Archive for September, 2013
How Great Sales People Respond to Price Objections
Posted by Rick Pranitis in SALES BEST PRACTICES on September 20, 2013
Lowering prices or throwing in add-ons is often not the best methods to respond to price objections. Although all sales involve negotiation, using these tactics overlooks the reasons behind most price objections which is, in the prospect’s eyes, the value is not quite at the level of the outlay required to obtain a deal. Great sales people use the three tactics below to respond to price objections without cutting into margins for their organizations or their own commissions.
Great sales people respond by looking for a cause behind the price objections
A great sales person who has spent enough time with a prospect to know he or she is committed to moving forward with a deal and has the support of his or her organization knows enough to suspect that price objections are really masking another reason for hesitating on signing a contract. Follow the lead of great sales people in dealing with these price objections and dive deeper into why a prospect may be raising price as a reason for not moving forward:
Ask the prospect whether the product or service as presently defined is what the prospect and his or her organization is looking for. This can help the prospect reflect on value for price and realize that the price shouldn’t be an objection.
Find out whether the prospect has the full support of other decision makers, or if there may be a key decision maker who is not convinced. When this is the case, you can arrange a meeting with the hold outs to overcome the price objections.
Ask whether the prospect has found similar value for money anywhere else. Price objections are sometimes the result of competitor offers, and knowing whether or not the prospect is working with one of your competitors can help you explain where your offerings differ and provide a better value.
Great Sales People Find Out Whether Price Objections May End the Deal
Once great sales people have explored all other avenues, if the price objections remain it is possible that the objection to price can cause the prospect to walk away from the negotiations without making a purchase. It’s crucial for great sales people to find out whether this is a possibility before the prospect begins to distance him or herself from the deal. Great sales people handle this by:
Asking whether it’s the price or the product/service which is causing the prospect concern. Occasionally prospects think of an additional feature or functionality that would be nice to have or even a must have at this late stage, and this may be easily solved.
Finding out whether it is the price or the terms that’s the real problem. Less established companies or those emerging from recent business combinations may need longer terms, which can be less expensive to negotiate than price.
Great Sales People Put Price Objections in a Different Perspective
Big ticket sales cause pressure for prospects, especially if a prospect is worried about how his or her organization will react to the changes that a product or service may introduce. In other cases, it’s only the number that a prospect is worried about. In either circumstance great sales people help prospects overcome price objections by putting the price in a different perspective relative to value using tactics like amortizing the price and creating timelines that compare the price against the potential gains in revenue or margin. Using a combination of all of the above tactics, great sales people are rarely stymied by price objections.
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You can’t sell if you don’t know how they buy
Posted by Rick Pranitis in SALES BEST PRACTICES on September 17, 2013
It is one of the most fundamental and important propositions in major account selling – you can’t sell if you don’t know how people buy. Ask any top performing salesperson and they will paint a comprehensive picture of the customer’s buying process. Ask an average performer and they will provide only a sketch.
Because of the foundational nature of this idea, it is always a good idea to pay attention when someone adds new insight about how customers buy. In a McKinsey article they asked a fundamental question – Is the buying cycle linear? Their short answer was – No!
According to a McKinsey & Co study, the traditional linear sales process – customers take in information; narrow down their choices; kick the tires, and submit the purchase order – is not really how customers buy. Rather, they talk about the Customer Decision Journey that is anything but linear.
The study found that more than 50% of marketing spend is misaligned because of a misunderstanding how customers make buying decisions – as they say that is a problem worth correcting. So let’s take a look at three steps a salesperson could take to start getting it right.
Stop assuming the buying process is a mirror image of your selling process.
Most companies have a five or six stage selling process beginning with stages like need recognition and ending with stages such as resolution of concerns and proposal submission. The processes are almost always linear in depiction.
The first problem, as the McKinsey authors pointed out, is the buying process is often not linear. Second, the customer may not start at the beginning of your sales process. For example, they may expect that you have a good understanding of their needs hence not want to go through an extended series of discovery conversations. Third, they may have placed additional emphasis on a stage like evaluation of options so they can engage more people and committees in the buying process. So you are stalled at Stage 3 and don’t even know why.
Don’t get there too late with too little.
In an HBR article Steve Martin reported on a win-loss analysis study. He found – “Approximately 30% of the time, the winner of the sales cycle was determined before the official selection process started. Another 45% of the time, customers had already made up their minds about whom they were going to buy from about halfway through the process.”
This means that 75% of the time customers make their final decision halfway through the selection process. Consequently you have to determine early on whether you are chasing a bad business opportunity. On the other hand, if it is the case where the race can still be won, you need to have a strong first half.
Stop assuming the present can be predicted from the past.
