Backdoor selling – definition and meaning
Backdoor selling or back door selling is the art of cleverly getting information about a company. This information subsequently gives the sales people an edge over rival competitors in negotiations. Not only does this strategy give a company an edge over its rivals, but also over the buyer.
When backdoor selling occurs, somebody asks non-procurement personnel in another company questions. It is usually a sales person who asks those questions. Although the questions may seem innocent, they are very strategic. Without realizing it, the other company’s people divulge sensitive data.
In a competitive bidding environment, backdoor selling is an illegal practice. Even though enticing purchasers to buy goods or services without competitive bidding is tempting, it is often against the law.
The term may also refer to the sale of goods by wholesalers directly to the end user or another company. Specifically, we use the term when a company does this in violation of a retailer agreement.
This article, however, focuses backdoor selling when it means getting sensitive data from a company’s staff.
Not only does backdoor selling reduce the buyer’s leverage, but it also does away the need for negotiation. Put simply; the seller can clinch the deal or gain a higher price.
Make sure you train your non-procurement staff to deal with backdoor selling techniques. Not only is it necessary for good business practice, but also for your company’s survival in the marketplace.
Regarding backdoor selling, mbaskool.com writes:
“It is a manner of asking well-crafted questions to the buyer so that the sales person can gain adequate knowledge about the buyer’s interests about the product /service being offered. It can also give them an advantage of engaging the buyers fully towards them.”
“These questions are addressed to engineering, information systems, marketing, line managers, warehouse workers and HR.”
Backdoor selling – acquiring sensitive data
What type of information helps you secure a contract? You might want to gain access to information the buyer wants to protect. Additionally, you would love to have information that your competitors do not have.
Backdoor selling is all about achieving those two things, namely confidential buyer data and information your rivals don’t have.
Skilled sales people will target non-purchasing personnel because they are less likely to realize what they are doing. **Non-purchasing staff are less likely to know the sensitive value of certain data. They also unlikely know what information is confidential.
** ‘Non-purchasing’ and ‘non-procurement’ have the same meaning.
Non-purchasing employees have less training in dealing with sales people compared to their purchasing department colleagues. In fact, many of them have no training at all.
The competing supplier might seek data on quality, delivery, service life, price, deadlines, and rivals’ performance.
If I sign an agreement pledging to sell to just one company in a territory, and then I sell directly to another company in that territory, I am guilty of backdoor selling. The term is used when the supplier violates a sales arrangement with a customer or partner.
The bidder with the most knowledge can focus on the clients’ needs more successfully than rivals can. That bidder an also exploit buyer weaknesses. Sometimes, the supplier armed with vital ‘backdoor’ information may push for a higher price or add fees.
“By circumventing standard procurement procedures, backdoor selling essentially games the system designed to protect the buyer’s interests and ensure fair competition among suppliers.”
“Gray-area techniques like backdoor selling are often used by experienced sales persons and included in sales training materials. Despite its common use, however, backdoor selling can be considered a low-level form of industrial espionage.”
Sales people specialized in backdoor selling
The seller’s sales people have specialized training in asking the questions in a certain way. The people answering those questions do so without realizing what is going on.
In other words, non-procurement employees do not know that they are giving the seller an unfair advantage.
Below are some examples of questions:
– “What are your priorities from our product/service?”
– “How do I stand against my rivals?”
– “Who are your main suppliers?”
– “What do you like the most regarding your current supplier?”
Defend yourself against backdoor selling
Some major multinationals, including Texas Instruments, Philips, Lockheed Martin, Honeywell, GlaxoSmithKline (GSK), Bristol-Myers Squibb, and Rockwell train their personnel to recognize backdoor selling techniques. They also teach their staff what to do when they suspect that somebody is using the technique.
If you haven’t overhauled your non-procurement departments recently, your supplier has probably been exploiting you. In fact, it is likely that several suppliers have the edge over your in negotiations.
Unless all your employees acquire those procurement-department skills, suppliers will continue exploiting you, says CPP Purchasing Practice.
The impact of backdoor selling accumulated over all of a company’s negotiations may be significant. It can undermine the value of what the company delivers to its customers. In fact, even the bottom line may suffer. ‘Bottom line’ means net profit, net income, or net earnings.
CPP Purchasing Practice adds:
“At the heart of any corporate level negotiating capability building program therefore, should be steps to manage and control ‘backdoor selling’.”
Video – Dealing with backdoor selling techniques
Some sales people are experts at backdoor selling. This videos helps you learn how to deal with them.