A little about me
I have spent most of my working life working in the B2B space: auditing/accountancy, corporate recovery, management consulting, IT professional service and marketing services. And there is something that I have noticed during the latter years that was not present in the earlier years.
How the B2B sales and B2B buyer dance tends to work out
Here is what has happened more often in the latter years. The B2B sales guy is courting the B2B buyer and the buyer makes sure that the sales guy knows that he is only one of a number of people courting the buyer. What does just about every B2B sales guy (that I have worked with / come across) do? The one that expends (and wastes) the least effort just drops his price to the absolute minimum he can get away with. The most wasteful one has his organisation put in a ton of effort educating the buyer, coming up with shiny objects, detours/side shows, and in the end drops his price to the absolute minimum.
When he wins he is delighted, it is something to show the folks (that matter) back at home. The people back at home are rather simple and confuse revenue with profitability. They don’t even think of cash-flow. When he does not win he tends to say that the other guy won because he offered the lowest price: “we are just not price competitive enough!”
Once the delight of the win fades, reality hits home – at least to the team that has to deliver on the promise. It soon becomes clear that it is not possible to deliver what has been promised and make enough of a profit on the work. Here it goes one of two ways. Either the least investment is made – people, time, effort – to get the job done so that it is done just good enough. Or the pressure is placed on the delivery team to work long hours (not bill them) and deliver a great job.
What is the thinking about doing a great job? This usually happens when the piece of work is being done is the first piece of work for a new customer. And there is the carrot of a lot more work to come. The organisations management (including the sales guy) is convinced that doing a great job will secure a promising future. A future where the B2B sales guy has the upper hand: he can charge higher (more realistic prices) and win a steady flow of big piece/s of work usually termed “implementation”.
Welcome to the ‘dark side’ of the human condition
What actually happens? Before I spell that out let me just remind you of the darker side of human beings. In particular what I call the ‘four prime directives of the dark side’:
- Look good, avoid looking bad;
- Be right, avoid being wrong;
- Strive for control and dominate, avoid losing control and being dominated;
- Justify self, invalidate others.
Back to the B2B sales/buyer dance and how it plays out
Back to my question, what happens? The buyer wants to continue looking good and is at pains to avoid looking bad in the eyes of his boss, his organisation. So he insists on getting a discount on the existing price he is paying in order for him to reward further and usually larger pieces of work to the B2B sales guy.
The buyer insists he is right, he is being reasonable. Loyal customers (like him) should get a volume discount isn’t that what loyalty merits?. The B2B sales guy explains that he dropped his prices to ‘cost’, even made a loss, on the expectation of higher prices for the follow on work when value had been demonstrated. What happens? The B2B buyer justifies himself, his stance! And proceeds to invalidate the B2B sales guy’s perspective.
During the whole encounter “negotiation” (which can be from days to months) the B2B buyer is determined to be in control and dominate the B2B sales guy and avoid being controlled/dominated (taken for a ride) by the B2B sales guy. After all, he got to do it the first time and the B2B sales guy was ok with it. Why change now?
Now what happens? The B2B sales guy caves in and gives the buyer pretty much what he is asking for. What drives his action? Fear, the fear of looking bad in his organisation and the desire to look good. The folks back home are not that sharp: they will rejoice in the revenue and not look too hard on the margin on the piece of work that has been won. And of course, the long hours (with no pay for the extra work) will be worked by the guys who deliver stuff.
And the same cycle repeats itself in the next sales encounter especially if it is a ‘brand name’ that is well known and thus highly valued by the organisation: a brand name that gives bragging rights.
Somewhere in the organisation is a finance guy (like me – I qualified as a chartered accountant many years ago) is wondering why the folks in the organisation are doing what they are doing. Why are you guys selling valuable people/skills/expertise so cheaply and thus giving up revenues that are needed to invest in and grow the business – the people, the methodologies, the thought leadership, the tools..?
What I have to say about the B2B sales/buyer dance
I am not an expert in sales and yet I have done selling and account management. Arguably, you might say that I know a thing or two about people and negotiations. And I say to the B2B sales guy, your leverage is right at the start. You have to position yourself and your organisation correctly right at the start by genuinely creating value for the buyer right at the start.
When I say creating I mean creating value – not talking about creating value. I mean being/living/embodying the value. How? Here are some ways I have gone about it and that have worked for me:
1. Take and demonstrate a deep interest in the company, the industry and the markets that the company operates in. That often means showcasing a good grasp of the history of the company and where it has got to be. This is not easy, it takes time and requires real dedication.
2. Use the work that you have done to generate insight into the situation that the company is facing and the options that are available to the company. Explore those options with the buyer (and his colleagues) by facilitating a workshop (or two) to explore the options and their implications.
3. Take the buyer (and his colleagues) through concrete examples of how exactly you/your organisation have addressed that kind of situation/issue/problem, the hurdles that came up along the journey, where they came up, why they came up, how they were addressed or not, the outcome and lessons learned.
4. Take the buyer (and his colleagues) as concretely as possible through the journey he/his organisation is going to go through. Help him to visualise the assets he/his organisation has. Help him visualise the obstacles that are there already and the ones that are likely to show up given his organisation/his unique situation. Work with him to develop ways that you/your organisation and he/his organisation can work together to handle/overcome them.
I hear you say that this is a lot of work. I agree, it is a lot of work. I hear you say that this is simply not possible because you situation is such that you are not allowed to meet the buyer (and his colleagues) to do what I propose as the whole process has to be done at arms length. I say that when that has been the case I have made it clear that the price of my participation in the game is access (one or two workshops) to the buyer and the key people who are party to the issue at hand and addressing it. And where this has not been granted I have walked away.
