The Incumbent Strikes Back

Problem: The deal was consummated and Troy had finally displaced his number one competitor at an important account. Having received a promise that the initial order would be sent the following week, he departed, congratulating himself on his good fortune and ability to land the tough ones. Then, several days later, he received a voice mail message from his new account. From the tone of his contact’s voice, he immediately knew something was wrong. Apologetically, the client told Troy that when the competitor found out that they had lost the business, they reacted with decisiveness and lowered the price significantly. The result was predictable. The initial order was cancelled and the incumbent retained the business. Having been blindsided, Troy was at a loss for what to do. His company was unwilling to match the new price and he “lost” the deal. To add insult to injury, his contact was too embarrassed to return his phone calls.

Analysis: Salespeople hate bad news and will go to most any length to avoid having an unpleasant discussion with a prospect. Troy was no different. His gut told him that the incumbent might react by lowering their price, but he didn’t want to face that possibility and didn’t know how to deal with it anyway.

Prescription: You’ve got to deal with landmines early in the process. Certainly the potential for the incumbent to cut price or make some other compelling concession to keep the business always exists. The successful salesperson needs a tactic to deal with this eventuality. Risky though it sounds, Troy should have met the threat head on before he left the meeting with his “new client.” He might have said, “I’m kind of curious. What do you think your present supplier will do when they find out you’ve decided to give us your business?” Often the prospect will respond by saying that they might, indeed, lower their price in order to keep the business. At that point the only response the salesperson should make is to say, “Assuming they do lower their price, what will you do?” Had Troy brought up the subject himself he would have been in control of the situation instead of being in a reactive mode.

When the issue is raised, the prospect will respond in only one of two ways. If they were making the change because of sincere dissatisfaction with the incumbent, they typically will decline to accept concessions. Once having told the salesperson that, the likelihood of it happening is remote. However, if they say that they may have to “take a look” at any concessions, the sale was never made in the first place. That being so, the salesperson is still in front of the prospect and has an opportunity to rescue the situation.

Remember, the sale is not made until the money is in your bank account, so keep your eyes open for things that can go wrong, especially the obvious ones.