Tim Breithaupt is founder and president of Spectrum Training Solutions, a Calgary firm that specializes in delivering sales-training workshops and management programs. Since 1989, Spectrum Training Solutions has partnered with businesses to improve sales results and profit. Here, Mr. Breithaupt, who is also the author of Ten Steps to Sales Success, talks about Stealth Acoustical's experience with global giant Siemens.
How common is it for small companies such as Calgary-based Stealth to be negotiating with giants like Siemens in the oil and gas industry?
Tim Breithaupt: It's not as frequent as you might think it is. There are a number of reasons for that and the first reason is that the smaller companies feel that these big guys aren't approachable. They're just overwhelmed by the concept of trying to penetrate the depths of a large corporation. They also don't stick with it. It can be a long sales cycle and it could take up to a year, and that can be fairly daunting. The stick-to-it factor unfortunately doesn't prevail.
Another reason would be that they don't know the right people to approach. There can be many layers of management, middle management and senior management. Where do you start?
The human factor is that we all look for instant gratification, especially smaller companies. The smaller [the company], the more critical cash flow is. So they go for low-hanging fruit.
These issues prevail regardless of industry.
Is there opportunity for small businesses to succeed in selling to large corporations, despite what you've just said?
Tim Breithaupt: There is absolutely opportunity. For those that do persevere, they can be very successful. Small companies bring several advantages and being nimble is one of them. You need to be nimble and truly responsive to the ever-changing expectations of the client. The giants have to make adjustments and be responsive to the economy, so their expectations are in constant flux and the smaller guys can be responsive to that.
If you are successful, the upside is huge. Not only does it establish you as a player in industry but it brings great credibility. And it's great to have some of these guys on your résumé.
What is your advice for small companies like Stealth when negotiating with large corporations?
Tim Breithaupt: Do your homework is an obvious first. Research the structure of the company you're going after, the roles and responsibilities within that company. And look within your own company as well: Know your desired outcomes, your price points.
You've got to dig around within that [target customer] company and discover who the proper people are. When companies go into negotiations, one of the biggest mistakes is they're talking to the wrong people. One of the things we teach people is the definition of customer and we fondly define a customer as a bag of money. They have decision power and a budget.
Ultimately you need to get to the bag of money. And I believe a lot of times we end up talking to the bag of wind. So first you have to dig around in the corporation and find out who they are and where they are. They could be in different city. But eventually you identify that bag of money and at some point you need an audience with them.
Another tactic in negotiation is using tradeoffs effectively. Tradeoffs are where a client may ask for something and you may agree to it but you ask for something in return. If you give in to demands because you're seduced by a big sale, then it's tempting to offer concessions. If you ask for something in return, then you flip that concession into a tradeoff and that sends a very powerful message. So for example, they might ask for an additional 3 per cent or 4 per cent discount. You could come back and say, “Yes, I can look at that but for that I need blank” – and it could be more time, it could be faster payment terms.
In your experience, what are common mistakes small businesses make when negotiating with large corporations?
Tim Breithaupt: No. 1 is they're ill-prepared. I'm still amazed and marvel at how many sales and management people wing it. They just show up. We're a lazy species. We procrastinate and we get so busy that all of a sudden it's game day and you haven't built in time to properly prepare for it. Customers identify that as one of the big frustrations.
Also, it's important to get some negotiation training. A lot of people are terrified of negotiation. It's one of the major fears in the world of selling.
Stealth founder Colin Davison prepared a bid for Siemens once and was turned down, but he went ahead and bid the following year when they came back to him. This time he got the job. What are your thoughts on his decision to bid a second time despite the initial rejection?
Tim Breithaupt: I think it's awesome that he bid a second time. Why would he not? It's called sales. Sales is going back two, three, four times and having a degree of persistence, especially when you're invited to come back. There was a reason for that. I would take that as a positive. They were invited back, which means they did a good job first go-round.
So he already he had a number of cards in his hand in his favour and another reason is that it didn't cost him anything. May have cost him bit of time preparing the budget, but capital expense wouldn't have been an issue. Every once in a while, you need to roll the dice. Sometimes it works out for you.
Can small businesses in the oil and gas field leverage a relationship with one global company to help them get businesses from other corporations? How can they do this?
Tim Breithaupt: Once you have a track record of success, you want to pursue that success in other similar situations. You do that by asking for a reference. It could be a written reference, an e-mail, a telephone call where someone phones their buddy and says, ‘Talk to my friend Colin, he did an awesome job for us and he's worth having coffee with.' It's just a question of asking. It's amazing how often people are quite happy to help out. People will support success.