Shortly – the more we progress as society the more it is yes! Let me start from outlining the Principal-Agent problem. It refers to the conflict in interests and priorities that arises when one person or entity (agent) takes actions on behalf of another person or entity (principal). The problem worsens when there is a greater discrepancy of interests and information asymmetry between the principal and agent, as well as when the principal lacks the means to punish the agent. The deviation from the principal’s interest by the agent is called “agency costs” or “transactional costs”.

How can this be reflected in sales?

In plain words… The Client is “Principal” who consults salesperson – “Agent” (as an industry expert and potential solution supplier) – on the best possible solution to their problem. Their interests are following:

– Client wants to confirm & obtain the right solution to his problems, often for cheapest price (but with Client’s subjective quality-price ratio limits) in a given timeframe (in B2B mostly some arbitral project time scope given by PM or steering committee)

– Salesperson wants to sell the solution, for highest possible price in a timeframe linked to his KPI’s (usually within month/quarter) assuring the fit and satisfaction to build lasting relationship with Customer

I am being a little crude regarding above, though want to catch the pure fundamentals of each roles interests. No side motives or hidden agendas taken under consideration in above descriptions.

Now let’s examine the statement that “The problem discrepancy of interests and information asymmetry between the principal and agent”. It has two parts:

1. Discrepancy of interests – this is why I bolded part of sentence above. The Customer wants best (or at least good enough) solution for his problem, the Salesperson wants to sell his product. The interests are only aligned if the product really answers to Customers need.

2. Information Asymmetry – this area is shrinking thanks to internet and extensive knowledge available there. But Customers often don’t have time for extensive research and rely on salesman to deliver the right set of information. This creates space for information abuse to “push” the Customer into buying product not necessarily fit for him. Everything can be sold once, using the information asymmetry, but it will backfire on you with more losses (mainly long-term harm to reputation) then potential gain from this one transaction.

With the right craft those two areas can be managed to create bond between both – companies (it is Business 2 Business after all) and people (sales is Human 2 Human). Or it can end dreadfully when either of those is abused through so-called “sell & forget” model (which thank God is being diminished by ubiquitous access to information and social networking helping validate person & company selling to you).

Conclusion?

Thanks to the interconnected world we live in it is much easier to validate both – the product fit and the salesman honesty. Only sales consultants who prioritize assuring fit of their solution and future satisfaction will build lasting relationship with Customer and ultimately achieve their target through mutually beneficial cooperation.

One of my saying is – if you work with right people, on right goals and assure everyone benefits from it – then success, money and whatever you want to achieve will eventually come. Support your Customer – and you will see their support.