Today we are living and selling in a time of “compressed history.” Changes driven by the global market and advances in manufacturing technologies make the past a bad predictor of the future. Companies in many industries are going through transformational changes which are impacting their buying process and, in some cases, their basic business model.
As a result, competitive advantages that once lasted a long time now disappear quickly. What you need to do and how you do it during the sales process has to be adjusted and fine-tuned to the new reality. If you want to prosper – assuming what worked in the past will work in the present is a risky assumption.
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This article was originally posted to the Sales Training Connection by Richard Ruff on September 9, 2013.
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Five Characteristics of a Successful Sales Team
Posted by Rick Pranitis in SALES LEADERSHIP on September 13, 2013
In order to build a successful sales team, sales managers and executives need to know the characteristics of a successful sales team in order to choose the right candidates. When the right sales people are on a sales team and the sales manager is actively involved in promoting the team’s success, that team will become successful. Here are five characteristics that all successful sales teams share.
1. A Successful Sales Team Is Collaborative
The days where a single sales person could routinely land major accounts alone are fast receding. This is due in part to changing customer expectations; prospects need to feel that someone at a vendor is always available, and team selling helps fulfill that need. A successful sales team is made up of individuals who thrive in a team environment and are therefore able to cooperate and collaborate on major accounts. This also means that sales compensation and incentive plans should have contingencies for equitably recognizing each sales person who made a contribution towards closing a major sale.
2. A Successful Sales Team Is Able to Self-Direct
Most top sales people are described as driven and self-directed. In a successful sales team, the majority of individuals fit this description. Sales people who are not able to self-direct and meaningfully contribute to team accomplishments and dialogue have little place in and rarely last long on a successful sales team. The self-direction of a successful sales team comes from many sources, including:
* Peer support. Members of a successful sales team tend to look to one another for assistance before requiring direction from the sales manager.
* Knowledge of resources. Sales people on a successful sales team are intimately familiar with the resources available, and will use these resources to their maximum potential.
* A comprehensive recruiting plan. The recruiting plan for a successful sales team must actively search for and select individuals who will thrive in the environment.
3. A Successful Sales Team Manages Its Time
Few things are more frustrating than seeing opportunities slip away due to poor time management. With a successful sales team, this is rarely a problem. Combined with the other characteristics of a thriving sales team, excellent time management skills allow such a team to coordinate individual effort to ensure that no sale is missed due to time pressures. These time management skills also allow these sales teams to make time for other priorities such as development and coaching without negatively impacting sales numbers.
4. A Successful Sales Team Has Inherently Strong Communication
Communication on any sales team is key, but the successful sales team makes communication an art form. At any time on a successful sales team, team members will be in routine contact with one another, team supervisors and managers, and promising leads and prospects. In such a sales team, sales opportunities are rarely dropped because the dialogue is kept open and active – while management is always aware of the status of important opportunities and sales targets. This communication also allows the sales team to:
* Understand what must be accomplished in order to meet quota.
* Give valuable input on the sales process to make improvements for even better sales team performance.
* Pivot where required when priorities or goals are changed as business needs evolve, without substantial disruption to the existing pipeline.
5. A Successful Sales Team Enjoys Winning
The thrill of winning is one of the drives behind most major sales achievements. A successful sales team is motivated by the thrill of accomplishment for its own sake, and the manager of this team will find that monetary incentives often come in second place. This does not mean that monetary incentives should be phased out; many sales people count this as a strong motivation. However, sales managers looking to build a successful sales team may want to move the strategy away from compensation and look to the non-monetary characteristics of a successful sales team first.
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The article was originally posted to the SalesForce Search Blog by Matt Cook on August 30, 2013
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Does Your Sales Dashboard Have The Right Indicators? (reprise)
Posted by Rick Pranitis in SALES BEST PRACTICES, SALES LEADERSHIP on September 9, 2013
I posted this article about a year ago and, after a recent discussion with a client, I thought it would be worthwhile to bring it back from the archives to help remind others.
The idea of a sales dashboard is appealing. What business manager wouldn’t like to run their company like a well-oiled machine, with the help of a few select indicators? But in practice, it is ironically the choice of these indicators which can stall the effectiveness of the sales dashboard…
Every company is certainly different, and it goes without saying an industrial equipment maker cannot manage its sales process (for example) like a travel agency, or a service provider. However, here’s some tips on zeroing in on the right indicator can be helpful in the majority of situations.
Choose indicators which are useful throughout the sales process – As the saying goes, you shouldn’t count your chickens until they hatch. Nevertheless, you want to manage your sales process continuously, not just once a quarter. It’s important to avoid indicators which only become meaningful at the end. For example, “Actual/Projected sales” is more useful when compared to its historical average at that stage of the quarter.
