Posts Tagged Selling Value
How Sales Teams Should Approach Price Negotiations
Posted by Rick Pranitis in SALES BEST PRACTICES on January 31, 2017
Sales staff face many challenges en route to closing a deal, but one of the most difficult can be handling those tricky price negotiations. In many cases, a buyer will look to try and squeeze a discount out of a sales rep, forcing a negotiation to take place. So how should a sales team approach this?
Negotiate From the Beginning
Too many sales reps think of negotiation as something that takes place at the end of a sales process, after all of the other work has been done. In reality, your sales team needs to be negotiating throughout the process. However, early negotiation should be framed in terms of trying to find a mutually beneficial solution.
A common tactic from buyers is something known as ‘anchoring’, where they attempt to establish their own maximum price early. When this is attempted, sales reps should enquire as to how they arrived at that figure, and try to learn about the buyer’s needs. Ideally, sales staff should also be the first to state a figure.
Sell Value Rather Than Price
One of the best ways to improve negotiating is to sell value rather than price, and this should be emphasized in sales management training and become a part of the sales culture. Your product may be more expensive than a competitor’s because it is better. Selling value means staff can approach negotiations from a position of strength.
“The reality is, there are solutions customers will pay a premium for,” MHI Global writes in their document, The Problem With Price Discussions. “Ultimately, customers decide to buy from you because they believe you brought to the table something that has value to them that they can’t get elsewhere.”
Know When to Walk Away
Finally, a sales team should know that there will be times when a mutually beneficial solution cannot be reached. This is unfortunate, but staff should have a clearly defined breaking point and should not be afraid to walk away from sales opportunities that have no real potential.
Where possible, sales training should try to teach staff to recognize early warning signs that a negotiation will fail, so that as little time is wasted as possible. However, this can be difficult. The most important thing is to remember that other sales opportunities will exist if this one isn’t right for either party.
This Article was originally posted to the EyeOnSales Blog on December 2, 2016
Do Your Prospects Really Want The Cheapest Price?
Posted by Rick Pranitis in GENERAL DISCUSSION on August 29, 2015
I bought a new smart phone last week. I had absolutely no intention of getting a new phone when I walked into the store, yet I still walked out with one. How did this happen, you ask? Solely because of the professionalism of the sales representative!
Before you say it, no, I’m not an impulse buyer. In fact, anyone who knows me will tell you I’m quite the opposite. I was only there to buy a car charger!
When I walked into the store, I was promptly greeted by a very friendly sales representative. He asked questions about why I was there and then showed me exactly what I had asked for. Most sales representatives would have stopped the process right there, and sent me off to the cash machine to pay for my new car charger.
Not this sales representative, though. He didn’t stop. He kept asking me questions. He probed deeper into how long I had had my phone, what I use it for, how much I was paying for it etc. He finally said, “You know, for only $20.00 more than you were going to pay for that car charger anyway, you can have a brand new phone that will allow you to take those better pictures like you wanted to.” The first thing I thought was, “Tell me more!”
As I said, I’m not an impulse buyer. I didn’t sign the contract right then. I had questions. Yes, you could even call them objections. Objections like:
- How much is the screen protector, carrying case and memory card going to cost? It all has to be more than just $20 up and above a car charger.
- How are you going to get my contacts from my old phone to my new phone because I certainly don’t have the time to re-enter them all.
- I want to stay with my current carrier. They are very dependable in the rural areas where I frequent (i.e. the golf course).
- What about the car charger? That is why I came in today, after all!
This sales Rep had done his homework though. He knew about all the current promotions from his store and my carrier. He was able to deal with all of my objections, one by one. It really was only $20 more than the car charger. Granted, my new plan was going to cost more per month, but with all the extra services I was going to receive, it was going to save me money in the long run because I won’t have those overage charges any more.
Wait, did I just say I had agreed to pay more than what I was paying when I walked in? I was only there to buy a car charger, and now I had bought a brand new, shiny phone with all these fancy bells and whistles, on a moment’s notice, no less? More importantly, I was (and still am) feeling absolutely wonderful about the whole experience. I guess it really is true; we all want the cheapest price, but the cheapest price for what we want.
When I look back, I realize, he didn’t sell me anything. He simply made it very easy for me to buy the solution that was right for me. But isn’t that what the best sales reps always do? Like I have always said, “Better the fact find, happier the customer, better the paycheck!”
This article was originally posted to The Sales Compass blog by Susan A. Enns on April 2, 2015.
