Sales Experience in Subscription Based Services
Get the sale as soon as you can. Don’t wait. STRIKE NOW!
If there is a customer who fits directly into your target customer segment, do not linger around haggling too much over price and discounting. Go all out and get them unless the demands are extraordinary. Increasing your customer base in the target segment (core target segment) builds a sectoral supremacy for the organization. Not only that, it gives the sales team confidence that the organization is willing to go all out and support them to acquire customers. It gives customers in the segment confidence that this organization is the best option as it is being used my a majority of players in their segment. It is willing to go the extra mile.I have been in negotiations which spanned 6-8 months while haggling over 5% of the initial investment amount. In a particular case, negotiations spanned 8 months and neither we nor the customer was willing to budge as it had become an ego issue for both parties. A sort of ‘who blinks first’. Eventually we onboarded the customer at their desired price. In the process, we lost 8 months of subscription. Interestingly, the client had agreed to our initial subscription quotation and never negotiated on it in the whole 8 months. Had we onboarded him even 6 months prior, we would have made up far more than the discount amount we were haggling over.
A Sales Leader in one of my previous organizations told us young sales people a short personal story. He was looking for a house to rent in Gurgaon. He liked one place and spoke to the home owner. The owner asked for a rent of Rs. 1.5 L, he was willing to give 1.25 L at the most. Neither party backed down and the deal didn’t go through. Eventually he took another house closeby within his budget. At the time of telling this story, it had been 5 months since the negotiation fell through. He said he drove past that house every day on his way to work and the house was still empty.
In looking for an extra Rs. 25,000/- per month, the person lost Rs. 4,75,000/-. That is 29% in total on his asking rate. In refusing to offer a 17% discount on rental, he lost 29% of revenue over the whole year. As more time passes, the losses pile up.
How Customers react
My experience is that customers with whom I have spent too much time negotiating for small amounts, have lived with a feeling of discontent. The perennial Indian “aap itna bhi nahi kar sakte”. When I have begrudgingly agreed to their asking rate in the first 1-2 conversation, clients get a feeling of happiness. It gives an assurance that I am willing to go out of the way to serve them. Do something special for them. These clients have stayed longer and re-negotiated much later and that too very little. It goes without saying that whatever product I offer must be a good product and be backed by excellent customer support.How the Sales Team reacts
Whenever I have agreed to or approved a discount for a team member’s client, that person has felt assured and confident that I am backing them. They feel that I want them to succeed. It acts an amazing boost of confidence, and generally those deals have closed soon. If not, the sales person at least feels confident that me and him are together in this. He has come back to discuss the details of the negotiation with me and why it didn’t go through, what steps we could take on the product or service side.In reverse, if I always refuse to budge or rarely agree on the rack rate (something that I have experienced myself a number of times over my career), it signals that a) I do not support my sales team and don’t want them to succeed, b) I’m more interested in making money rather than serving clients and c) I have little understanding of the market.
The sales team would never look at the real reasons why we lost the negotiation and continue pointing out the refusal for discounts as the only reason. They would enter the next negotiation low on confidence. Any discussions between me and the team be it reviews or coffee break chats would lead to arguments over rates, pricing and discounts with the team believing that I am separated from the market and have lost its pulse. They start feeling that if we are not able to go the extra distance for our core customer segment, what would we do for other segments. Overall, it turns into a bad situation and negatively effects morale.
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