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Wed, Dec 3, 2008 11:28 EST
10 Stupid Things ERP Software Salespeople Say
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Posted by: Thomas Wailgum in Rants Topic: ApplicationsBlog: Enterprise Software Unplugged
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Vinnie Mirchandani has witnessed his fair share of vendor negotiations first-hand—as a consultant to companies in the RFP and vendor-evaluation processes with his firm Deal Architect, as a global outsourcing executive at PricewaterhouseCoopers, and as a former Gartner analyst. He's helped his clients negotiate enterprise software contracts of $5 billion and claims to have saved technology buyers millions of dollars over the years.
He's also heard just about every possible software salesmen cliche, exaggeration and come-on. So it is with equal amounts of seriousness, frustration and mocking humor that he developed his list of the "Top 10 Stupid Salespeople Tricks," which are quite amusing. The anecdotes are particularly relevant in light of today's software-buying environment. (See ERP Software: How to Get Big Discounts Now for insight and advice on what to do to get a good deal.)
Of the 10 sales lines, here are my personal favorites, with Mirchandani's witty retorts:
"We want to be a partner, not a vendor." OK, in that case we want a board seat and some equity....
"Just wanted to make sure you saw this about competitor XYZ." Usually it is something unflattering from the press or an analyst. I tell my buyer clients to respond: "Attached is what that a competitor sent us about YOUR company." That stops the negative traffic pretty quick. Negative selling usually boomerangs—few buyers find dirt about your competitors that titillating.
The start up sales pitch: "We do not believe we have any competition." In that case your category may be still immature. Few buyers want to be that pioneering.
"Gartner (or Forrester) puts us in the top right of their magic quadrant." Gartner has many, many quadrants, and they change at least twice a year. In a recent deal, three systems integrators had different quadrants in which they were magically all in the top right quadrant.
"You are trying to commoditize us"—a common statement during negotiations. Excuse me, most of corporate America makes 10 to 30 percent gross margins. Even the offshore vendors are close to 50 percent gross margin and the bigger software companies all make 70 percent plus. If there was a Wal-Mart like channel, tech vendors would understand what commodity pricing meant.
Discount shock: "I cannot believe you can even talk about such a steep discount—never happens in our industry," said a salesperson during a negotiation last year. I e-mailed him a link to the Department of Justice website which made public several of Oracle's pricing and discount sheets. Sheepishly, he agreed to a higher discount a few days later. Realize there are many buyers who bluff, but a few of us have benchmarks to back us up.
To read the rest of Mirchandani's musings, check out his post. Heard any other good sales lines? Let me know.
crm, enterprise software, ERP, software sales, supply chain, Vinnie Mirchandani
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I can't count the number of times I have been told by a vendor, usually after a request for even common terms and conditions, "I've never been asked for that before!".
The intent was to invalidate the request and position the request as outside the norm so the requester would second guess themselves and put it aside.
Responding with a smile and the statement "Well, now you have!" usually put the request back on the table.
I was pretty much convinced after the third response that this was yet another canned comment taught in software salesmanship 101.
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Mirchandani makes some good points but my retort to him is that by driving software to commodity price status, despite - when applied correctly can fundamentally improve a customers business all these "vendor management" consultants do is reduce the activity to the same mediocre programming quality levels that are prevalent with the offshore development model.
The net result of services like his is that the ongoing working relationship between the software vendor and the customer is driven out of the transaction by the price. As a result the vendor is forced into "sell and run" model and is not motivated to stick around and ensure that the customer is mentored and supported in the development of solutions using that software.
Cheap does not always mean better - ask anyone who bought a Buick because they didnt think a BMW was value for money.............
BMW is doing well and GM (Buick) has its hand out to the taxpayer to stave off a well deserved bankuptcy.
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Without getting into other specifics, your car purchase is analogy is very poor and irrelevant. The question is not about buying a buick or BMW the question is about being open, honest and fair in negotiations. The free market will determine what the better product and value is but only if there is a full disclosure of information. Advertising and sales-speak try to obscure and slant the facts to the detriment of the market because the 'best' products may not prevail. As long as this intentional deception is practiced, it is the consumer's obligation to wade through it and diffuse it whenever possible.
To bring it back to the car analogy, no one benefits from bilking the customer $500 for floor mats except the dealer and salesman.
-Patrick Beyries
hmmm...your comment about sell and run, even after 50/70/90% margins? I suggest every tech vendor spend a year in the grocery, auto and other industry then they will empathize with how good they have it, how much waste there is in most tech sectors with SG&A 4 times R&D etc.
BTW my clients are all in it for the long term. They don't hire firms like mine to just get a short term deal. They have little interest in vendors who sell and run and don't drive me to find them vendors which do.
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Most of your top 10 list is spot on and accurate, however just as with Letterman's lists, the #1 listing is always the least impactful.
Revenue Recognition is a major issue for software vendors. Throughout my career, every single company I have worked for, especially the major vendors with thick, murky policies, have been an absolute bear to navigate through from a rev/rec standpoint. Asking your salesperson to create rev/rec miracles can often bring scrutiny from legal, accounting, and pricing which would otherwise be avoided if titanic requests weren't being made.
My point is, its a two way street, and you should know your salesperson and how to work them. "Excuse #1" is often times valid, and asking your salesperson to go down the path of battling rev/rec could end up hurting you in the long run and hurting them in the short run. This is the 100% gods honest truth. If you, as the buyer, have worked your salesperson properly and have opened the lines of trust and communication, they will fight an internal battle they can win on behalf of you as their customer, not because of commission, but to do just that - to win on behalf of their customer. A battle they cant win will be met with resistance, like rev/rec.
It is not you vs the world. Approach negotiations as a team and you'll find you not only get the best deal, but every single rule in the book will be bent and broken for you moving forward. IMO, the salesperson should be the one to start this cycle and instill this level of trust in you, but you have to be a willing participant as well.
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