Five Tactics and Challenges SAMs Face … And What to Do About Them

By Jeff Cochran

Partner, Master Facilitator

Shapiro Negotiations Institute

We’ve all been involved in at least one high-pressure sales scenario, whether we’re the buyer or seller. Take the ubiquitous example of purchasing a used car:

“If you are ready to buy it today, I can offer it for as low as $24,999.”

You need a new car, but you also recognize your need to be the one in the driver’s seat, as it were. Maybe you think the price is a little steep, and you want to bring it down. What do you do?

You stall.

“This was a little more than I was expecting to spend.  I need to talk it over with my wife first.”

We rely on a tactic because we don’t like to be pressured and we want a better deal. It’s a common negotiating tool — one that we all encounter regularly, but one not all of us knows how to handle.

As a strategic account manager, you run into these sorts of stall campaigns all the time. Does any of this sound familiar?

Instead of a wife, it’s a boss. Instead of a dealership, it’s a rival company. Clients have an arsenal of tactics they use to try to get the most out of their account manager relationships. Let’s explore some of the most common:

The “Higher Authority” tactic

This is the classic shrug-your-shoulders, “it’s out of my hands” ploy. This tactic says, “I want to do business with you, but what can I do? My hands are tied.” It effectively transfers responsibility to an anonymous third party. It’s also one of the most common tactics strategic account managers encounter in daily business. Often, it’s a ploy to drive the price lower.

The “Should Cost” ploy

This is a common tactic and one of the most frustrating to navigate. Say you go to the store for office supplies and buy a stapler. The stapler rings up for $19. “That’s ridiculous,” you say. “This should only cost $12.”

It’s not something we think to do, is it? But it’s a ploy that strategic account managers run into regularly. This length of tubing “should” cost $12,500. These engine parts “should” cost $125,000. These filters “should” cost 79 cents.

If you have dealt with Procurement, then you have likely also dealt with “Should Cost.” These  days, other departments will use this tactic as well. The question is, “What can we, as SAMs, do about it?”

The “Taking Business to the Competition” threat

Ah, yes. The “I would love to continue working with you but your competitor is offering a much lower price” hurdle can be frustrating to navigate. Sometimes this is real and there really are competitors trying to win the business offering a competitive product or solution. But just as often, they actually do want to stay — but this threat is low-risk, high-reward for them.

Critical turnover

In this business, you’re only as good as the relationships you forge. Say you have a great working relationship with a decision maker – someone so good at her job that she earned a promotion or took an offer elsewhere. Now, all of a sudden you have a new client contact. This newbie doesn’t know how to justify costs to management and begins to question your product/solution at every turn.

Bringing in “The Big Guns”

Most SAMs’ response to dealing with Procurement is the same as the rest of us waking up on Monday morning: “Ugggghh. ” However, it is important to not see it this way. Working with Procurement has its pros and cons. While it may be harder to develop a relationship, it still can happen. It just needs to be approached differently.

Now you’re probably saying, “Yes! I can relate to all of these, but what do I do?!!?!” What follows is what we recommend, based on all of our years of training strategic account managers.

Generally, we recommend you consider the following three-step approach against any tactic:

1: Recognize the tactic. The first step in remedying a situation is realizing that it’s occurring in the first place. Learn how to recognize stall tactics when you see them. Are they appealing to a “higher authority?” Are they strategically creating more turnover? Whether it is on purpose or not, the first step is to be aware of it.

2: Respond effectively. These tactics only work if you let them. Take steps to defuse the situation. A response should take the form of engagement with the customer. You could try any of these responses:

“What is this ‘should cost’ based on?”

“Could we set up a meeting with you and your director so we can go through it together?”

“Before you transition into your new role, can we grab lunch with your successor?”

3. Redirect the conversation. Finally, take control of the negotiation and redirect your conversation to a safe place. If you get defensive or try to justify the price of your product or solution, you’re putting the client in the driver’s seat. Maintain control and steer the conversation back to your product/solution’s benefits. Alternatively, you could say, e.g., “The cost of the stapler is $19; tell me why it shouldn’t be.” Don’t give the client an opportunity to steer the negotiation for you.

In this case, this works for both “higher authority” and “should cost.”

Here is what we recommend when dealing with critical turnover at your customer:

Maintain consistency. Don’t think about the switch as starting over, but pick up right where you left off. Better yet, prevent this from happening in the first place by forging relationships company-wide, including with supervisors — even the C-Suite. As a SAM, your job is to forge relationships high, wide, and deep. Don’t bank on just one internal champion. It’s far too risky.

