Beware of sales expense traps
Stiffer competition is leading most businesses to increase sales expenses. Some procurement processes are so absurd that they also increase purchasing costs… but that’s the topic of a different post.
Be aware of the TCN
Haven’t heard of the TCN? The TCN is everywhere all at once. It takes on several forms and indirectly undermines many sales reps.
Total cost of negotiation. That’s what’s hiding behind the acronym. The TCN is concealed and calculated in several ways:
Pre-sale cost: Before you even bring discounts into the equation, the simple fact of travelling, providing sales resources and gathering experts all represents a cost. In this respect, some buyers can get us to invest amounts that will be hard to justify if the deal falls through.
Opportunity cost: A classic. The more time a sales rep spends on a deal with their team, the less time they have for other opportunities. So there’s a pre-sale cost in time and resources. But lost opportunities also have a cost, which is tougher to evaluate.
Emotional cost: A really deceitful buyer will imply to the sales rep that they’re on the inside track and the deal is within a hair’s breadth. The goal is to get the seller to share their confidence and expectations with as many company colleagues and managers as possible. The more they talk about it, the more they will be reluctant to let the deal fall through.
You get the picture.Beware of wily buyers who will inflate your TCN right under your nose. And the cost of failure increases in step with the TCN, swinging the balance of power in the buyer’s favor.
But as is always the case in negotiation, two can play that game. The client also has a TCN. The more time they spend with you, the more they get their teams involved, the more concessions they ask you to make, the more time passes and deadlines approach, the more the client becomes dependent on their sales dialogue with you. They’re trapped by their own TCN.
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