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 US$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.
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.