More than ever price has become part of the sales discussion. Companies are under tremendous pressure to lower costs and squeeze as much out the budget as possible. This environment is having tremendous effect on selling as buyers are making decisions primarily on price.
Because of this trend, I thought a good What Would You Do Wednesdays would be to create a situation where the buyer is ignoring all the value and wants to only focus on price.
Alex has been chasing Webnoxious for the last 12 months. Webnoxious is looking for a new data center provider and Alex’s company is the best in the industry. Alex has painstakingly crafted a custom solution for Webnoxious. Alex’s company understands the unique requirements of Webnoxious and has worked with them to build a custom solution that would support Webnoxious for years to come.
It is a competitive bid. Alex knows his number one competitor is also bidding for the business. To combat the competition Alex and his company committed to meet a requirement requiring them to make an unplanned capital investment. Alex knew his competition was incapable of meeting this need and knew the committed investment would go along way in differentiating them.
Webnoxious has told Alex they want to go with his company. Webnoxious feels Alex’s company has the best solution and meets all of their requirements. They have stated the solution Alex put forward was exactly what they wanted and even went so far as to say it was industry leading. Webnoxious has said they want to close the deal and start implementing the solution immediately, BUT the price is too high and they need a 10% discount or they will; “Unfortunately be forced to go with his competition.”
Alex is flabbergasted! He had pricing agreement all along the way. He had been very transparent with the fact his company was making a capital investment that was not part of their overall plan to provide the features Webnoxious required. Alex is feeling completely blindsided. He has gone to his buyer who told him the budgets are tight and the deal HAS to come in at a lower price. Alex engaged his CEO, and his sales leadership. They have been unsuccessful at getting Webnoxious to budge.
Alex needs this deal to make his quarter. It’s a huge deal with tremendous upside opportunity. However, the deal on the table is a good one. It’s only 10% above the competition and their proposal lacks the key feature Alex’s company committed to. Alex is tempted to take the deal. It’s worth 9 million dollars over the next 3 years. It seems a foolish to walk away from a 9 million dollar deal over 10%. At 8.1 million, the deal would still be profitable, but not nearly as much. Alex is confused, he’s not sure what to do. What would you do?
How would you handle this situation. Have you ever been in a situation where a customer tried to deduce a good valuable product or service to a cheap, inexpensive commodity? How did you handle it?
What would you do if you were Alex?