Here is what we recommend when dealing with the threat of taking business to the competition:

The “I can find a lower price elsewhere” hurdle can be frustrating to navigate. The solution: plant a seed with a well-placed question. The answer is less important than the other side having to think about it. Try these, for example:

“If you leave, what will happen to the proprietary technology we’ve built together?”

“Are you equipped to handle the burden of startup costs?”

“What would happen if the other company doesn’t deliver on its commitments? The lowest price doesn’t always mean the lowest cost.

Don’t get defensive, but do let the client know about the dangers of leaving. They spent months, even years, cultivating a relationship with you. They know you can deliver a high-quality product on time. Your support has been put to the test and passed with flying colors. Are they willing to throw it all away to save a few pennies per unit?

Here is what we recommend when faced with “the big guns” (i.e., Procurement):

Don’t view your relationship with a procurement specialist as a hurdle. View him as a potential ally. You should dedicate time and energy to befriending these procurement specialists and communicating your company’s values and account plans. You can use procurement specialists to build a rapport with customers, even if they don’t end up bidding on your project or product.

To sum up:

SAMs regularly face hurdles from strategic customers, whether it’s hard-nosed negotiating tactics or general bureaucratic messiness. Knowing how to approach these challenges will improve your customer relationships, establish rapport and ultimately lead to more business. It takes some practice, but if you enter your engagements with a plan in mind, you’re sure to see significant improvements in your outcomes.

Jeff Cochran is a partner and award-winning Master Facilitator at Shapiro Negotiations Institute. Over the last 15 years Jeff has trained and coached organizations in over 25 countries in the areas of sales, negotiation and influencing. Before SNI, Jeff was an account manager for Tessco Technologies and a Peace Corps volunteer in Nepal. If you enjoyed this post, come see Jeff speak in person at the SAMA Annual Conference May 21-23 in Orlando, Fla.

 

 

Accelerating customer decision making through rigorous business assessments

By Nicolas Zimmerman

Editor-in-chief

SAMA

At SAMA we hear it all the time: Customers expect more than ever from their strategic suppliers. They expect insights, they expect a distinct point of view, and they expect best practices gleaned from other customers. Most of all, they expect their strategic suppliers to help them solve actual business problems.

National Instruments, a global provider of testing and measurement software and hardware platforms, traditionally has functioned as a products company, which meant responding to customer challenges by helping them to achieve technical success through its testing packages. Responding to its customers’ evolving expectations, NI is learning to help its customers achieve business success by developing in-house tools and capabilities for conducting rigorous business assessments for its customers. They use these engagements to create alignment at the customer and accelerate decision making.

NI’s mission is to take the customer on a journey — first to agree on a “future state” vision and then to gain organizational consensus on a course of action and free up resources to execute on that vision.

When NI’s customers get stuck on their status quo, Deb says, it usually can be attributed to one of two factors: Either they didn’t build a strong enough business case for change, or the company failed to build internal consensus to focus on a particular problem at the expense of all the other problems it could seek to solve.

Before the engagement

Says Deb: “If you do not validate that the customer is ready to change and ready to execute, you can do a lot of good work and end up with a report that just gathers dust.”

That is why NI makes sure it has explicit customer buy-in from the beginning in the form of a formal memorandum of understanding, sponsorship on the customer side from someone at VP-level of above and a nominal upfront payment for National Instruments’ services.

What the customer brings to the engagement:

  • Highly confidential data that normally would not be available to suppliers
  • Access to the right people in the customer organization

What National Instruments brings to the engagement:

  • Industry best practices — common problem statements from best-in-class organizations and the high-level testing strategies they’ve used to overcome them
  • Sophisticated financial modeling capabilities, which they use to build a compelling business case

Building Internal Consensus through Business and Technology of Assessments

Research from Harvard Business Review shows that, in the past two years, the average number of entities involved in making complicated solutions purchases has jumped from a little more than five to nearly seven. This helps why so many “slam dunk” projects fail to gain the requisite internal consensus to move forward.

“Our starting challenge is the customer status quo,” Deb says. “If we can’t challenge the customer enough to change from that, this whole flow doesn’t work. They may go through this process and decide, for all sorts of reasons, that they’re not going to move forward. So our whole idea with these business impact engagements is to help the customer through this journey.”

