far you could have put a hardboiled egg in his mouth.

The cat was on the box. He needed us, because he needed competitive quotes to do his negotiation dirty work.

I did not quote that particular project, but did quote and win a small one shortly after that. Ultimately, although our work was fine, the mill had an ongoing problem with projects not going well (no doubt due to all the underbidding), so it never grew into a healthy relationship.

Nevertheless, the story is instructive, because even in this multiple bidding environment, we had a degree of power that we had not been leveraging. Not all prospects are good ones, and your salespeople must be clear on what makes them good or bad.

Businesses exist because they create real value. Power is a form of value. Understanding the Customer's Journey requires that you understand the power, pain, and value you hold with your customers.

Next week in part 5, I'll explain how even the best salespeople can be defeated by their own company, if the leaders don't think the process through carefully.

Michael J. Webb
July 15, 2008

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