How to structure your sales compensation plan to deliberately undersell • Hacker News Board

Re: How to structure your sales compensation plan to deliberately undersell

#31

Post by Closi » Tue, Jul 26, 2022, 10:30 PM UTC

waynesonfire wrote: post #25

Closi wrote: post #7

I think this is a particularly rose-tinted glasses view of the sales process, which sells underquoting as a great thing for your customers that they will love ('When you tell them they need to pay more, they will love you and will recommend you to others!'). In reality, 'land and expand' is almost universally hated by customers and this just appears like an excuse to under-quote to win the commercial point on an RFP…

I have never seen anything remotely to your ideal. Did you forget how competitive and cut throat the world is? You don't sell, you don't eat. Sales is a race to the bottom, a competitor will eat you alive by undercutting or over-promising just the right amount to win the deal.

It probably depends on both the market and the cultural landscape.

I'm in the UK, and USA providers are more 'cut-throat' than domestic UK providers in my personal experience when I have tendered enterprise software in the past, and the cultural differences have been massive.

Cut-throat is fine until you get a reputation for cost overruns, get to be known as untrustworthy, and eventually end up with a lack of customers willing to give you positive references. I certainly know which vendors in my industry are known for land & expand and scummy sales tactics (and when I personally see these tactics being deployed I will tell everyone else I know in the industry to avoid them like the plague).

Re: How to structure your sales compensation plan to deliberately undersell

#32

Post by Closi » Tue, Jul 26, 2022, 10:41 PM UTC

Rastonbury wrote: post #13

mox1 wrote: post #9

Earlier quoted context omitted.

Yea, at my F500 sized company we set budgets year(s) in advance. I literally have a line item (that gets reviewed monthly!) for each major SAAS product my team uses. We estimate like a 5% inflation YoY into these budgets. If a vendor purposefully under-quoted / undersold me and then asked me to pay more $$ 6 months in, I literally couldn't do that if I wanted to.

Expansion and addons are really common though, the stakeholder has to push for more budget, not too difficult if the product really drives business value

This isn't about selling customers what they need, then discovering new value through addon's though.

The article is quite clear that it is intentionally selling a customer less than what they need in order to get them to buy what they actually need later down the line, once they are already committed.

As a simple example, I could sell you a 3-year software license agreement with a 60 day estimated implementation program on a T&M basis. Then after you have signed the software agreement and are committed to licencing we go into blueprinting, I could suddenly say that it's actualy 120 days implementation now, and that will net the vendor an extra $90k revenue in Y1. Then after implementation you realise that you didn't buy the 'Bi-Connector' that was demo'd to you during the sales process because "oh that's actually another license" even though they clearly showed it as core functionality in their demo.

Re: How to structure your sales compensation plan to deliberately undersell

#33

Post by Foobar8568 » Wed, Jul 27, 2022, 6:06 AM UTC

Closi wrote: post #32

Rastonbury wrote: post #13

Earlier quoted context omitted.

Expansion and addons are really common though, the stakeholder has to push for more budget, not too difficult if the product really drives business value

This isn't about selling customers what they need, then discovering new value through addon's though. The article is quite clear that it is intentionally selling a customer less than what they need in order to get them to buy what they actually need later down the line, once they are already committed. As a simple example, I could sell you a 3-year software license agreement with a 60 day estimated implementation pro…

I am dealing with such in different clients, fuck them, fuck these people. Even worse, you are taken hostage to their sales team,what can you do? Break the contract? Penalties when you barely have a working solution? Bring the legal team? Yeah sure, good luck to have anything completed.

Re: How to structure your sales compensation plan to deliberately undersell

#34

Post by Mandatum » Wed, Jul 27, 2022, 9:43 AM UTC

mox1 wrote: post #9

Closi wrote: post #7

I think this is a particularly rose-tinted glasses view of the sales process, which sells underquoting as a great thing for your customers that they will love ('When you tell them they need to pay more, they will love you and will recommend you to others!'). In reality, 'land and expand' is almost universally hated by customers and this just appears like an excuse to under-quote to win the commercial point on an RFP…

Yea, at my F500 sized company we set budgets year(s) in advance. I literally have a line item (that gets reviewed monthly!) for each major SAAS product my team uses. We estimate like a 5% inflation YoY into these budgets. If a vendor purposefully under-quoted / undersold me and then asked me to pay more $$ 6 months in, I literally couldn't do that if I wanted to.

That’s why we usually tie you into a 2 year contract with review points for expansion and adjustments, with looots of discounts up front. By year 5 you’re paying sticker price and paying our consultants for integration and Enterprise feature configuration.

Re: How to structure your sales compensation plan to deliberately undersell

#35

Post by [deleted] » Wed, Jul 27, 2022, 1:10 PM UTC

Enginerrrd wrote: post #12

In my consulting business, I've found the opposite strategy to be true. I, if anything, deliberately slightly overbid/oversell. Then when I deliver the product that they asked for less than I quote them, I get REAL word of mouth, glowing recommendations. I also have found that this practice really weeds out the people that would otherwise give me endless problems like delaying or fighting payment, poorly defining the…

[deleted]

Re: How to structure your sales compensation plan to deliberately undersell

#36

Post by mox1 » Wed, Jul 27, 2022, 5:57 PM UTC

aaaaaaaaata wrote: post #28

mox1 wrote: post #9

Earlier quoted context omitted.

Yea, at my F500 sized company we set budgets year(s) in advance. I literally have a line item (that gets reviewed monthly!) for each major SAAS product my team uses. We estimate like a 5% inflation YoY into these budgets. If a vendor purposefully under-quoted / undersold me and then asked me to pay more $$ 6 months in, I literally couldn't do that if I wanted to.

Do you have a discretionary budget?

Yes, but I wouldn't be allowed (or I would be questioned) why I wanted to use that budget on this addon/upcharge. We can always fight to get more $$ (there's always money in the banana stand!), but I do have to put myself on the line to do it, justify the need, etc. I would never do that for a vendor 6 months into a new relationship.