They do this by conducting comprehensive business and technical assessments of the customer organization, which consist of six steps:

  • Assess testing organization. Because NI’s customers run the gamut from consumer electronics and heavy manufacturing to medical technology, the company is in possession of copious data on what best-in-class testing looks like. Using this stockpile of data, NI assesses its customer’s testing capabilities across five competencies ranging from the highly technical to the highly business-oriented.
  • Identify areas for improvement. NI grades its customer in each of the five competencies as “average,” “above average” or “below average.” The goal isn’t necessarily to be above average across the board but to identify how important each area is to the company and to use that to guide decisions on where to invest in improvement. The goal is allocate resources most efficiently for maximum impact.
  • Co-develop a test TCO model. NI creates a baseline model to show the customer its current distribution of costs. The idea is to open the customer’s eyes to the “hidden cost of the status quo,” Deb says. While customers usually have a very strong sense of their hard costs (e.g., material costs), they are often shocked to see how much “invisible” costs (like hardware and software development) impact their bottom line.
  • Quantified high-impact recommendations. Using the baseline model, the company’s current testing capabilities and the metrics that are most important to them, NI forward projects ROI and payback period for addressing certain areas.
  • Proposed multi-year plan. NI makes a set of recommendations for improvements, highlights the metrics they believe will be affected, and tries to quantify the risk of doing nothing.
  • Help build internal consensus. Even more than highlighting the benefits of moving forward, NI sees its role as lowering the customer’s perceived risk of a given project. Says Deb: “You may have the world’s greatest ROI project, but if the customer perceives there is tremendous risk associated, they will back off.”

NI has learned from its past mistakes and feels like it has fine-tuned a process for conducting its customer business assessments. A rough outline of NI’s process follows:

STEP 1: Business alignment at the VP level or above. Discussions are held with the leadership sponsor regarding alignment with the company’s business needs and signing a Memorandum of Understanding (MOU).This ensures NI will get access to the right people at the customer and the necessary data during the information-gathering phase. This also encourages commitment to execution on the back end

STEP 2: Kickoff engagement and onsite interviews. NI uses these interviews to understand the customer’s processes, how it uses its assets and how it makes investment decisions. It’s during this stage that NI makes sure its financial models are tailored to the client’s specific needs and goals.

Interviews last no more than an hour and are done with the fewest number of people possible. NI focuses on three levels of customer stakeholders: engineers and other “boots on the ground,” middle management and senior management responsible for mapping long-term strategy. NI pays special attention to the people up- and downstream from these key stakeholders, as it’s usually at these “handoff” points that Deb and his team see the most value gained or lost. “Most of the value creation we find is at these interfaces,” he says. “Within these blocks, most companies do a decent job. It’s in these ‘handoffs’ and interfaces where value is lost.”

STEP 3: Process maps and test TCO models creation. National Instruments develops process maps, showing the decision flow based on the interview and follow-up conversations, and builds factory and service center TCO models that identify needed data for input.

STEP 4: Acquire the right customer data needed to build out NI’s projection models. This is the most difficult step, but Deb says it may also be the most important. You can show a customer case studies all day, but unless you’re using the customer’s own data you are going to struggle to create the urgency needed to make the case for change.

Deb emphasizes that this stage of the engagement must be beneficial for both sides. In exchange for furnishing NI with the data it needs to populate its models, NI provides its customers with data insights. While some of the information the customer provides NI will be readily available, much of it is data the customer has never captured and, in many cases, doesn’t even know how to capture. Here, NI works with its customers to think through its knowledge gaps and how to build proxies to capture missing data.

STEP 5: Report preparation and executive debrief presentation. A formal report is prepared and the highlights presented to executives in a debriefing presentation, followed by discussion on follow-up execution. The deliverables include a report on the highlights of the interviews, a TCO financial model including ROI, a formal business report documenting insight and an executive-level summary.

But the business and technical assessments are just the beginning. While they free up budget and resources to start investing, customers still need help executing all the way through the end. If you over-promise and under-deliver, it may be the last co-creative engagement you have with this customer. But if you’re there until the end ensuring a successful execution, you will likely find yourself with a long-term strategic partner.
For a more in-depth treatment of NI’s award-winning process for conducting customer business assessments, see the forthcoming issue Velocity magazine.

Key insights from the floor at SAMA’s Pan-European Conference

By Bernard Quancard

President & CEO

SAMA

Plus ça change, plus c’est la même chose.

This French proverb (“The more things change, the more they stay the same”) has been perhaps overused, but it is interesting to note how much it applies to the best practices of strategic customer management. One thing I love about SAMA’s conferences, training events and leadership symposia is the dual focus on emerging trends impacting strategic account management and “evergreen” subjects that never lose their currency with strategic customer-centric organizations.

With that in mind, I offer you a few critical observations gleaned by my senior team and me during two days with the SAMA community at the SAMA Pan-European Conference 12-14 March in Berlin. These are in no particular order, and, like SAMA’s conferences, they contain a mix of old and new wisdom — and, hopefully, a little something for everyone.

