Millions of people love Amazon for the instant gratification, the almost universal selection and the typically good pricing the platform offers. Uncountable others, including current and former Amazon merchants or hometown businesses who feel the giant has squashed their formerly prosperous Main Street or online businesses, think Amazon is the devil.
Here at CEDF, I’ve served two clients as a business advisor who rode a roller coaster of excitement and then despair over their relationship and Amazon’s opacity, inequitable policies and kafkaesque behavior. Without dwelling on the technical details of their frustrations, one walked away from literally millions in future purchase orders in order to protect the pricing integrity for its hard-won conventional channel partners. Another fought product diversion abetted by the colossus, and later came to the realization that when selling direct to Amazon, the purchase orders the leviathan was placing were being outpaced by returns from other Amazon warehouses. On a net basis, Amazon owed the client money and it wasn’t paying too fast.
Now these may be exceptional circumstances. But there is enough written in the business press to make it clear that an Amazon relationship can make or break a business and not everyone is happy.
As an aside, when I’ve made presentations for SCORE about getting one’s business on the internet, few people in the audience realize that two-thirds of the sales on Amazon are from independent sellers.
Many entrepreneurs feel their brand, which they may have sacrificed for and nurtured for years, represents the soul of their company. How much would you sell your soul for? This article explains the little-known Amazon Accelerator program which can boost a merchant’s visibility beyond your wildest dreams, but with a catch. Amazon can buy your brand on 60-days notice for $10,000. Would you take that bargain?
It’s often taken on authority that the right way to sell is to develop a consultative approach that makes you a trusted advisor to your customer. They won’t be able to bear using a competitor because of all of the warm and fuzzy advantages you bring to the relationship. It’s pretty well demonstrated that this is true.
But this article credibly explains why this goal is so often unreachable and that training provided to sales team members doesn’t stick long enough to make a difference. The problem is not with the sales staff or the training but the organizational culture. The author explains why talking a great game about being consultative with customers doesn’t stand a chance with so much of the work environment rewards the transactional approach.
Transactional selling can work too. But it makes it easier for customers to simply scurry away when they can use the internet to buy somewhere else and save a nickel. So unless you can build a transactional, high-volume, low-margin selling machine that beats all of your bigger competitors doing the same, it’s time to take a proper look at what is really required when we talk about serving customers and becoming an advisor.
One of beloved baseball legend Yogi Berra's famous malapropisms was "You can observe a lot just by watching." Many of his supposed quotes are inventions -- although Yogi is documented to have spoken "I really didn’t say everything I said" -- but even those do have a grain of truth beyond the chuckle.
I like to think Yogi meant that you can learn a lot just by watching. And what I mean is small business owners must develop a keen habit of observing what makes up successful competitors, ventures or techniques and learn how to implement the essential elements. Typically, this observation is a self-taught skill. Few owners have been through a formal course of study, for instance, in how to sell. But they find themselves in desperate need of becoming expert in sales and marketing with limited resources to hire an ad agency or a team of sales professionals to boost the results of their catering, landscaping or industrial product companies. The only solution is self-education and imitation.
I love this article because it provides such a clear example of the many elementary lessons waiting to be gleaned, as Yogi would say, just by watching. The article is about e-commerce but one doesn't need to be selling online in order to apply the examples. They can just as easily be employed in a menu presentation, a package of lawn services, or the way a B2B sell sheet is organized.
And while the article deals with the visual, the underlying impact can include everything from pricing to buyer psychology. But analyze carefully to be sure you are incorporating the correct lessons. As Yogi might have said, "If you can’t imitate him, don’t copy him."
The internet age has disrupted so much about pricing of products and services. In decades past, price was so much more opaque and subject to negotiation like in a medieval bazaar. If as a buyer you couldn't fully understand the features, benefits and scarcity, you tended to be more willing to patiently engage with the seller to seek this information. What you got was usually served with big helpings of persuasion.
The buyer-seller game has changed both for B2C and B2B transactions. Now, most of us check the price of an item on Amazon before making a decision about whether a store purchase (at a potentially higher price) makes sense for our priorities. Many B2B transactions are carried out online with no human sales intervention so pricing has to be plainly displayed.
All this has conditioned buyers in B2B environments to expect transactions to work more like they do in the consumer world. I wonder if it is really possible to withhold pricing information without risking losing a significant chunk of the top of the prospecting funnel? Then again the whole idea of the sales funnel is in disruption as more and more buyers show up at their suppliers doors having already researched the product or service of interest with the help of the internet.
So this leads me to question the practicality of the advice of Geoffery James in his Inc Magazine article:The Single Most Essential Rule About Pricing. And that is "Never quote a price before the customer fully understands the benefit of buying." While I agree that his advice represents excellent classic sales technique, I just question whether contemporary buyers have the patience to cooperate. Of course much depends on the nature of the product or service and how much information is publicly available for close analogs. A good salesperson should react to this circumstance and the level of research a prospect has conducted. So if you think you can pitch before meting out too much price information, please give it a try.
-- Frederick Welk CEDF Business Advisor
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