By Paul Reilly
Based on years of research, we’ve identified the biggest and costliest mistakes that salespeople make in tough times and tough markets. Understanding these mistakes will give you an edge in your market.
Salespeople reduce face-to-face calling by 38 percent
According to a purchasing management study, during recessions, salespeople call on customers at 62 percent the rate they call on customers during good economic times. One can only assume the reasons for this. They may feel that no one is buying and that it makes little sense to call on buyers when things are tough. Salespeople may reduce calling to avoid rejection and price resistance. Some salespeople may call less frequently because they don’t know what to talk about during recessions—they’ve run out of hope. They may reduce calling because their companies have redirected their sales efforts elsewhere.
For whatever reason, salespeople cut their face time with customers significantly during recessions. The remedy is to increase your calling by 25 percent. If you call on customers at a rate of 125 percent of the rate you normally call, and your competition calls at a rate of 62 percent of the rate they normally call, you have effectively doubled your coverage! You’re calling at twice the rate of the competition.
Salespeople believe everything customers tell them
If you call on four customers and all of them tell you how tough things are, you may erroneously assume that it’s that tough for everyone. This may bias your next presentation. For example, you may say this to the buyer, “Mr. Buyer, I understand from many of our other customers that the market is soft now. Are things as tough for you as they are for everyone else?” If this customer has an ounce of horse trader in him, he will elaborate on how his business is suffering and how desperately he needs relief from your higher prices. Just as some sellers prevail in tough times, some customers prevail in tough times. Never assume that because some customers are suffering, all are suffering. You may create your own misery with a customer if you give him or her the opportunity to wield bad news for a negotiating advantage.
Salespeople cut price versus sell value
This is always the easiest way to resolve price objections, but generally the costliest way for sellers to handle them in tough times. When you cut the price, say good-bye to your margins because it’s doubtful they will increase when tough times are over. We surveyed purchasing agents and discovered that 75 percent of salespeople cave in when the buyer objects to their prices. Our studies further identified that buyers want their costs cut during tough times. Many salespeople interpret this as price cutting. If one-of-six buyers is a price shopper, one-of-six salespeople is a price seller. These salespeople rely on price to do the heavy lifting for them.
At the heart of most price resistance is a perceived lack of equity. Buyers want to feel they are getting as good as they are giving. Put your emphasis on building the buyer’s perception of your value. If you rely heavily on price to salvage the business, you may regret the business that it salvages. It may be salvage-yard business.