In today’s environment of low margin and low growth, for many industries, decision makers have added pressure to make sound purchase choices. A sure way to destroy long-term relationships is to have clients and customers buy more than necessary or more than they can afford. This can result from over-priced offerings but more often, this happens when customers or clients are sold more than is necessary. In either case, your offering is not viable for that customer.
In B2B, today’s customer is more informed but they still count on the sales person’s advice. This is particularly true in industries where innovations, or lack thereof, constantly change previous buying standards. For example, PC innovation is happening slower and people are increasingly using smartphones for PC tasks. PC replacement has slowed. It has become even more important that the sales person accurately predicts and communicates, to the customer, how much they should buy. Often, less is more.
When Boeing decided to build their Spokane, WA, plant, they deployed innovations in many areas including manufacturing, employee relations and computing. They used mini-computers to manage many parts of the manufacturing and business operations. I worked for HP at the time and we won the business but then it came time to determine how much computing resource they really needed. This is where selling less, at the time, resulted in selling much more in the long term.
There were new technologies, called fault tolerance and hot backup, that everyone wanted. This was hardware and software that allowed a computer to know when it was about to fail and cause it to switch all its users to another computer so there would be no interruption in service. At HP, we had just started shipping new RISC (Reduced Instruction Set Computing) architecture, which had fewer moving parts making computers much more reliable and easier to fix. So computers didn’t breakdown as often and repairs usually came in a matter of hours rather than days.
The GM of the Spokane plant wanted the latest and greatest, which included computing. The computer we’d specified for their core applications, cost over a million dollars and was about the size of a large refrigerator. The GM wanted a second million dollar computer as a hot backup, which would be on all the time, just in case the other failed. I hadn’t put this in the bid sheet but, at the GM’s direction, his team added it to the purchase order.
I knew this was overkill and that they’d end up having a million dollar computer that was used less than once a year. I explained the hot backup technology, to the GM, along with how little time these new computers were inoperable. I suggested that he get a much smaller computer that cost $150,000, and have the most critical tasks running on it so if the other computer failed a small number of users could still work for the short time the main computer was being repaired. It took a while to convince the GM because, as he later told me, he couldn’t believe a sales person was telling him to spend less. In the end, they took my advice which saved them about $800,000.
Some might think I was wrong not to take the added revenue. However, this was a long-term relationship and it was worth more to have them trust me than it was to get the additional commission check. I know it seems altruistic but this kind of situation has presented itself many times in my career and each time I’ve focused on what was right for the customer and it’s typically given me and my customer good results.
In the case of Boeing Spokane, their leaders told their peers what I’d done which led to other plants wanting the Spokane solution and wanting to work with me. I gave up that single $800,000 sale but got $1,800,000 in referral sales. Additionally, because of the trust I’d built, Boeing put me on their IT configuration committee for the 777 project. This was a team of 20, who decided how many servers, PCs and terminals were needed from all computer manufacturers, not just HP. I was the only non-Boeing employee, who voted on how much computing hardware they needed.
In this case, selling less resulted in selling much more in the long term. I also became an insider by earning their trust. Focus on what’s truly viable for your customer or client and you’ll be rewarded in the long term.