Winning Orders with the Brain - Classic Case Studies - Marketing Wisdom 9

Author: Sun Luhong
Publisher:
Publish Date: 2006-06-01
Features: This is a typical example of relationship-based sales. Liu Xiangdong relied on the relationships he had previously established to complete new sales when the hotel replaced its existing product through a bidding process, leveraging his past cooperative ties. During the sales process, the salesperson did not apply effective sales techniques, ultimately leading to a sharp conflict between the client and the supplier over pricing. If Liu Xiangdong made concessions, the company would not be able to quickly recoup its R&D costs for such advanced fully enclosed dry-cleaning equipment. Moreover, other hotels would likely reference this price level when purchasing the same equipment, thereby affecting future sales prices in the region. Although Liu Xiangdong’s manager had authorized him with a 10% price control margin, the prices for dry-cleaning equipment purchases across the Jiangsu-Zhejiang region were still based on Zhijie’s selling price. If this deal were discounted, what about the others? If not, it was highly likely they would lose the deal, which would give competitors successful clients in the Jiangsu-Zhejiang area—a bad outcome. Therefore, only one option remained: to offer personal benefits to Director Tian to secure the deal without giving a discount. By giving up 10% of the profit directly to him personally, this method had worked before. However, the last General Affairs Director was fired by the company over this issue and later even sued, leading to a rather conclusion. Additionally, during the dinner, several attempts to engage Director Tian in conversation seemed to fall flat, and he didn’t pick up the thread. How should Liu Xiangdong handle this? Currently, one of the biggest problems in industrial product sales in China is that salespeople rely too heavily on relationships. Relying on relationships often leads to two common outcomes: first, it satisfies personal improper motives, ultimately resulting in corruption, investigation, punishment, and other negative consequences; second, suppliers face pricing pressure, leading to contracts with unsatisfactory profit margins. The fundamental reason for these issues is the lack of industry knowledge among salespeople. A lack of industry knowledge prevents salespeople from successfully influencing the rational thinking of clients, giving the clients a certain advantage in pricing. P31-32