Sales Practices: Question and Answer #5

This is a Sales Question and Answer article about customer relationship management from guest poster Dave Kahle, author and leading sales educator. Follow Dave’s latest Tweets at @davekahle.

By Dave Kahle

The Last LookQ. How do I ensure that I get the last look in a competitive bid situation?

A.  This is a question that I’m often asked.  In a lot of industries, particularly those involved in construction, government purchases and large-volume manufacturing, most of the customers require an official bid.  It’s not unusual for these to be highly formal and structured.

Here’s a typical scenario.  The customer sends a bid to five suppliers, and each responds with a written document by a certain specified date.  The customer reviews the bids, and awards the business.

The writer of the question wants the ability to go in after the bids have been submitted, to look at the competitive bids or at least the lowest bid prices, and to change his/her prices in order to be awarded the business.

First, it should be noted that in some instances, the “last look” is illegal.  In many cases, it’s viewed as unethical.  In other industries and situations, it’s viewed as business-as-usual.  This question and answer is only relevant to the latter situation.

I have responses for this on several different levels.

1.  Avoiding a bid situation to begin with.

2.  Making a last look unnecessary.

3.  When all else fails, insuring that you get a last look.

Let’s think about each one separately.

1.  Avoiding a bid situation to begin with.

OK, I know that bids are standard operating procedures in your business.  But, I also know that a lot of business is “negotiated.”  In other words, the customer selects the vendor he/she wants to work with, and then negotiates the best deal with that customer.

I’d much rather you get yourself into a negotiating rather than a bid situation.  That way,  you’d avoid the bid scenario altogether.

And, while it is true that you’ll never convince 100% of your customers to negotiate with you rather than send out bids, if you are successful over the next few years in moving 20 – 30% of your customers to negotiating status, you’ll see a tremendous improvement in your sales.

How do you earn that position?  Two ways:  First, build powerful business relationships, be a reliable supplier, and offer a special relationship – “negotiating” – with all your good customers.

In other words, bring the subject up regularly, plant the seed in your customer’s brain, tell stories about how you were able to work effectively with others – how they cut costs, paperwork and time out of the cycle by working with you.

If you are good, and persistent, you’ll eventually convert a significant chunk of your customers.

The second way to operate effectively in this situation is to become more deeply involved in the customer’s buying process and influence the creation of the specifications in such a way so as you are the only one who can meet those specifications.  The bid then, becomes superfluous.

Some of you who have been in my programs have heard me tell the story of how I did the most profitable transaction of my life in an account whose policy it was to bid everything to five vendors.

2.  Making a last look unnecessary.

“…if you have some aspect of your product, service or offer that sets you apart from the competitors… then the customer should be happy to do business with you even if you are not the absolute lowest price.”

The whole concept of a “last look” implies that the reason the customer would do business with you is that you are the lowest price of the group of bidders.  While there is a time and place to be the low price, I’d like for you to question whether or not this is how you’d like the customer to think of you.  If you have done a good job in the past for the supplier, if you have become the low-risk supplier, if you have understood the customer’s situation at a deeper level than your competitors, if you have some aspect of your product, service or offer that sets you apart from the competitors, if you have communicated those things in a persuasive way, then the customer should be happy to do business with you even if you are not the absolute lowest price.

In other words, if you have done a good job of selling, then a couple percentage points in the price should have no impact on the deal.

So, rather than try to be the low price, I’d prefer that you do a deeper, better job of selling this account so that you don’t have to be the lowest price. And that means that you have created powerful, trusting relationships with the key people, that you have understood the dynamics of their situation at a deeper and more detailed level than any of your competitors, and that you have fashioned a unique proposal that meets their deeper needs.

When you do that, you don’t need to worry about the last look.

3.  Insuring that you get a last look.

While everything I said above is fine, the reality is that there will still be some situations where you won’t be able to implement those strategies, and are reduced to one option – be the low bidder.

Some of your customers negotiate the business with you, and the last look is, of course, not an issue with them.  Some of them will buy from you because of the good job of selling you did, and the last look, with them, is not an issue.

But you will still probably be left with those who are going to bid and award the business primarily on the basis of price.  It’s that group for which you’d like to have the last look.

How do you do that?  By achieving excellence in the basics:  building powerful, positive business relationships with those key contacts, by understanding their needs in deeper and more detailed ways than any of your competitors, by doing everything you can to assure that your company is highly respected by the customer, and finally, by asking for the opportunity.

What you are really asking for is the preference of the customer.  In other words, where the customer sees no difference between you and the other guy in your offer, he still prefers doing business with you.  This scenario assumes that there is no difference between you and your competitor, and there is no reason for the customer to pay a little more to do business with you.  Your only hope is that the customer will prefer to do business with you, providing you are the lowest price.

Ask yourself why the customer would prefer you.  Create a detailed answer. Then set about becoming the supplier with which your customer would want to do business.  And, continually ask for the opportunity to have a last look.

Remember that getting the last look is the last, least desirable strategy to pursue. While there will always be times and situations where it is your last resort, those times and situations should be minimal.

If these ideas resonate with you, you may want to dig deeper into the concepts expressed above.  Consider the CD’s, “Conquering the Number One Buying Obstacle: Reducing the Risk.” or “Sales Practices to Increase Margins.”

If you are a member of The Sales Resource Center ™, review Cluster CL-1: “Preventing the Price Objection,” and CL-11: “Price Pressures”.  Take the lessons in Pod-16: “Successfully Selling in a Price Sensitive Market,” and Pod-18: “How to Sell Value, Not Price.”

