One of the biggest sins committed by rookie
salespeople and even by salespeople who
should know better is dropping their price low
enough to make a buyer happy.
One of the big lessons to be learned is that
this only makes one person happy, and it isn't
you, since you'll be earning a lower commission.
When I was a rookie many moons ago I
landed a huge account, and every time
I went in they were just so happy to see
me. I sold them thousands and thousands
of dollars worth of merchandise, and the
account ate up a big percentage of my time.
After my second year in the business I did
a financial analysis of all my accounts and
discovered that neither I nor the company
made any serious money on that huge
account. The margin was very low, and I
had other accounts I made 10 times what I
did in this one.
I started raising my prices, and pretty soon
the attitude of the people who ordered from
me in that account changed too. They weren't
so happy to see me all the time, and some
times they refused to see me at all.
Why? The reason is very simple. When I was
a rookie they took advantage of me for almost
two years, and got great deals for themselves,
and I made virtually no money in return. That
isn't the way the system is supposed to work,
and when I figured it out I wanted more of a
piece of the pie.
I cut back on my visits to this account, and
then I stopped seeeing them altogether. If they
needed somethig they could leave it on my
voicemail.
Then they called me in for a meeting. I went,
listened to their proposal, and told them I would
think about it. They were willing to pay a little
more than they had previously, but not enough
to make me any money with the time that was
required to service the account. I left them a
voicemail message the next day thanking them
for their offer, but told them it wasn't high enough
to get all the things they wanted.
We had no communication at all for four months,
then they left a message asking me to come in
again. They made a much better offer this time,
but I wanted a clause in the contract that left me
free to charge market rates for anything that was
short notice.
I wanted this because this outfit was always
behind the eight ball when they needed something,
and often required things at supersonic speed.
They huffed and puffed for a little while,
and then agreed.
When I analyzed this account at the end of the
year the difference was amazing. They were
now my second most profitable account, and
over half of the orders they placed with me
were short notice.
So in the third and fourth year I made back some
of the money I had lost while I was a rookie.
You can't employ this strategy unless you are
willing to walk away from the table. Not every deal
is a good deal. If you don't get want you need out
of a deal then you should walk away.
If a deal is slanted to far in a customers favor it
won't work in the long run. The same is true if it's
too far in your favor.
Don't let yourself or your services go cheaply.
It's a serious mistake. Learn how to ask for top dollar
and hold your ground when you're are questioned
about your price. If you have to make a price
concession then you must make the buyer
concede something too. Never give up your
price point without getting something in return.
And if the buyer wants a concession from you
but they aren't willing to give you anything in return,
walk away. Negotiation is hardball, and you have to
learn how to play.
From the big saddle,
Jim Whelan
The Chairman of the Board
P.S. Every man, woman, and child just ponied
up $4082.00 to the government so they can save
companies who are giving out $66
billion dollars in performance bonuses.
thejamesrwhelanagency.com
206 407 3124
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