Knowing your prospect’s buying power or signing authority can seal deals and shorten sales cycles. I think back to a software deal I had on the table with a wireless cellular carrier years back. The invoice price for the total solution was $50,000. The deal dragged on for a few months until I got a call from the prospect at 2 P.M. the day before Christmas.
The prospect told me the since procurement was out of the office for Christmas Eve he could use his buying authority to sign off on anything under $25,000. He suggested if we broke the deal into two invoices for $24,900 we could get it done that day.
Not wasting any time I raced across New Hampshire back to my office, generated the paperwork and got the deal done. Making the day even sweeter, our company’s CEO came into the office to pick up Christmas gifts he had stashed in the office as $50K was pouring off of the fax machine. I learnt a valuable lesson that day.
I took this understanding of prospects’ buying authority with me throughout my career. When dealing with government agencies, healthcare, and educational institutions, I have noticed if you can keep the proposal below a certain threshold you avoid having the RFP from going out to bid. You could lose revenue in the bidding process or even worse the deal and account itself.
If you can keep a deal out of the bidding process or out of procurement, do it at all costs. Less red tape means a shorter sales cycle, be creative when sending proposals to larger companies. Have the conversation with your prospects about their budgets and signing authority. Sometimes putting goods and services on separate invoices may get the deal done. You might even want to consider using a channel partner to handle part of the deal