In Manufacturing Supply Sales, Its Not All About Price

The majority of sales people who operate in the highly competitive field of manufacturing supply have internalized the fallacy that “it just comes down to price.” 

These are sales people who have accepted that they will bid on all (or most) opportunities and cross their fingers that their bid is the least expensive and possibly throws in the most “value add.” 

Because technical details are indeed important in manufacturing supply sales, we observe this disbelief combined with a second, but related, delusion that technical buyers are “only about the numbers,” and that  lowest bid + technical details = landing the sale.

Yet, consider this scenario.

A design engineer at a manufacturer needs a supplier to make a part.  He explains what he needs to procurement, and they provide a list of suppliers who might be able to get the job done. The engineer calls the sales department at each of the three of the suppliers and asks them to bid on the job.  

All three suppliers claim to be able to make the part and deliver it by the stated deadline.  They respond to the bid with technical details + their lowest price.  The engineer chooses the least expensive option of the three.  There appears to be no differentiation other than price, and after all, the engineer has a budget he must manage for the project.

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The part arrives three weeks late.  It’s also not to spec.  The engineer can’t use the part as is, and is now further than 3 weeks behind deadline on his project because he must now ask a new supplier to manufacture the part.

At the surface, the observation might be that this is a clear example of using facts and data in decision  making — the part is late and off spec, so the logical thing to do is choose another supplier. 

If we dig a little deeper, something sales people rarely have the skills or courage to do, we might find that there are a cascade of emotions flowing from management and the engineer who has received the tardy, faulty part.

For the company, a late part means a project that might not meet an internal or external deadline.  Failure to meet that deadline means that the larger item that is being manufactured, for which the part is needed, is not in production by the company’s stated date to start manufacture, which means that the company loses money every day that production has not yet begun as planned. When the company loses money, bonuses take a hit. It’s starting to get personal.

For the engineer, he must now answer to management about why the project is late.  It might be the supplier’s fault, but it is the engineer’s responsibility to get the project done on time. 

Ultimately, he is left holding the bag (of useless parts) and the blame.  He feels the pressure from peers and management, understanding the cause and effect between this delay and their bonuses. He’s seen internally as responsible for the delay.

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Digging deeper still, we discover even more compelling emotions.  The engineer is lying awake at night, anxious about the size of his own bonus, because he had planned to take the family to the beach this summer with that money.  

And ultimately, he’s worried that if he can’t get the correct part soon, he might be passed over for a promotion from a failure to manage his project to completion and meet deadline.

In this all-too-common scenario, everyone loses.   The engineer and his company clearly lose.  The late supplier is now on that company’s black list and won’t get any more jobs unless they are desperate.  The supplier who could have done the job correctly and on time loses, but it’s not because they were more expensive. 

They lost the bid because they behaved like a commodity during the sales process and were thus treated as a commodity by the engineer.  If all things appeared to be the same, why pay more?

Suppose the salesperson at the more expensive, but also reliable, supplier had responded to the bid in the following way.

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“Mr. Engineer, Really appreciate you thinking of us for this project.  I’m calling as a courtesy to let you know that we’re rarely the low cost provider, which means we’re not right for every company or every situation. 

When customers choose to work with us, it’s usually because they simply can’t afford to miss deadline.  Maybe they’ve been burned by other suppliers who shipped parts too late or off spec, causing delays that cost the company money as well as potentially anyone whose paycheck is affected by project completion goals.  Project deadline might not be that critical for you on this project, in which case we may not make sense.  Thoughts?“

If you’re a salesperson who just fell out of your chair reading that, you’re not alone.  The approach is counter to everything taught by traditional sales methodologies; however, disarming honesty builds credibility.  It also uncovers whether or not a salesperson has any chance at winning the bid. 

If a missed deadline is a minor issue for this project, that salesperson is probably better off passing on the bid unless they can uncover another compelling emotional reason why it would make sense to pay more. 

Most sales people aren’t gutsy enough to uncover the emotion behind the decision. However, in the absence of the constructive tension required to uncover the real, personal, and compelling consequences of a job gone wrong, everyone loses.

Manufacturing engineers and technical buyers are no different than every other human being– they buy emotionally and justify those decisions intellectually.  It is the salesperson’s job to rewrite the equation:  satisfying emotional needs = landing the sale.