Wednesday, February 14, 2024

When Relationships Don't Matter


In the sales profession, we're often reminded how critical business relationships are in the sales cycle (especially for complex or large deals).  In discussing the importance of building relationships with customer stakeholders, we often discuss that establishing relationships help to develop trust.  I think we can all agree that trust is important (and sometimes essential) to create the environment of closing business.  If you believe in the concept that "people buy from people" (regardless whether it's decision by a committee, board, or by proxy), it furthers the argument that relationship building is one of the most important skills for any salesperson.

REAL LIFE STORY:  What happens when building trusted relationships don't matter?  In a real-life example, a team of seasoned sales professionals targeted a large public sector customer over an 18-month period.  They identified half a dozen key stakeholders, including financial, business, end-user, technical and procurement.  Not only was the sales team successful at meeting with these stakeholders, but they went on to develop meaningful relationships.  One of the key ways they developed trust, was by demonstrating value (before asking them to buy anything).  They provided educational/discovery sessions, brought industry experts to engage, showed the customer how they've helped other organizations like theirs in lowering costs, improving productivity, improving image and more.

As with many public sector customers, this real-life customer put out RFP's.  As time progressed and RFP's were released, this group of salespeople found that the customer only chose the lowest price (and by razor thin margins).  In many cases, these salespeople went back to their trusted stakeholders and asked them if they valued the engagement.  At the end of many of these discussions, it was clear that while the customer greatly appreciated the relationship and the value they had brought to them, they would only pick the lowest price (even if they didn't like or trust the rep/company).  One of the stakeholders actually said, "we hate those guys and don't trust them - but they bid the lowest price."  Here's some lessons learned:

  1. Pick your customers.  There are absolutely some customers out there who will NOT value anything other than the lowest price.  Some actually will buy from a company they don't trust, or from a salesperson they don't like.  It's not often, but they are out there.  These are the type of customers who will not pay more for better value.  Identify these customers quickly and spend your time finding customers who value trust, want to learn/be educated, and may spend more for better value.
  2. Don't respond to unsolicited RFP's.  There are tons of studies showing that if you have not been involved/aware/engaged way before the RFP is released, you have less than a 10% chance of winning.  That's cold call results.  While there are always exceptions and strategies, RFP winners are either engaged and/or influencers with the RFP in advance, or it's a knife fight for price.  Watching how RFP's go down with prospective customers over a period of time can tell you a great deal about how they pick their partners and if they value things other than price.  Look for selection criteria that have price as only one factor of the decision criteria in an RFP.
  3. Ask you prospective customers how they do business before you invest time in developing relationships.  Talk to stakeholders and ask them about how you can provide value to them.  Ask them how they've made complex/large purchases in the past.  Who did they consider?  Why?  What was the decision-making process like?  Ask how they procure?  Review their previous RFP's.  Educate yourself before you invest.
Since developing relationships takes time and investment, it's OK to be picky about which stakeholders and which companies value the things you can bring to their organizations that they would truly value.  Trust is key to building sold relationships.  Just be sure that your prospect can translate trust into the buying decision.

Happy Selling!