There are a number of pre-conceived notions from both sides that buying/selling is a zero sum game. There is a perception that there must be a winner and a loser from negotiations through implementations. One of the vendor slides I abhor comes late in presentations. It shows smiling people shaking hands, inferring what a wonderful partnership the relationship will be.
As mentioned in previous blog posts, my contention is that buyers and sellers are worse off than they were 15 years ago. My rationale for drawing this conclusion:
- There are many “tire kicking” product evaluations that have no supporting initiatives.
- People refuse early help from sellers due to a fear that they will somehow be manipulated.
- Vendors are chasing low-level, entry-point visitors that can’t buy.
- They struggle to achieve top-line revenue growth despite the ongoing inbound volume of interest that seems to indicate buyers and sellers are confusing activity with progress.
- Buying and selling organizations are wasting tremendous amounts of time in product evaluations destined to result in “no decision” outcomes.
In having a hard look, sellers and vendors have taken liberties with buyers for decades. The worst offenses came before SaaS models when implementations were Herculean tasks. Sellers were guilty of emphasizing how good it would be while minimizing how much effort would be needed for implementations. Buyers were often low-balled and had little choice but to pay whatever else was needed. Buyer resentment and distrust of salespeople became widespread.
With the Internet and social networking, buyers leveled the playing field. Click & Tweet! Deferring seller involvement as long as humanly possible is baggage from the past. Competent B2B sellers do not want companies to buy offerings that aren’t a good fit or that won’t provide value. While continuous revenue streams can be a blessing, excessive customer churn is a nightmare for SaaS companies. Unlike B2C transactions where buyers and sellers will never interact again there is the need and desire to establish relationships and execute “land and expand” approaches over time.
There is an underlying challenge for vendors. Most have failed to take a hard look at the approaches their salespeople are employing. There likely is too much emphasis on product training. I say that because mid to low level staff self-educate via the Internet and executives won’t tolerate product pitches. The real challenge is for sellers to help organizations migrate from product evaluations to making business decisions based upon cost vs. benefit analyses. In my mind 10-15% of sellers are capable of helping in this way. Vendors should consider shifting some of the product training to better understanding customers’ business issues and the financial impact that offerings can allow them to achieve.
The buyer-seller relationship has been strained, if not broken, forever. Click & Tweet! In offering an olive branch I believe sellers/vendors should put “skin in the game” to support their assertions of how much benefit can be realized. Instead of merely touting potential improvements in reducing downtime, reducing scrap, reducing costs, etc. I’d like to see both parties identify areas where benefits are likely to accrue and set baselines of where prospects are prior to buying (i.e. % uptime; % scrap; costs; etc.).
In making purchase decisions, both parties should agree to targets and set a minimum acceptable improvement as well as a stretch goal. The customer would pay 75% of the purchase price and leave 25% in play over the next year (or whatever time frame is appropriate). Moving forward:
- The customer pays 75% of the total price up front.
- On a quarterly basis improvements of defined variables are measured against baselines.
- After the specified period of time:
- If the minimum improvement is not reached, the customer would never be invoiced the 25% that was in play.
- If the minimum is met but the stretch goal isn’t, the customer pays the additional 25%.
- If the stretch goal is met the client pays a 25% premium over the quoted price.
As a buyer I’d find a presentation slide implying that a partnership will be forged with a vendor far less offensive. These have and will continue to be hollow words absent an incentive for both parties to deliver value after making buying decisions. Putting money at stake eliminates the zero sum game buyers and sellers otherwise play.