Problem: David got trapped by the prospect; maybe “squeezed” is a better term. Here’s what happened.
His prospect was playing him off against the incumbent. It’s a familiar ploy and it goes like this. The prospect holds out the carrot by suggesting that the incumbent vendor is doing an “okay” job, but suggests that having an alternate (backup) supplier might be a good idea, “just in case.” (Ever heard that one? Salespeople invariably assume that because the door of opportunity seems to be opening, the prospect must have some dissatisfaction with the incumbent.) But the hitch is that the backup vendor needs to have a better price than the incumbent to be considered. In this case, the prospect was paying the incumbent $100 per unit and wanted David, the “hungry” secondary vendor, to come in at $90 per unit. After all, the prospect “reasoned” that if a supplier wanted their business they should be willing to price aggressively in order to have a shot at it.
Diagnosis: Long story short, David took the bait. His sales pipeline was spurting air at the time and he needed the business. He agreed to try to get the pricing approved, but on the way back the office suspected he’d been duped. But now he had no way to get back to the prospect without losing credibility.
Sometimes we sales folks, being so emotionally attached to the prospect of getting an order, just can’t see the obvious. Perhaps it’s never happened to you, but you probably know someone who has fallen into this trap.
The question is…what can we do to get ourselves out of this predicament?
Prescription: This is a tough one, but there is a way out. Like the old “good cop, bad cop” tactic, you’ve got to blame someone else. In this case, blame the “home office.”
Tell the prospect, “When I went back to the home office and told them what you wanted, they just laughed. In fact, they’re still laughing. They said we’ve got the lowest costs in the business, and that nobody can offer a $100 per unit price for long without taking shortcuts somewhere. I had no idea the margins were that tight. The bottom line is that I can’t offer you the $90 price. In fact, the best I can do is $105, and that’s for a minimum of 25% of the business.”
This might create some fear, uncertainty and doubt with the prospect and encourage him to back off his unreasonable demand. At the very least, it gives you an excuse to bail out of the difficult situation you’ve gotten yourself into.
But let’s address the real problem. First, David didn’t plant his feet. He didn’t recognize that he was being used by the prospect and played right into the trap. When you’re emotionally involved in the result (“I need this sale”), you’re vulnerable. So plant your feet, look at the situation realistically and find out if the prospect really needs a secondary source; in short, develop the prospect’s pain. Find out why he needs a secondary supplier, what happens if the primary vendor can’t deliver and if there are any specific reasons why he’s worried about their possible failure to deliver. If the answers don’t make sense, then don’t play the game. If the answers do seem to add up, then treat it as you would any real sales opportunity by providing well thought out solutions to the prospect’s problems.
In short, play the game from a position of strength, not weakness.