Wednesday, April 06, 2005

Is relationship-based selling still alive and well?

...is question I've been pondering on with colleagues in the sales & marketing field lately in a variety of industries.

The follow on question is -- are customers more concerned with price and cost cutting or the actual quality of the product and customer support they will be getting? Are customers in all types of industries buying because they have strong relationships and partnerships with their suppliers - or are they buying into competitive predatory pricing practices just to save money?

I often tell customers - if my competitor is willing to give you their product for free - you have to think about their motivation and the longevity of that type of business strategy...

I'd be interested to hear others thoughts on this topic...

5 Comments:

Anonymous Anonymous said...

This one issue is of particular interest to me. Companies who offer to give away products to win business are suspect. Often, this happens when a startup has closed little or no business and is beginning to run out of money. The conventional wisdom in a failing firm is "if I can line up a few good names, then I can secure the next round of funding". Companies in this situation rarely stick around long, however. The customer who accepts "free" products usually gets stuck with high consulting costs (to make up for the loss of product revenue) or additional work to pull out a product from a failed company. "Free" carries the stench of failure. Don't fall for it!

1:50 PM  
Anonymous Eric S. said...

This all depends on the company, culture of doing business with vendors (ie. procurement negotiated a deal vs. a SVP of IT) and the current IT spend going on internally.



I personally think customer are interested in all of the above (price, support and products). But over the past four years, people have become very savvy at negotiating with vendors. Sometime today you see them negotiating terms even before a technical evaluation has taken place.



Does a customer who has beaten you down a vendor on price really think they have done good for the relationship? The software industry typically sees when a company who spends the most gets that vendors absolute attention (from the CEO down). Obviously that is just simple math, but I respect companies that try to be true to their work during a sales and negotiation process.

8:55 PM  
Anonymous John S. said...

Tim



I basically agree with your comments – especially on the “give away” pricing – usually always a bad idea.



WRT to relationship selling – believe there is still a level of it, but it is no where near like what it “used to be”. Too much pressure on the buying guys to be too a buddies with any one. Have heard way to many folks post bubble talk about how the “work the vendors over”



For what it is worth.

8:55 PM  
Anonymous Anonymous said...

When asked to give something away for free, I immediately ask myself the question "Is the customer having this more valuable to me or to them?" I will only give it away if it is more valuable to me.

In a software sales situation, customer success may be more valuable to me than the value of the some consulting or customer support time. In that case it makes sense to consider a discount or even a freebie.

On the other hand, if the point of the deal is the software -- and that software is supposed to be strategic to the enterprise -- what does it say about the value of the software if I offer it to the customer for free? I'd say it says that I don't consider the software to have as much value to them as having them on my customer list is to me. My software mustn't be that great, then.

10:29 AM  
Anonymous Anonymous said...

Interesting comment:

Three Golden Rules of Software Sales

The three golden rules of software sales are to achieve customer success, customer success, and more customer success. The goal of establishing customer success must always come first (and second and third). Other skills, milestones, and metrics of success all stem from this basic concept, and if you lack the ability to enable your customers to succeed, then you yourself will ultimately fail, both personally and professionally.

8:33 AM  

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