Every company in America has a niche --- something that they do differently; hopefully better --- than their competition.

Sometimes this niche can be significantly different (an example that comes to mind is the Apple iPhone --- which for an inordinate amount of time enjoyed a completely monopolistic position) while at other times the amount of differentiation is virtually imperceptible. A good example of less-dramatic differentiation might be the service one receives at a local restaurant.

Sometimes you have to look very hard and very closely, but it’s really hard to fathom a business that is without some kind of differentiator.

This “special distinction” is generally known as the “value proposition” offered by that particular business. It’s the primary reason why the client patronizes that business in the first place.

I bring this up in light of the fact that, and even though every company in America has some way of differentiating itself from others, the salespeople for these companies still persist in selling based on price and price alone. Allow me to illustrate.

Salesman for “Company A”

Consider this imaginary but realistic exchange between salesperson and prospective customer at what we’ll call “Company A”:

Salesman: “Good to see you. I trust you’re having a fine day.”

Following an obligatory amount of small talk about such things as weather and sports, the salesman proceeds to the business at hand. “The reason I wanted to drop by today was to tell you all about our brand-new Materials Handling System, the XL-1,000. This system not only moves raw materials, but can be programmed to direct those materials to different inventory staging areas as well as move finished product throughout the warehouse. It’s really quite amazing!

(The prospective customer nods in agreement and so the salesman continues.)

And here’s the best news of all --- the list price on this baby is only $1 million; but if you buy it and pay cash within thirty days from today, I’m authorized to cut the price to just $750,000.00.”

The customer leans back in his chair. He interweaves his fingers behind his head and says nothing for a good long minute. Finally, he opens his mouth: “You say you’ll cut the price to three-quarters-of-a-million-dollars if I pay you in thirty days?” he asks.

“Yes,” the salesman replies, warming to the question as it clearly indicates more-than-casual interest.

“So what if I pay you in 180 days? Can I still have the discount?”

The salesman now looks pained. He was not prepared for this. Nonetheless, he senses an ability to close NOW. “Well, if you’re going to sign a contract today I’m sure I can convince the powers that be to hold the discount for six months.”

The purchasing manager, now very pleased with the fact that he has squeezed a quarter-of-a-million-dollars and the cost of that quarter-million-dollars out of this vendor, moves to apply the coup de grace. “OK, you have a deal, but we won’t pay any installation charges. That has got to be part of the deal.”

The salesman again folds. He meekly bows his head and leaves the prospective buyer’s office while trying desperately to figure out a way to sell his boss on the fact that he gave away almost all of the profit on the deal by agreeing to install the system for nothing. Nonetheless, that is the deal he accepted and that is the deal the company will just have to live with.

No one’s happy with this and within a year, and three more similar deals, our salesman is looking for a job.

Salesman for “Company B”

Looking very chipper, the salesman walks, head erect, into the prospect’s office. Again, the small talk. Then down to business.

“We have spent more than $35 million dollars researching and developing the finest Materials Handling System in the world. We looked at German models, Swiss models, and the ‘best of breed’ in the U.S. There is no product in the marketplace that can compare to ours.”

He went on to add the fact that there were at least ten significant features of his materials handling system that significantly differentiated it from competition.

“And I have done some back-of-the-envelope calculations and come up with an average per annum savings to your company of $800,000.00 dollars just from these ten features! There’s probably even more available savings, but I treated this very conservatively. Here are my numbers (he said this as he gracefully slid his paperwork across the desk in order that the customer might study his assumptions).”

“Quite impressive,” the customer remarked, “and your assumptions are indeed both conservative and accurate. I can buy your savings.”

“Thank you,” the salesman responds, “And like I said, these are savings that will repeat themselves every year for at least a decade. That’s at least $8 million to your bottom line.”

He waited patiently while the customer absorbed this latest thought. He could see by reading the customer’s eyes that all the homework he had done on both his product and those of the competition was now paying off.

Just before leaving the room, the buyer, and somewhat chagrined, took the salesman quietly by the elbow and whispered, “I’m almost embarrassed but I forgot to ask you --- how much?”

As the salesman folded up his briefcase, leaving a perfectly prepared contract for signature on the buyer’s desk, he casually and professionally remarked, “Only $1.6 million, not including the installation cost of $525,000.00, plus or minus a few bucks.”

As he went out the door, the last words the salesman heard the buyer mumble to himself were, “Hell of a deal.”

So there you have it --- “A Tale of Two Approaches” might just be a fitting title for this article (which is generally historically accurate, by the way, I was involved in just such a deal maybe twenty or so years ago).

Did Company B have an advantage, product-wise? The knee-jerk reaction to that question is probably “yes”, but Company “A’s” product was no antique, either.

In point of fact, Company “A’s” MHS (Materials Handling System) actually had six of the same “breakthrough” features that our sales hero at Company “B” so beautifully packaged and touted!

So it was really a matter of how cleverly the salesman for Company “B” put his presentation together, nothing more. He knew that ongoing savings to a company that treasures cash flow savings would be irresistible. Why? Because he knew his customer and he knew his customer’s ways of seeing things.

The key difference in this deal was time and energy expended by the salesman up-front. He prepared extremely well and it paid off.

In spades.

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