It’s rare that Dutch researchers publish in the Harvard Business Review. Amsterdam Business School Professor of Management Accounting Marc Wouters recently introduced ‘tiebreaker selling’ in this leading management magazine, together with two American colleagues.
Tiebreaker selling is about selling nonstrategic products or services by adding something extra, the value of which is self-evident, in addition to the desired product at a competitive price. This justifier provides a clear-cut reason for the purchasing manager to select one supplier over others when similar offerings are on the table. The tiebreaker also confirms the purchasing manager’s added value in the purchasing process.
Marc Wouters: "If sales managers claim they already do this, I would ask them to show me. Because in 99 per cent of the cases, they don’t. It is remarkable how often salespeople are satisfied when they can deliver all the requested specifications at a competitive price. For this study, we wanted to learn how to sell nonstrategic products and services. Tiebreaker selling deals with the sale of for example staffing services, catering, cleaning, car leasing and construction materials. As a supplier you have to anticipate that the purchasing manager receives several nearly identical offerings in a very tight price range. How do you make your offer stand out if that’s the case? That is possible if you offer something that is self-evidently of value to the purchasing company. This justifies the choice of the purchasing manager and lets him or her make an extra contribution to the business. This justifier is what we call the tiebreaker.”
"This study is an example of what is referred to as management practice research, which is one of our many research methods. We determine innovative practices and identify what can be interesting for others. For this study, unlike research that is based on questionnaires, we had lengthy conversations on broad subjects: what do you do, how do you do it and what can others learn from it? Over a period of three years we spoke to people from dozens of companies, small, large and global players, to extract the most interesting knowledge to pass on to other managers."
"If we want to understand the marketing and sales side, we often start talking to the buyers side. We asked purchasing managers if they had examples of suppliers that did an exceptional job. And guess what: in the case of standard products, the value of the tiebreaker must be evident without first requiring a thorough analysis of its monetary worth. The client isn’t prepared to pay a price premium for it.”
"Apparently the great majority of businesses does not use tiebreaker selling yet. Salespeople often tend to lower the price, which doesn’t work. If all the suppliers follow the price concession, the problem remains which one to choose. And a price that is very low raises suspicion of being too good to be true. Another frequently used tactic that doesn’t work is naming extra features of their product or service that their competitors lack. Sellers end up stressing features the purchaser didn’t ask for and that aren’t valuable to the buyer. In order to be able to offer a real justifier, it is key to know customers very well and really understand their business."
“This way of selling hasn’t been described so clearly in the literature yet. Of course unique selling points (USPs) have been described, but I really think that’s just a fragile thing. Selling something isn’t about unique features; it’s about adding value to the customer’s business. Not everything you offer the purchaser as a bonus is convincing enough to be a tiebreaker.”
"There are very few companies that do this well. But it does happen, and in the Harvard Business Review article we mention some great examples. One is about rebar, the steel rods to reinforce concrete. You can hardly imagine a greater commodity product. If a company wants to buy rebar, they specify exactly what they need: supply conditions, a wide range of requirements. After all, it’s not just some office chairs. And they expect a competitive price. There was one provider that said: ‘anything you ask, we can deliver, and still you have to choose us. Because we offer rebar that doesn’t intertwine, thanks to the smart way we produce and strap the bundles of rods’. A purchasing manager immediately understands how convenient that is. And if the offer is otherwise the same, that advantage is the tiebreaking justifier."