We talk a lot about how sales teams can Negotiate with Backbone, and rightly so. This is a huge opportunity to take action in limiting discounts that companies think they need to give to win business. Our clients’ sales teams are making significant improvements on margin in negotiating their very next deal after learning the Backbone framework.
The key to success however, really lies in ensuring that leaders, coaches, and executives can manage with Backbone. It only takes one executive to undermine the Backbone and confidence of an entire sales team or worse, the entire sales force:
One such offender was the President of a hardware manufacturer. We were asked by the sales leader to help his sales team in a negotiation to win a large order for computer drives. His team was up against 6 other approved vendors. Procurement set the target price for the device at $7.50 (numbers disguised) and the competitors had met that price. We calculated that the time-to-volume was worth roughly $4 per unit and decided to charge an additional $1 for a price of $8.50. We had the sales team put the time-to-volume performance into the presentation. Everyone on the team was behind the price except for the President.
The head of Procurement came in and ripped our sales team up one side and down the other. After 3 hours, he left the room for an hour and came back and tried it again. He left again but this time he never came back; instead the President of the customer company came in and apologized for what they had put our team through. He then announced that the head of procurement was fired and placed 100% of their business with our client for a price of $8.48. It became our client’s largest and most profitable account. We successfully rolled out Backbone through the international force of 400 salespeople and they loved it. Unfortunately, our client President never got on board. In fact, he stood up at a sales meeting and made the following statement: “We won’t lose any business based on price.” At that point, they had a headcount of 32,000. When the Board finally caught up to his problem, they were down to 7,000 people. They fired him but it was too late; they lost the company.
Being able to Manage with Backbone means several things:
1) The courage to set a walk-away price and stand behind it
2) Foresight to require salespeople to plan the negotiation ahead of time
3) Participate in the sales training to build the skills necessary to defend price
4) Implement incentives that encourage the right behavior in all of your customer facing teams
5) Have the confidence in your salespeople to lead smart negotiations
It is only through these steps that a leader can truly create confidence in their customer-facing teams, defend their margins, and grow their revenue.