Is There Anything as Predictable as a Sales Droid?

For years, the Cranky Product Manager has been dealing with all those whiny Sales Droids. 

You know, those people who moan all the time about how Sales is The. Hardest. Job. Ever., as they yap on their bluetooths while driving around in their Porche 911s?   You know, those dudes/dudettes who always win deals because of their mad persistence, unequaled interpersonal aptitude, and their wicked awesome sales skills? Yet when they lose it’s always the fault of the product or the price?  

Yep.  Those Droids.  You know who the CPM is talkin’ about.

Anyway, the Droids have been bitching for YEARS to the Cranky Product Manager about the price of her product.  “It’s way too expensive.”,  “I can’t sell it at that price,”  “The competition is priced so much lower we can’t compete,” “We need to drop the price by at least 20%,”  blah, blah, blah. 

All that time the Cranky Product Manager resisted dropping the price.  Yes, her product was priced higher than the competition, but it offered way more value.  Plus, being a wicked big geek, the Cranky PM created this elaborate pricing model spreadsheet based on shitloads of historical pricing and sales data .  It showed price was relatively inelastic. 

Well, fast forward to 2009.  The economy is in the shit and the Droids all miss their numbers by a mile.  Their screaming about the “too high” price reaches 120 decibels.  Loud enough that it catches the attention of The Man, AKA The Quasi-Playboy, AKA The Dirty Semi-Old (50-65 years old) Man Who is Always Scanning the Marketing Events Planning Staff for New Blond Mistresses.  AKA  The CEO.

So, the CEO calls the Cranky Product Manager into his office.  After complimenting her hair and the way her jeans fit, asking her if she is still happily married, and trying to give her a George-W-style shoulder rub,  The Big Boss tells her to drop the price to the one the Droids are begging for. 

The Cranky Product Manager sez, “No Effing Way,  Mr. CEO (and I mean that in the most respectful way).  Behold my awesome spreadsheet!  Dropping the price will NOT lead to more units sold and will make the product unprofitable.”

“You look hot when you’re angry,” sez the CEO, “But we’re still dropping the price.  I want you to create a new forecast based on the new price.  Not your lovely theoretical spreadsheet.  Instead, do it bottoms-up and go ask each sales rep how much he’ll sell at the new price.  Oh, and let me know when you tire of that husband of yours.”

And so the Cranky PM announces the price cut to the field. She then asks each rep, one at  a time, how much product he/she was committing to sell based on the new price.

And SHOCK OF ALL SHOCKS, the Droids sandbag it.  Apparently, even with a 25% price cut they can only sell about 3% more units than the numbers they had signed up for just 3 weeks earlier. 

Guess price wasn’t the issue after all.  WHO COULD HAVE GUESSED THAT WOULD HAPPEN?   Oh wait, I know this one…. Yep.  The CRANKY PRODUCT MANAGER guessed it!

AS EXPECTED, the New and Improved bitching and moaning from the Droids began immediately .  “The price is too low”,  “You just made it 25% harder to make my number!“, “With a price like that, people will think we offer less capability than the competition”, blah, blah, blah, blah, blah.  Will. It. Never. End.

Even the 2-year-old CrankyKid changes his mind less often.  And even the CrankyDog can remember past events  better than Sales Droids. 

There are two things you can always count on at DysfunctoSoft: 1) The Droids will never like the price, and 2) The CEO will always skeeve you out.

22 comments

  1. Greg Glockner

    Damn CPM, you hit the nail on the head again. I remember once when half the sales reps were losing deals because the development price was too high. The other half were losing deals because the deployment price was too high. My solution: Give it away for free!

    Fortunately, people got that I was making a joke.

  2. Chris Steele

    Well, as Karl Popper said:
    “Good tests kill flawed theories; we remain alive to guess again.”
    Your test killed the theory that your price was too high.
    Now what the Sales Droids might have really meant was “my commission is too low”, I’m sure the CEO would be only too happy to hear that feedback when you explain that sales have slumped because of lack of motivation in Droid Department. Then you’ll have a Cranky CEO too, but maybe not if you wear the extra specially jeans…

  3. Saeed Khan

    Listening to what sales reps have to say is good. Having to obey them is wrong. The “price” of anything is simply an artificial number used to place a value on it.

    Need and Perceived Value are really what determines actual prices. The price of gas fluctuates daily where I live. I have no alternative but to fill up and I can’t haggle at the gas pump so the need outweighs the cost.

