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
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.”
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.
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