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Service & Supply

Quota-Based Selling by Manufacturers, Resellers Leads to Uncontrolled Costs Evaluation

By |2018-11-26T13:08:04+00:00Monday, November 26, 2018|Categories: Cost Reduction, Document Output, Electricity, IT Cost Management, Telecom|

Salespeople sell. That is their job. Unfortunately, what qualifies as a success for them does not always translate to a win for their customers. If the salesperson is facing a quota, they tend to ignore the needs of their customers with even more tenacity, trying to reach that all-important number before the end of the sales period.

While any heads of business could certainly empathize, vendor sales staff making quota is hardly their problem. In fact, quotas can present an even bigger problem as high-pressure situations and exaggerated promises lead to purchases that the customer later regrets. In such an environment, controlling costs and achieving procurement cost reduction is nearly impossible.

Document Output Management “Solutions” and Problematic Vendors

The issue of sales quotas leading to distorted cost projections is a real conundrum with services like document output management and other software-based or SaaS products. Ideally, the purchasing organization will be able to objectively evaluate multiple products to find the one with the best fit. The type of document management system they choose will have dramatic consequences on workflow and efficiency, not to mention the subsequent costs.

A major problem arises when they are not sure who they can trust. Commission-based sales and quotas strongly incentivize the sales associate to “convince and close” their lead, often steamrolling over concerns and crucial details in the process. The most honest salesperson in the world would rarely recommend a competitor’s’ product over theirs, even if it might work better for the customer.

Resellers may also — consciously or subconsciously — steer customers towards products with the highest profit margin. Or, they might only look into the most popular options, regardless of whether they fit the customer’s needs, simply because those have a higher chance of closing.

In the wake of the sale, regret is a likely outcome, along with high procurement costs and unpredictable overhead for months to come.

The Solution: Cost-Recovery Based Consultants Who Offer Procurement Cost Reduction

Our point is not to paint a negative portrait of salespeople or insinuate that they are all dishonest. The root of the problem is that they have an incentive to close, regardless of how it could affect the customer.

An alternative to this model is to solicit the help of cost reduction consultants like Freedom Profit Recovery. Rather than operating on a quota or commission model, we operate on a cost recovery model and have complete vendor independence. Our payment comes from a small percentage of cost savings that we help you achieve.

In other words, we practically work for free. Your organization gets the benefit of comprehensive suggestions for solutions that integrate well while saving you money. We simply get to keep some of the money we help you save.

Such an arrangement eliminates the pressure of quotas and creates trustworthy, ongoing relationships with our clients that can help them continue to save money and achieve overhead cost reduction, month after month.

Learn more about our capabilities by looking into our document output management consulting services.

About FPR

FPR is a privately-held North American-based consulting, technology services and outsourcing company. Through our industry-unique VISIONAnalysis™ process, we have successfully combined unparalleled expertise and comprehensive intelligence to deliver significant value and cost management to our clients. FPR collaborates with its clients to help them achieve high performance.

For more information, please feel free to contact Mr. Brent Newton at FPR at (972) 650-0700.

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