Be selective – you start with the laudable intention to stick to the essentials, but find yourself a few months later with a computer screen that looks more like a spacecraft cockpit than the clear-cut dashboard of your dreams. To be more selective, ask yourself this question before adding another indicator to your sales dashboard: is it directly related to what your company is trying to achieve (i.e. prospects progressing along your pipeline), or is it merely informative?
Choose actionable indicators – avoid indicators which look sexy but don’t bring anything tangible to the table. A traditional indicator that clearly points you in the right direction is better than a “sophisticated” one which needs to be explained to everyone and even leaves you scratching your head.
Favor dynamic indicators – one which measures a sales team’s progress. A static indicator only measures an activity. For example, “Number of leads qualified/Week” is a dynamic indicator, while on the same subject “Number of qualification calls/Week” is a static indicator. From this example we can infer that a dynamic indicator is naturally outward-looking (i.e. focused on prospect dynamics) while a static indicator is often inward-looking (i.e. concerned with your team’s processes).
Beware of environmental indicators – those which are focused on your company’s environment (e.g. “Number of RFPs in my sector”) are most certainly outward-looking. Yet, do they belong on your sales dashboard? Not especially. You’re interested in your company’s performance, which only indirectly depends on its environment. Environmental indicators are rarely actionable, unless you are matching them to a triggering threshold. For example, you could decide to re-contact your existing client base systematically when the number of RFPs in your sector falls below a threshold of ten per month.
Certainly there are others, more specific to your particular situation. The objective here is to give you a starting point. Get you thinking about what’s key to steer your sales process to success. As always I’m interested in what you think and what you’ve found to be effective in your sales dashboard. I invite your comments, ideas and suggestions.
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To Move Ahead You Have to Know What to Leave Behind
Posted by Rick Pranitis in SALES LEADERSHIP on September 3, 2013
Decisions are the most fundamental building blocks of successful change in our organizations, our teams, and our careers. The faster and more strategically we stack those blocks, the faster and more successfully we achieve change. Yet, change efforts often stall precisely because those decisions don’t happen.
The question is why?
Avoid Changing By Addition. The Latin root of the word “decide” is caidere which means “to kill or to cut.” (Think homicide, suicide, genocide.) Technically, deciding to do something new without killing something old is not a decision at all. It is merely an addition.
When an executive announces that her business will change to become a luxury service provider, technically it is not a decision until she also states that they will not provide low cost services to price-sensitive customers anymore.
When a sales manager declares that his strategy this quarter will require his salespeople to spend more time strengthening existing customer relationships, he has only made an addition until he also declares that they should spend less time on something else like hunting for new prospects.
Your palms might be sweating at the mere thought of telling your team to ignore some group of paying customers or to not spend time hunting for new business, even if you really want to see the change happen. Research has shown that making tradeoffs is so mentally exhausting that most people try to avoid them whenever possible. That’s why a manager who is no stranger to long hours and hard work will escape the discomfort simply by piling on new change objectives without killing any of the current priorities.
But this change-by-addition approach can be a death blow.
Avoid Trickle-Down Tradeoffs. When team leaders fail to decide which old directions are going to be sacrificed in service of the new direction, the tradeoff doesn’t magically disappear. It simply slides down the ladder. Instead of the team leader leaning into the discomfort and deciding once that the team is going to spend this quarter strengthening existing customer relationships, and not actively hunting for new prospects, each team member now has to decide for themselves whether to call on an existing customer or go find a new one every time they pick up the phone, open their email, or hop in the car.
Trickle-down tradeoffs create two major problems for change efforts. First, they undermine team alignment toward the change. It is highly unlikely that each team member will independently arrive at the same conclusion about what to do and what not to do. Part of the team will choose to move in one direction while the other part moves in another direction — the very definition of misaligned.
Second, psychologists have shown that making tradeoffs depletes our overall mental capacity and causes us to make poorer judgments in completely unrelated situations. This phenomenon is why otherwise healthy eaters end a long afternoon at the mall of choosing between stylish shoes and comfortable shoes by feasting on a hearty dinner of French fries and Cinnabons. They have no mental energy left to make good dieting decisions.
Similarly, when your team has to spend a long morning making tradeoffs it leads to long afternoons of either staring at the wall and web-surfing, or making poor choices for their customers, their workloads, and their budgets.
To Lead Is To Decide. Making change decisions is a cognitively and emotionally taxing activity that the average person will go to great lengths to avoid. While I have discovered some techniques for increasing the consistency and reliability of our decisions, there is no proven way of completely eliminating the discomfort of making tradeoffs. That might be a key element of what makes great leaders great. Great leaders and change agents have come in all shapes, sizes, colors, genders, and personality types.
But the one thing they all seem to have in common — the one thing that distinguishes them from ordinary people — is their willingness to decide when others could not.
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This article was originally posted on the Harvard Business Review Blog by Nick Tasler on August 7, 2013
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