Selling More for Less

You can sell more deals for less effort with the right strategy for handling price objections, focusing on scope (or value) and letting price take care of itself. Rather than push up the price by including stuff for free, agree whatever the customer wants to pay, and negotiate down the product or service you’ll provide for it. Only include enough to get the deal.

It’s counter cultural, obviously. Pushing up the price as far as possible is worth giving some stuff away for free. At least you get the revenue now. Who knows what will happen next month, or next year. Take the money and run! Isn’t that what all salespeople do? Well not quite.

A past employer of mine certainly thought that way. At the time the company was a veritable gold mine. It’s ERP software led the market for multi site AS400, System 38 and System 36 computers – IBM when nobody got fired for buying it.

Some of the sales people made an awful lot money (before my time unfortunately). The company encouraged them to give away future prices and even annual maintenance as long as the cash kept coming in. This was a sort of Ponzi scheme, in which everybody was happy as long as the business kept growing. Eventually the growth stopped. IBM mini computers lost their attraction and the Y2K Bug scare skewed the usual upgrade cycles. By 1999 nobody was buying anything. The company disappeared almost without trace, alongside a lot of other software businesses. That’s what happens when you give away future upgrades and annual maintenance.

Meanwhile another past employer of mine has grown from strength to strength, dominating markets which didn’t exist during my time. This company is in the outsourcing business – software, infrastructure, information systems operations, business change management. It’s philosophy is totally different to the previous example – take as much as the customer is prepared to pay and negotiate down what will be provided. As a result the value of its contracts just keeps growing. Every time the customer wants something extra or a little different the contract gets renegotiated and the Account Director smiles all the way to the bank.

If you’ve heard the stories of the UK government efforts to build new integrated IT systems for Health you’ll wonder how it could spend so much and get less. Reports are confusing but I’ve seen figures as low as £7 billions and as high as £13 billions. That’s the cost of something which just doesn’t work.

No names quoted here. I know some of the companies involved but not all, and not who isn’t doing what. I do know somebody did a really good job of selling less for more.

Which brings me to the closing story. Did you hear the one about the young bull and the old bull?

The young bull says to the old bull “lets run over to that group of cows and inseminate one of them”. (That wasn’t the word used but it’s safe for work.)

“Well” replied the old bull. “I’ve got a better idea. Let’s walk over there and inseminate all of them.”

Next time you’re fighting with a prospect over price try negotiating down the scope. You’ll close the deal more quickly and look forward to selling all the upgrades later, when you hold all the cards.

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