Image owned by Amanda G (cc)

About the Author:

Dave Kahle is one of the world’s leadng sales educators. He’s written nine books, presented in 47 states and seven countries, and has helped enrich tens of thousands of sales people and transform hundreds of sales organizations.  Sign up for his free weekly Ezine, and visit his blog.  For a limited time, receive $547 of free bonuses with the purchase of his latest book, How to Sell Anything to Anyone Anytime.

Copyright MMXI by Dave Kahle

All Rights Reserved.

Sales Best Practice #35 – Regularly spends time and money improving sales skills

This article focuses on Best Practices for sales people from guest poster Dave Kahle, author and leading sales educator. Follow Dave’s latest Tweets at @davekahle.

By Dave Kahle

Isaiah Thomas free throw. Having spent most of my adult life in Michigan, I have naturally grown to be a fan of the Detroit professional sports teams.  Basketball is my favorite sport, and I’ve been a Pistons fan since before the Bad Boys.

As you know, the Bad Boys were world champions for a couple of years in the 80’s.  Isaiah Thomas was the leader of the team.  He was at the top of his game — most valuable player on the world championship team.  It doesn’t get any better than that.

During that time, he built a house in Detroit, and added an indoor basketball court.  When asked about it by a local newspaper reporter, he replied that he often woke up in the middle of the night and used the basketball court to practice his free throws.

Imagine that.  The most valuable player of the world championship team practicing the most basic shot in the game in the middle of the night.  Why would he do that?  Probably because he was not a 100 percent free-throw shooter.  No matter how good he was, he knew there was room for improvement, and that he could become better yet.

“Imagine how competent you could become, relative to your competitors, if you regularly spent time, money and effort improving your sales skills!  What an opportunity!” – Dave Kahle

That belief, that you are not as good as you could be, that there is always room for improvement, is one of the marks of the best sales people.

The world is full of mediocre sales people who don’t care enough about their own performance to spend any time or money improving themselves.  My own experience is that only one out of twenty sales people has spent $25 of their own money on their own improvement in the last 12 months.

While that certainly is an indictment of their lack of professionalism, it also represents an incredible opportunity for those who want to excel.  Imagine how competent you could become, relative to your competitors, if you regularly spent time, money and effort improving your sales skills!  What an opportunity!

That’s one reason why the best sales people are the best.  They regularly spend time and money on the pursuit of perfection.  They are the ones who buy the books, listen to the CDs, attend the seminars, and eagerly participate in sales meetings.

Vince Lombardi once said, “We will pursue perfection, knowing that we will never attain it.  But in the striving for perfection, we will catch excellence.”

The best sales people continually pursue perfection, knowing that in the striving for it, they will catch excellence.  And excellence is rewarded by greater competence, greater confidence, and a more robust standard of living.

That’s why it is one of the best practices of the best.

If you’d like to pursue this practice, check out The Sales Resource Center™ where we have over 435 lessons for sales people, all delivered 24/7 over the internet.

Image owned by Neon Tommy (cc)

About the Author:

Dave Kahle is one of the world’s leading sales educators. He’s written nine books, presented in 47 states and seven countries, and has helped enrich tens of thousands of sales people and transform hundreds of sales organizations.  Sign up for his free weekly Ezine, and visit his blog.  For a limited time, receive $547 of free bonuses with the purchase of his latest book, How to Sell Anything to Anyone Anytime.

A Quick Analysis of Level One, Level Two and Level Three CRM Software Providers

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While some CRM solution providers try to be all things to all people most of the popular CRM programs are designed and targeted at a specific market segment. I have labeled these by Tier. See below:

Tier 1 – Enterprise Level CRM Providers

While targeted primarily at the Fortune 1000 companies, CRM software providers in this category traditionally have a few things in common.

  • They offer comprehensive functionality covering all aspects of front office business operations for account management, sales, leads, marketing and customer service
  • They have a highly scalable platforms that support several thousand users
  • They support multiple languages and multi-currency
  • They offer application programming interfaces or API’s that enable disparate system integration
  • They offer best in class hosting or cloud computing services
  • They offer a High level of customizability and good customer support
  • There are many third party packages that may be integrated with these CRM programs.

Companies in this category include Oracle, SAP, Microsoft and Salesforce.com

Tier 2 – Mid-Market CRM Providers

Mid-market CRM providers offer  good functionality that often rivals that of enterprise level systems, but typically do not support multi-language or muti-currency although some do.  The top rated Tier 2 providers offer the following:

  • Good functionality with strong focus on account and contact management, e-mail integration, sales and lead management .  Some offer customer support or help desk and project management as well.
  • Robust scalable platforms that support hundreds of users vs. thousands like enterprise level programs. Very good customer support
  • May support multi-currencies, but typically not multiple languages
  • Several offer the best in class hosting or cloud computing services, same as the enterprise players
  • Fairly customizable with minimal programmer intervention in most solutions
  • Some third party package integrations are available

The most popular companies in this category include:  Commence CRM, Microsoft CRM, Sage – (mostly in Europe), Salesforce.com and SugarCRM

Tier 3 – Small Business CRM Providers

If basic contact management, e-mail and a sales forecast is all you require, there are several good inexpensive small business CRM solutions to choose from.  Don’t expect however to get advanced  level functionality such as security permissions, robust reporting, or automated workflow. Customization is often limited to adding a few custom fields if at all. Most small business CRM solutions offer:

  • Weak functionality as compared to mid-tier CRM offerings
  • Non scalable platforms that will not perform well with large data sets or larger number of users
  • Customer support limited primarily to e-mail
  • Rare support for multi-currencies or multiple languages
  • Second or third tier hosting or cloud based services
  • Minimal customization if any

Companies targeting this sector include: Zoho, Highrise & Avidian.