  • Customers want their strategic suppliers to be more proactive in proposing solutions that address their big strategic challenges. In his opening keynote, Arcadis CEO Peter Oosterveer talked about personally visiting each of his company’s major strategic accounts when he came aboard — both to telegraph his personal commitment to his customers and to listen to what they had to say about doing business with Arcadis. In his keynote, he said he came away from those meetings with two main realizations: (1) Customers do not care one bit about their suppliers’ internal issues and organizational challenges; they just want them to follow through on their commitments and help them solve their own business challenges. And even more critically, (2) customers are eager for their strategic suppliers to more aggressively and proactively bring them solutions that create actual business value. If you, as a SAM, are waiting around for your customer to approach you with a problem, you risk missing out on opportunities to co-create value.
  • Despite having generally strong solutions, most companies report a sad inability to tell their story well enough to capture the imagination and spend of their customers or to accelerate the rate of the sales cycle.  The real issue is that companies’ messages are not structured in a way that the human brain wants and needs to consume information.  The ultimate standard for all communication is that it can be repeated. This makes sense when you consider that complex customer purchasing decisions are made by an average of 6.8 people from a range of functional areas, roles and geographies. This means a salesperson’s key customer contact must then retell the sales story to a network of other stakeholders in a concise and convincing way.  The majority of the time they can’t, resulting in long delays in getting a decision — or, worse, a deal that is dead on arrival due to the story’s lack of compelling clarity and clear benefit.
  • SAMs must learn how Procurement works and how they’re measured. Presenter David Atkinson of Four Pillars estimates that only 10 percent of sellers truly understand how to effectively work with Procurement. What makes this such a head-scratcher, according to Atkinson, is that Procurement’s toolbox hasn’t changed much over the years. Atkinson proposes that strategic suppliers should incorporate Procurement metrics into their account plans. If SAMs can communicate their value in a way that aligns with how those in Procurement are measured, then they will be better positioned to make their Procurement counterparts look good, which will help steer the conversation away from price and toward value.
  • When selling to the C-Suite, your messaging must be calibrated to each relevant stakeholder. Jacques Sciammas, who served in the C-suite at Charles Schwab, Berkshire and BankBoston, reminds us that every executive is measured differently and sees business decisions through his or her own prism. You can’t come in with a one-size-fits all message and expect to get the traction you need to be relevant to and resonate with each individual’s vision and measurements.
  • Most B2B companies are not truly customer-centric. According to Gallup, companies’ lack of customer-centricity is leading to a double whammy of anemic growth and customers’ migration to disruptors. And while SAMs are the primary keys to success of a SAM initiative, they can only be successful if they’re backed up by a strategic customer-centric organization. Based on extensive polling and interviews, Gallup found that fewer than 30 percent of companies are fully engaged in a true customer-centric approach. And where does the customer-centric approach need to originate? I would point you to my first takeaway: Just think about the signal it sends to customers when a strategic supplier’s chief executive sits down with the sole purpose of listening to his customer. If suppliers aren’t set up to enable the SAM, companies risk failing to attract and retain top talent and ultimately struggle to grow organically and to reap the benefits of well-intentioned leadership initiatives.
  • Suppliers are all at risk of having strategic customers leave you.  These are the top three reasons customers make a switch: (1) supplier is too difficult to work with, (2) supplier takes the relationship for granted, and (3) supplier doesn’t do an effective job monetizing its value. While many suppliers think they are engaged in strategic account management, many of them are stuck on the treadmill of managing deals. As a strategic supplier, you can’t give your customers any excuse to start weighing their options.
  • The importance of creating a coaching culture at your company can not be overstated. As I wrote above, the SAM is the fulcrum of the entire strategic account management effort, so attracting and retaining the best talent is a business imperative. Psychometric tests widely available today can help answer the questions every SAM leader should be asking: Does a potential SAM candidate have the requisite inherent makeup to become a great SAM? As a SAM coach, how do I know what areas to focus on developing for each individual on my team of SAMs to improve their long-term efficacy beyond just “deal coaching”? Other questions SAM leaders need to ask themselves: Should I coach my SAMs myself or hire outside coaches? (Either way works.) Should my coaches be certified? (Absolutely, yes.) And should I track and measure an individual’s growth and the ROI of the coaching effort? (Most definitely.)

The last thing I want to leave you with is from a conversation I had in Berlin with a very experienced SAM. When I asked him why he had taken the time out of his incredibly busy schedule to attend the Pan-European Conference, this is what he said: “I just got assigned to a new customer after having successfully developed my current customers for more than five years. I decided it was time to remind myself of the best and new SAM practices, versus relying on what I remember working in the past.”

Do you need to brush up on what the best are doing with their most strategic customers? Join SAMA for our 2018 Annual Conference May 21-23 in Orlando, Fla. Click her for more details.