Great tip today from Shamus Brown who writes the Industrial Ego Newsletter (you can subscribe at www.industrialego.com)
It's centered around reasons NOT to do proposals for customers. It's good stuff!
Here it is...
2 REASONS NOT TO DO SALES PROPOSALSWhen someone asks you for a proposal, what do you do?
How do you react?
Do you get excited because you've made it to the next stage
in the sale?
And then do you go back and bang out a great proposal that
elaborates on all the wonderful capabilities that you have
to give your prospective customer?
WHY I HATE SALES PROPOSALS
I hate it when someone asks me for a proposal.
One reason I dislike this is because it usually means that
the person who asked for it cannot make a decision.
Another reason is that proposals are a lot of work.
These days I rarely do proposals.
You see prospects know that if they just ask, most all
salespeople will happily produce a proposal.
So they ask multiple vendors for proposals.
3 REASONS WHY PROSPECTS REQUEST SALES PROPOSALS
And they do this for three reasons:
1 - They want to compare prices and terms
2 - They want documentation to prove to their bosses that
they are doing a "good job"
3 - They need a document to help them internally sell the
vendor they like to other influencers and decision-makers
that they work with or for.
Most proposals are done to fulfill reasons 1 and 2.
They are comparing prices and terms, and they are creating
butt-covering-paper-trails that show they did their
diligence before making a decision.
Of these reasons, the only one I want to participate in is
number 3.
MAKE THEM SELL YOU ON DOING A SALES PROPOSAL
Here's what I recommend you do when asked for a proposal:
Ask them if they are going to purchase from you.
Most of your prospects and customers will be surprised at
this question.
They are used to salespeople running back to their offices
and getting them a proposal just a like a puppy dog who's
been thrown a stick.
When you ask them if they are going to purchase from you,
you are saying "I am only going to do this proposal if it is
worth my time".
The answers you get to this question will tell you a lot
about where you stack up versus your competition.
If you are told that you are being given "fair and equal
consideration, the same as all other vendors", you should
know right then and there that you are not in the lead.
Because if you were in the lead, someone would be telling
you and helping you win.
Use the "are you going to purchase from me" question to
flush out where you stand in the deals that you got into
after your competition.
Presume that your competition is in the lead, and make the
prospect sell you on why you should expend more effort to
sell to them.
Don't give a proposal until either you have an inside
champion helping you and showing you how to win, and ideally
you should save the proposal work as a final step before
entering into any closing negotiations.
HOW TO RESPOND TO THEIR SHOCK AND SURPRISE
As an alternative when asked for a proposal, you can reply
by suggesting to discuss what would be contained in a
proposal verbally for budgetary or planning purposes. You
can also suggest providing any marketing brochures or
company literature that you might have available.
Watch the prospect's surprise, and listen to them tell you
that you are supposed to give them a proposal because you
are a salesperson. That's your job they'll say.
And you can reply as a businessperson by saying that no your
job is to wisely use your company's time and resources to
find customers that are a good fit. And until you and the
customer get closer to knowing that this is a good fit, any
written proposal is premature.
Be flexible, but most importantly be wary of prospects
wasting your time.
If you test everyting with the question "Is this worth my
time?" then you can get your closing rate to 50-90% of
your deals.
Hi Dan,
Matthew W, Grant here...a new, fellow author on Know More Media. My blog is PurchaseRealm and I have been in the Purchasing field for 8 years. I loved the headline of your post; it certainly caught my attention.
I know you referenced another newsletter. Did that give you the idea to write your post or was the material a summary of the other person's? I'm curious because I'm not sure whether these are your actual examples of dealing with proposals or his.
I'm writing my blog to support Purchasing professionals and to give sales people access to a Purchasing professional so they can get that perspective on their issues. Knowing that, please understand I want help sales people be successful. That's why I have to weigh in on this "ditching proposals" idea.
First, your post is right that we would ask for proposals from multiple vendors, therefore, most of the bidders will not in fact, win the business. That is a fact of doing business.
Your post is also right that the response to "Will I get the business?" should be "You will have a fair and equal chance." Any other answer would be unethical. I can't deny that many Buyers would give the vendors more information and indicate who is their favorite, but that isn't appropriate.
I, and most Buyers I know would not accept "a verbal discussion" in place of a proposal. Everything should be in writing and it has nothing to do with showing one's boss or client that a "good" job is being done. It has to do with creating a paper trail for reference and verification when inevitable disagreements, misunderstandings, and miscommunications arise later.
If a salesperson tried to "sell me on why they should expend more effort to sell to me," they would be out of the process. Buyers are bombarded with potential vendors via sales calls, meetings, and literature all day, every day. I would not spend anytime with someone who, right from the beginning, gave me an indication that he or she was either going to be difficult to work with or would not follow the procedures I was establishing to do business. If one vendor refuses to do a proposal, another gladly will and that person will be part of the final consideration process.
One more thing...physical proposals stay around the desk and office for years, they even outlast the staff members who asked for them. A proposal today could result in business at any time in the future.
Sorry for the long post. I felt the readers would benefit from another perspective to this discussion. I will look forward (yes, really!) to you stopping by PurchaseRealm and giving the readers your sales perspective on my upcoming posts. Maybe we can do some debate-like structured posts in the future!
Matthew
Posted by: Matthew W, Grant | February 16, 2006 3:54 PM | Permalink to Comment