Three Ways to Ensure Price Isn’t the Main Criteria for Decision Making
Posted by Rick Pranitis in SALES BEST PRACTICES on July 5, 2015
Many salespeople believe that their customer base revolves around the concept of price. That is, price is the be-all and end-all of their decision-making process. Certainly, if they listen to what many of their prospects say, you can understand the reasoning.
Expressions like: “You’ll have to do something with your price before we can even consider this” or “What’s the best deal you can offer me?” or “You competitor offered 25% off list price. How far can you go?” are designed to make the sales person feel they have to concentrate on price before the sale can be advanced in any way.
Actually, you can make sure that price isn’t the main criteria for decision-making in the customer’s mind by building on these three components:
Make sure you know the value of your products and services and how they link to the customer’s business situation. This is the key to creating value and is at the heart of selling with integrity and credibility. A salesperson must understand the departments that are most affected by the solution, and the financial impact of his solution on various departments within the entire company.
Understanding the customer’s critical issues, dissatisfactions, and frustrations, plus recognizing the business opportunities that arise from them, takes research, time, commitment, and dedicated work. But it is definitely worth it.
If you’re able to find out information prior to the visit or on previous visits before you start talking about prices, then you build opportunities for you and the prospect to select other, more credible, ways of achieving their goals and objectives.
Make sure you can help the customer calculate the cost of not using your solution. Before you can offer a remedy, you must be able to firmly establish the results of not using or buying your solution. You must help the customer identify physical symptoms of his problem and show him that multiple departments are suffering. Remember, if there is no pain associated with the current situation, you’ll find it difficult to move the prospect out of their comfort zone and make the decision to change.
Pain is the most basic human motivator for change. It is the natural defense mechanism that tells people that if they don’t change and deal with a problem, they will face consequences. And of course, change itself is painful. Therefore, change will not occur until an individual or company recognizes that the pain of change is less than the pain of staying the same.
Tell the prospect the impact of your solution over those of your closest competitors. Make these figures specific. This is where you should be able to pre-empt all but the most irrational objections. If you can get the customer to recognize that your product will provide a specific financial impact, such as cutting the cost of a critical process or increasing desired revenues, they will realize that your premium pricing makes solid business sense. You get them to identify how the benefits outweigh the costs incurred, especially if they see a competitor’s offer as offering more value to you.
When you quantify the impact of your solution, it will quickly become obvious to your customer that your solution, at your price, makes for a solid business decision. If that is clear to them, it solves the challenge of them having ‘buyer’s remorse’ and helps them persuade other decision-makers who might have a say in the final decision.
Try these three ideas out before the prospect talks specifically about price. It will build the value of choice before their mind goes to think about commoditizing your product.
This article was originally posted to the MTD Sales Training Specialists blog by Sean McPheat on February 9, 2015.
Do You Let Customers Set Prices?
Posted by Rick Pranitis in GENERAL DISCUSSION, MARKETING on June 4, 2013
If you ask a group of product management and marketing leaders most, if not all, will say they carefully develop pricing according to a set business strategy, and their pricing is guided by three requirements: the needs of the buyer, the value the offering delivers and profitability. However many will fail to set strong pricing policies to ensure the fruits of the strategy are delivered. Without this policy, every transaction runs the risk of becoming an “exception,” and customers – not the organization – end up setting prices.
A strong pricing policy clearly spells out pricing, how it’s structured, and what metrics are used to value the offering. It indicates the criteria customers must meet to fit into each price band. It also explains policy (e.g. price protection, raw-material cost increases, etc.). Finally, it provides direction to the sales team on how to manage price objections.
To maintain the value of an organization’s products or services, a best-in-class policy provides a menu of tradeoffs salespeople may offer when negotiating with buyers. Say a company has a budget of $25,000 for software. Your proposal comes in at $32,000. Do you discount? No! Offer tradeoffs of service levels or usage access. That way, customers come to understand the pricing is not open to negotiation, but a solution can be reworked to fit the budget. Once customers are used to working with your organization in this way, they will no longer assume they can negotiate, and will better recognize the value of your offering.
Once you have built strong pricing policies, make sure you do two things: First, educate your sales force on the pricing strategy and policy, and provide them with tools (e.g. ROI models and case studies) to support the policy. Explain the tradeoffs they may offer customers, and role-play negotiating scenarios with them. Second, develop strong pricing policy enforcement at the regional level. How is this done? First, include regional marketing and sales teams when developing the policy, so they can stand behind it. Second, allow no exceptions. Reject all quotes which go against the policy. If field marketing and sales data indicate that the policy is not competitive, (then) consider revising the policy as well as the pricing.
