There’s an Unlimited Demand for Free

By Conrad Smith, Vice President, Consulting Services

March 28, 2017

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What is it with customers always asking for more?

Sure, you might make a point of offering various end-of-quarter, end-of-year incentives to induce them to buy, but everyone does that and even that has its limits. At some point, you must start to wonder when your customer is simply going to acknowledge the value of your partnership and stop chipping away at your margins.

You also might wonder how it got to the point where you’re fighting tooth and nail for every basis point of margin.

But here’s something to consider: What if shrinking margins aren’t just about your customer demanding more? What if they’re also about you conditioning your customer to ask for more? Making matters worse, maybe you’re not even aware of how you create the possibility for value to leak out throughout your sales cycle.

Most sales cycles are long and complex—and getting more complex by the day. You now have to manage lots of buyers and influencers, each with their own set of goals and agendas, which don’t always align within a given stakeholder group. Because individual stakeholders have unique, and sometimes divergent priorities, they tend to ask for stuff that suits their specific interest.

The natural reaction for salespeople is to oblige them and say “yes”—all the more so when the relationship is delicate or developing. Salespeople want to come across as cooperative; they want to be seen as exceedingly helpful. So the answer is almost always “yes” when a prospect makes a simple request for, say, an additional meeting, a pilot, another proposal response, or…you get the picture.

Another challenge you might confront as salespeople: The “promised” close by the end of the quarter, so long as you tack on one small added feature. Naturally, your customer can’t pay any more for it. But you’re told that if want to close the deal by the end of the quarter, you need to “help your buyer out, give them a small win”. After lots of internal conversations, you and your manager agree to move forward.

And then the “promise” gets broken. Not only does your deal not close, the buyer has gone on vacation and you’re left in the lurch. Now you’re getting pressure from your manager because you missed your commit (which means she missed hers too). Now your deal has lost momentum and is on the verge of fizzling out altogether into another “no decision.”

What’s happening here?

More than likely, experiences like this are symptomatic of a condition you are just as culpable for as your customers are. If you give your prospect everything he asks for, without exchanging something of equal value, they start to think of you as “free.” And make no mistake: there’s an unlimited demand for free. 

You may not think of what you’re giving away as free, but if you’re giving things of value away without recouping anything, that’s exactly what they are. I’m amazed at how many times I’ve heard a salesperson say to a prospect, “Oh, don’t worry, that’s free.”

This is a prescription for margin erosion, and if you don’t push back against it with some unconventional and counter-intuitive skills, you are complicit in that profit-killing process. Once you condition your customers to expect to exchange no value for all the added benefits and services and knowledge you bring to the table, you have groomed them to continue asking for more freebies, again and again.

So why not ask for more? Why not identify opportunities for exchanging value instead of giving it away? Why not send the right signals when managing your concession strategy?

That value creation process—what we call executing pivotal agreements—is one of the subjects I’ll take on in my upcoming webinar, Monday, April 10 at 10 am PST.

I hope you’re able to join me. Register for the webinar here.

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