Sales Process Caveat

Posted: May 27, 2014 in Uncategorized

Today, I want to discuss an issue related to the sales process of an organization. Sales, although often dreaded by many, is crucial to the success of any business. And remember, understanding sales translates beyond simply the selling of a product, as any business is involved in sales in some form. For example, a service related business may not sell a tangible finished good, but does have to sell themselves to a particular client. Whatever the “product” is that is being sold, understanding sales will help deliver greater efficiency to a business.

I want to touch on something I recently came across, which although it is fairly intuitive, deserves some formal attention. Any potential buyer, consumer or client, certainly cares about the economics of a deal, but I think sometimes we tend to think that is all that matters, and it’s not. Now I don’t just mean economics, as in price, as a low price obviously is only one aspect of economics, and could very well mean that the quality is poor and thus the value is not there. What I mean by economics in this sense is the value of the product is good, and typically a buyer would buy when this good economics presents itself, but then they don’t buy.

So for an example, a company sells a product that contributes a high value to the customer, for several variables, and in general if the payback on the product to the buyer is within, say 5 years, it is deemed as a viable project. Now, of course, different organizations will have their own acceptable payback or IRR, etc., but for arguments sake let us say that Company X is looking for a product that delivers a payback of under 5 years. So Company Z, is offering a product to X, with a payback of under 3 years, while delivering high quality and has a great track record of their products. Z believes they will sell very well to this company, but X says no. Why?

There can certainly be many examples of why they say no, but this is a true story and I want to use it to explain why it happened in this instance. Cultural attitudes and differences are crucial in understanding how to sell to a buyer. In this case study, X was a company in a very risk averse culture (this was an international case) and due to Z being from another country, X was far to concerned about reliability. X pitching the product in terms of economics is not going to be enough, but rather needed to understand that the barrier to a sale was assurance of reliability, not economics. The most important route Z needed to take was to emphasize the long-standing success of the product in the market and focus the attention on how reliable it is. When these concerns are met, a sale will take place.

The point I am trying to make is that do not make the mistake of only emphasizing economics of a sale, but be aware that other factors will apply. The economics will always be important to include, but overlooking other variables will impede a successful deal.

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