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This article was originally posted to the Sirius Decisions Blog by Lisa Singer on April 24, 2013
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Selling on Price is the Wrong Path to Follow
Posted by Rick Pranitis in GENERAL DISCUSSION on October 17, 2012
Earlier this month Mark Hunter of The Sales Hunter fame came out with a short and “dead on” accurate article about the serious consequences of slashing prices for the sake of making a sale. Now some of you may say this topic is being beat to death. I hear sales people constantly saying they understand and they realize the impact of such actions and so on and so on… But for some reason (and for far too many sales people) when it comes down to crunch time selling price suddenly becomes flexible. So now everybody, let’s review once more why selling on price is not the path to success;
- Somebody will always come along and offer what you’re offering for a slightly lower price than your price. Don’t think for a moment you are the only one who can offer a low price. As soon as you lower your price, you can expect somebody else to do the same.
- The people you sell to at a lower price will be customers who can’t afford to pay you full price. There will always be a group of customers who are seeking the lowest price, and if you think you’re somehow going to turn them into loyal customers who will pay you full price, you’re crazy. These people have zero desire to pay anything but the cheapest price.
- The customers you attract will see value in what you’re selling at the lower price, but will not see value at the full price. Why should they? If you sold it to them at a lower price, then that is what their expectations are built around.
- Customers who haggle with you wanting a lower price are the same ones that will haggle with you over everything. This is the bane of so many issues. Why do anything that would attract difficult customers? A smarter move would be to encourage them to buy from a competitor.
- The lower profit margin you’re making selling at the lower price is not going to give you or your company the level of profit you need to operate. If you’re not making a profit, there’s no way you can stay in business for very long. Not only do you need to make a profit on what you’re selling today, but you need to make enough profit to allow you to invest in building your business for tomorrow.
- You’re worth full price! Do you view yourself as a cheap person? Of course not! Perspective does matter and if you think you can make a sale only by lowering your price, it will become your go-to method. It will become your “normal.” If you want to see yourself successful and capable of being at the top of your industry, then you simply can’t sell on price alone. And you certainly can’t make a habit out of discounting.
Mark’s list is pretty comprehensive and the points are all valid. I would add one more: The customers’ perception of value goes beyond just the product or service you’re offering. That perception extends to you personally. If you’re ever going to be considered as a valued advisor or consultant i.e. sales professional – caving in on price whenever the negotiation process becomes difficult will destroy any creditability you may have established in the eyes of your client. You become just as much a commodity as the product or service you’re selling. And, you can be just as easily replaced by the next shiny bauble or offer which walks in the door.
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Five Ways to Keep Your Biggest Customer
Posted by Rick Pranitis in GENERAL DISCUSSION on October 11, 2012
Before you slash prices, check out these strategies for keeping your best customers happy and loyal.
Contrary to popular belief, a big customer that buys a lot of product from you is not necessarily a good thing. Big companies have a habit of pigeonholing smaller firms into being suppliers of commodity products. That way, they can play you off against your competition in order to push prices down. They don’t care whether you make any money on the deal because they can just switch to another vendor should the price drop drive you out of the business.
Now here’s the good news. There are five ways to defend against this kind of pricing game.
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Strategy #1: Differentiate Yourself. If your firm offers a needed product or service that no other company can provide, then it’s impossible for the big company to play you off against your competitors. To create that differentiation, you position your offering so that whatever is unique about it becomes a “must have” for that customer. There’s the story of a lost a sale of a million-dollar publishing system because the competitor convinced the customer that they needed the ability to set type around the shape of a hand print, something that the customer had never done before and would never do in the future.
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Strategy #2: Provide Expertise. If you or your firm can offer expertise that the customer needs in order to fulfill their goals, you can be strategic to them, even if you’re a commodity supplier. For example, a company that sells glue for manufacturing consumer electronics might have world-class expertise in volume manufacturing that, if shared with their customer, would make them more profitable. That expertise is then periodically “lent” to the customer in order to reduce their manufacturing costs, thereby making an ongoing relationship valuable to the customer.
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Strategy #3: Create a High Replacement Cost. If it would cost the customer a prohibitive amount to replace your firm’s products and services, they’re far less likely to replace you with another competitor. What’s important here is that you create the high replacement cost AFTER you’ve made the sale, because prior to the sale, the big customer (if they’re at all self-aware) are likely to see the replacement cost as liability and thus be less likely to buy from you in the first place.
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Strategy #4: Really Know the Account. If you can get yourself involved in the inner workings of the customer account and become part of their strategic planning, they’ll begin to see you as a consultant rather than a mere supplier. For example, IBM sometimes assigns an employee as a general IT consultant inside Fortune 100 firms. In addition to being a sales representative, that employee is mandated to act as an independent IT resource acts as a clearing house for any problems that occur with IBM’s offerings.