    With software, there are many alternatives, including “do nothing” so buyer needs must be understood and the value of the offering must be clearly conveyed and understood by the buyer. The list price only factors minimally because everyone understands discounting will occur.

    Good sales people sell on value. Bad sales people complain about price. Take a look at Average Deal Size by rep and you’ll get a good idea of who is selling to prospects and who is simply looking for buyers.

    Saeed

    My test for sales reps is to

  4. gander

    From someone who s in the think of a full on pricing/positioning exercise, the numbers I came up with told me to RAISE price on three of 4 products, keep one the same, and povide a slight bit more flexibility in discounting when we are in tender situations.

    The Sales Droid Directors were ini on the big meeting, and they were shocked that this is what really, honestly, and truly came out of the exercise. All of them were screaming that the prices were too high, and oh lordy, if you don’t drop them by a minimum of 20%, TEOTWAWKI would happen (The End of the World as We Know It).

    DELICIOUS.

  5. The Cranky Sales Engineer

    This post was enough to bring the Cranky Sales Engineer out of his scotch drenched mourning of his personal income, and comment.

    After reading this post, the Cranky Sales Engineer has concluded that those sales droids suck. In his experience, price has never been a serious factor in the sales process unless one of two things happens:

    1. The price is WAY (5x-10x) above any justifiable ROI.

    2. The product is undifferentiated and has competitors.

    Without one of those the CPM was right to stick to her guns, and the resulting loss in revenue was easily predictable.

    But we all know what being right gets us—frustrated.

  6. Paco

    “the Cranky PM created this elaborate pricing model spreadsheet based on shitloads of historical pricing and sales data . It showed price was relatively inelastic. ”

    Hasn’t anyone ever told you that microeconomics is best left to middle-aged balding men who’ve never sold or marketed anything or employed anyone ever?

    I almost barfed from laughing so hard when I saw “price elasticity”. The CPM needs a vacation. As your attorney, I advise you to fly to Vegas, rent a big Caddie convertible, pose as a journalist covering a motocross event, and…

    blatant attempt to use world-class education = guaranteed futility*

    When a PM resorts to pure logic and reason, an intervention is necessary. Realize there are people how love/fear you and who never want to see a three-dimensional scattergram of pricing data again in their lifetimes. If you love/loathe these people at all, you owe it to them to never be so blatantly logical and straight-forward ever again.

    covert use of brainpower while appearing drunk = jedi mind trick**

    When it comes to persuasion, I think the PM arsenal is ranked thusly (and I believe ‘thusly’ should be a real word):

    1. Box seats for a play-off game
    2. Ridiculous bar tab
    3. Ridiculous sushi tab
    4. Indulging in other party’s favorite legal activity (e.g. karaoke)
    5. Referring to “those videos” you found on other party’s laptop
    6. Indulging in other party’s favorite illegal activity (bring your camera-phone)
    7. Random acts of musical violence (e.g. West Side Story)
    8. Roshambo
    9. A really well-crafted and data-rich spreadsheet
    10. Voodoo (the real stuff with a dead chicken, not the stupid stuff with the dolls and needles)

    I’m glad you didn’t resort to #10, though I suspect you’re dangerously close to doing so. Which leads me to reiterate – as your attorney, I advise you to take a vacation :)

    *This formula holds true when you’re smarter than the people you work for.
    **These aren’t the sales droids you’re looking for…

  7. Dr. Jim Anderson

    Tilting at windmills again are we CPM? Look, I’ve been there, done that at least 100 times and, yes, I lost the battle each and every time. However, one does not become a Product Manager without learning a few tricks (or, as Paco says, jedi mind tricks).

    Give it up, you’ve lost the current battle, and yet the war still rages on. It sure sounds like it’s time to roll out another release of your product or, if permitted, another product. In all honesty, the “new” product doesn’t really have to be all that new – it just has to have a higher version number (e.g. “Windows 7″). Once you do this, you can assign it premium pricing and the current product that is a reminded of the battle that was lost will quickly become a distant memory.

    Not easy, not fun, but definitely possible. In the end, Product Mangers always get their way.

    - Dr. Jim Anderson
    The Accidental PM Blog
    “Home Of The Billion Dollar Product Manager”
    Subscribe to The Accidental Product Manager Newsletter now: Click Here!

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