As a result of the time/effort that I have taken and the value that I have created, I have had the confidence and desire to charge the right price. The price that goes with the value that I have created (already) and am committed to bringing to the customer when I take him on as a customer. Put differently, when I have done it right, like I know it can/needs to be done, I have not had to discount my price to win the work.
It might just be that I do what I do because first and foremost I have the being of an educator, a coach, an advisor. . And I have never been put through ‘sales school’ and come out as a sales person. What do you say? What is your experience?
And can you please help me understand why B2B sales guys do what they do – again and again? Why do they continue doing what they do and yet expect a different result each time?
The Customer Blog 
Hi, Maz. I love this. Resonates on so many levels. First, I have long said that the main driver of all corporate behavior is not greed, as is simplistically portrayed by Hollywood’s version of business, but by the absolute terror of embarrassment. Once you get a black mark on your “personal whiteboard” – the one they give you and is hung around your neck the day you join the company – you can never erase it. The corporate club never forgets mistakes. So that’s one problem.
The other problem is, people who are attracted to sales positions like to talk more than they like to think. I’m a recovering salesperson (more recovered than not, at this point in my life), and the difference between what I was and what I became is just that – the willingness to do the hard thinking. If salespeople loved thinking, they would have become engineers.
But it’s not just the salesperson’s fault. It’s the way sales is treated in an organization. I am now starting to encourage my clients – the ones selling deep, complex, enterprise-level solutions – to forget about selling. No customer I interview these days WANTS to be “sold to.” What they want is exactly what you have just described. They want to have a meaningful and informative conversation with someone who has helped others in similar situations solve similar problems, and to honestly examine how the company might be able to solve the customer’s problem. Is there room for a salesperson in this scenario? Not much.
Salespeople will argue that they need to help with the negotiation, but if the dance were conducted the way you describe, what’s to negotiate? If the client is convinced of the value, price isn’t the issue. The world’s marketplaces are FILLED with examples of customers saying, “Well, it’s a bit more expensive, but it’s worth it.”
Salespeople are also paid on commission; all that matters is they make a deal, any deal – to the detriment of the company, just as you have described.
The gap between what buyers want and how sellers sell has grown even larger the last few years. Right now, we are in the “definition of insanity” mode, where managers are doing the same thing over and over and expecting a different result – meanwhile, the customer has moved on. Really, really moved on. Miles ahead.
Kristin Zhivago
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Hello Kristin
Thank you for making the time to write so thoughtfully and so richly. What can I say? I can say that it occurs to me that you and are ‘fruits of the same tree’ when it comes to the subject matter at hand. Put differently, you and I are in “violent agreement”.
I wish you well. Be great. Be an awesome contribution. And know that I love reading what you write. Most importantly, know that I am grateful that you exist and that you and I are in communication.
At your service and with my love
maz
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Goodness gracious!
These are the words my autistic brother spoke yesterday when participating in his first video conference (thanks to Skype) between he and I (in a hotel room in San Diego, during my visit with him) and his mother and brother (in their house in Arizona). He said these words when he realized that they could see him and he could see them, and that they were interacting with him in real time. That it wasn’t just “TV,” but real communication.
You remind me of him, in the sense that you understand it is all about love, that nothing else matters as much. Michael is the most openly demonstrative person I know – he hugs with amazing enthusiasm and delights in things that most of us take for granted. He is, in his own way, an “awesome contribution.” I cannot imagine my life without him, and the lessons he has taught me about empathy and non-verbal communication could fill a book. He has showed me that peace in our relationships comes from understanding, from honoring the other person’s perspective. When I understand him, he finds comfort in our interactions. That is exactly what we are doing when we take good care of our customers.
Thank you, Maz.
kz
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Hello Kristin
What a contribution you are! You have moved me to tears. There is a raw truth in that which you have recognised. Your brother, what you have shared of him, shows up as a source of inspiration for me. Someone that I find myself admiring – his way of being in the world, the love that he puts into the world. It occurs to me that there is a huge gulf between myself (as I am today) and your brother.
I also recognise the truth that you have pointed out. What is it that I want my children / my fellow human beings who know me to say? Simply this “Maz was a soul whose intentions were good. He strove to put love into the world. And in the process he eased some suffering and placed a smile on a heart or two. Maz strove to be a decent human being.” Which kind of explains why I love the following quote from Einstein:
“There is one thing we do know: that we are here for the sake of each other.”
I am deeply indebted to you Kristin. I can honestly say that love is present from me to you.
Be great, be an awesome contribution to “a world that works, none excluded.”
With my love
maz
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Maz,
I don’t know a thing about B2B sales. I have no idea if you are right or wrong, but I am reminded of the old phrase,
“if you always do what you always did you will always get what you always got”
So I guess what you recommend has to be worth at least a try
JL
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Hello James
Many thanks for those words of wisdom.
Interesting that I find B2B sales so obvious, so common place, and so taken for granted. And as you say, you don’t know a thing about it. Interesting, how we assume that everyone must know/have experienced what we know/have experienced!
Maz
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Hi Maz,
I think incentives play a big part in what we get from sales people?
If we put in place incentives that are only focused on sales then they will sell and sell to max their incentive with no regard to what happens outside of that.
Those are our rules and they are playing by them.
Adrian
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Hello Adrian
Yes, incentives do a play an important role. Yet, I could argue that the sale person has an incentive to sell at the highest price so as to maximise his commission. So why does he not do that, why does he sell at the lowest price?
Because certain other factors are much more important than merely monetary incentives. These are the four drivers and in particular the main one: “look good, avoid looking bad”.
Have you seen Robocop? Or Star Trek? If there is prime directive that runs human beings (even without them being consciously aware of it) it is this one: “look good, avoid looking bad”. And all else flows from that in pretty much every social group – the team, the dept, the company, the golf club, the community, society…
Maz
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