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Strategy #5: Generate Reverse Credibility. This one is tricky, because credibility usually flows from the larger company to the smaller one. (e.g. “Our customer list includes GM and Oracle!”) However, if a smaller firm has a market reputation that helps the larger firm create credibility in a new market, the larger firm will may see the relationship as strategic. Example: the Taiwanese computer manufacturer Acer used to publicly tout its’ relationship with boutique studio FrogDesign in order to seem more “cool” in the consumer PC space.
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Increase Sales with Consultative Selling
Posted by Rick Pranitis in GENERAL DISCUSSION on September 17, 2012
When consultative selling, a sales professional should act more like a consultant than a conventional salesperson. Rather than pitching the features, advantages and benefits, of a product or service, a consultative sales person should make recommendations based on the buyer’s most pressing pains and desires.
By acting like a consultant rather than your stereotypical salesperson, consultative selling enables sales professionals to create long-term relationships with customers which are based on trust. This adds significant value to each and every sale, making customers all the more likely to buy from you instead of a competitor.
Here are 4 quick sales tips which will get you on the right path to mastering consultative selling:
Tip 1: Be a Problem-Solver:
Consultative selling requires salespeople to approach selling in the same way that they would to solving a problem. They need to treat any customer pain, need or desire as a problem that is there to be solved.
Here a commanding knowledge of your own company’s capabilities is necessary to align the customer’s problems with the right product or service. However, it is important for salespeople to open discussions around the customer’s pressures, pains and desires before aligning them with the product/service’s features, advantages and benefits. To become a problem-solver, salespeople need to qualify with their customers that the problem exists and can be solved before pitching their solutions.
Tip 2: Become a Trusted Advisor:
When consultative selling, moving the discussion from the customer’s problems to their desires will transform the salesperson’s relationship with customers. By applying a consultative selling technique, the salesperson will be perceived as a trusted advisor by the customer. By acting like a problem-solving consultant, consultative selling can transform the buyer/seller relationship into a novice/trusted advisor relationship.
Tip 3: Probe with Open Questions:
To truly master consultative selling, salespeople need to be great at asking the right questions about their customer’s pressures, problems and desires for improvement. By asking open-ended questions (i.e. who, what, where, why, when…), salespeople can probe their customer’s deepest motives, feelings and attitudes towards the solution. By probing the customer’s pressures, the implications of failing to respond to these pressures (the potential pain), and the customer’s desire for improvement, the customer’s needs can be shaped and urgency can be created.
Consultative selling through asking open-ended questions enhances the salesperson’s understanding of the buyer’s situation. This makes them better equipped to qualify sales opportunities and align the buyer’s pains and desires with the solutions they sell, thus giving the customer confidence in the salesperson’s recommendations.
Tip 4: Give the Customer Added Value:
As part of the final step to mastering consultative selling, salespeople must learn to create added value for their customers. Here salespeople need to enhance the value that their solution will give the customer in order to differentiate their offer from that of the competition. Added value comprises the tangible advantages and benefits that your company offers over and above the product or service that it is proposing. This may be a ‘right-first-time’ delivery guarantee that you know is better than that of the competition, or a managed implementation service that you can deliver across the region.
Each ‘value-added offer’ must be specific to the selling organization’s capabilities and will increase the value of the overall solution to the client so long as it has been aligned directly to their most pressing need. When aligned directly to this need, added value will not only enable you to differentiate your offer from competitors, but will actually allow you to charge a premium. You will be able to not only increase your chances of winning deals but you will also find it much easier to up-sell or cross-sell during the meeting.
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Consultative selling enables salespeople to gain a clearer understanding of the customer’s world. By achieving a clearer understanding of the customer’s most pressing needs and desires, salespeople are able to play the role of a consultant who aligns their solutions with their customer’s problems. By implementing an effective consultative selling methodology, you will be able to determine you customer’s most pressing pains and desires and respond accordingly.
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This article was originally posted in the Sales & Business Development Blog by Steve Eungbut on November 11, 2011
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Selling value – an innovative framing
Posted by Rick Pranitis in OTHER CONTENT on August 28, 2012
Anyone who knows me can tell you I am constantly scanning the web for interesting articles relating to Sales and Marketing. This article recently caught my eye, and I agree with the author’s comment it’s a new twist on an old – yet still very much valid – concept of value being key to successful selling.
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Source: www.salestrainingconnection.com
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