| |
| |
|
Sales Information |
|
|
|
Instead of Discounting, Back Some Value Out of Your Proposal
Last minute discounting has become so prevalent that many companies have come to depend on it as their default sales strategy. Employing a go-to-market strategy of being the lowest cost provider is one thing, but dramatic, tactical discounting on every deal will erode your company's margins and leave you digging a deeper and deeper hole in which your company will ultimately bury itself. I don't want to give you the impression that discounting is never appropriate. I can think of three scenarios where it is required: 1. When a company has mispriced their offering. Let's face it. Times have changed. Competition is fierce. And yes, as much as we don't like to admit it, prices and fees have been forced down in some markets. If everyone else is now selling what you sell for $1.00 and you're still selling it, just as you always have, for $2.00 and you can't prove you can deliver a dollar's worth of additional value for the customer, your pricing is too high--way too high. Call it a discount, or call it a price adjustment, in this situation you've got face reality and sell your products at a price the market will bear, or you won't sell very much at all. 2. As a token concession to close the deal. I don't see a problem with "rewarding" a buyer for signing an order within your timeframe, for example. Understand, I would much rather provide other concessions that don't cost my company money and don't educate my customer that whenever I am going to ask them for an order, I am going to give up part of my margin and commission. But I do live in the real world and understand that for my clients, pricing concessions are sometimes required to get the deal signed. 3. When you haven't done an adequate job of selling the unique business value your product or service will provide the customer. My clients will tell you I am never happy in a situation like this, but if you've not done the best selling job, and there is some room for a discount, and you need the deal, discounting may be better than losing the deal on principal. How do you avoid discounting? I talk a lot in my book, How Winners Sell, about the fact that to succeed in business to business sales today, you must sell business improvement, not products or services. That means differentiating yourself from your competition in the unique value you, your products and services, and your company can provide toward your customer achieving their corporate, divisional, business unit, department, or government agency goals. Have you transitioned into the mode of creating customer demand by targeting accounts--getting in before they know they have a need, and establishing yourself as a knowledgeable, trusted, and patient advisor? If not, you'll continue to be on the receiving end of all sorts of one-sided customer demands, mostly taking the form of answering requests for information, doing presentations, demonstrations, fighting the constant battle against having your offering commoditized by the customer, and being on the receiving end of strong demands for discounts. We've been taught over the years to bundle our products and services where possible to provide the customer with a single investment number. That way, we were told, they can't nickel and dime you, and can't slice up your offering, able to say no to pieces they don't want or need. But now times have changed and when you think about it, that's exactly what you want to do. If you sell products or services that can be componentized, sold in pieces or modules, or in phases, you're potentially in good shape. Scenario You know your competition is going to come in with a substantial discount, as they have before. Your sales effort must include: ?Assuring yourself that the customer is not making a decision solely or primarily on price. This question must be asked again and again of key decision makers. ?Getting agreement from the real buyer that you understand their business objectives and that your offering can help them achieve those objectives. This method does not work unless you are dealing with the real buyer. ?Finding unique areas of additional value (on top of their existing requirements) that you can provide through the capabilities of your product or service offering. ?Management support for potentially selling part of your offering now, and the rest later on rather than selling the whole thing at a discounted price. In cases where you know your competitors will be discounting, you'll need to offer several investment options to your customer. Alan Weiss, the consultant's consultant, suggests providing three opportunities for them to say yes. If you offer your prospect three options to buy--let's say for the sake of labels, Platinum, Gold, and Silver--and you've done a good job of selling the business value of your offering--you can avoid having to concede more than a nominal discount. Your plan here should be not to discount, but rather to back value out of your proposal to meet the prospect's desired investment level. Presenting three options lets you do exactly that. The customer gets to determine how much they want to invest and will enjoy the resulting ROI associated with that level of investment. Here are the three options: The Platinum Option ?Gets the customer what they need (and want) ?Highest level of investment. You might ask for a 10-30% premium over the Gold level for this option, depending on the value you believe you can deliver to the customer. ?All the features, modules, components, capabilities available ?Your best resources ?Quickest time to value ?Priority service -- A special 800 number, top of the queue, 24 x 7 x 365 ?The highest ROI ?Other perks, such as quarterly meetings with your CEO, special invitation events, input into your product development plans The Gold Option ?Gets the customer all of what they need (and a few wants) ?Budgeted level of investment. This is aimed right at the prospect's budget level. ?Most/many of the features, modules, components, capabilities ?Proven, talented and dependable resources ?Quick time to value ?An attractive ROI ?Other perks, such as quarterly meetings with your VP of Service, special invitation events When your prospect tells you your competition has come in with a very low price, you discuss calmly with them the fact that you have an option (the Silver option) that will provide them with what they need at a competitive price. You will already have differentiated yourself from the competition in a number of areas: understanding the customer's business, industry, opportunities, challenges, competitive and customer pressures, and built rapport with the real buyer. In addition, you've professionally educated your prospect on the risks that befall companies who depend on tactical discounting to win. (See my July 2003 article, "How to Outsell a Competitor Who Slashes Their Price to Win.") The Silver Option ?Gets the customer most of what they need now, and the rest in "phase two," next quarter or next year ?The lowest level of investment, aimed 10-30% below the Gold level, depending on how severe a discount the competition is going to offer ?Some of your total array of features, modules, components, capabilities. The rest can be purchased later. ?Talented and dependable resources ?Reasonable time to value ?An ROI that meets their corporate requirements What will the customer do? The may tell you they want your Platinum option at the Silver price. If you've done an effective job selling the business value of your product or service and built a relationship with the real buyer based upon trust, you can look them in they eye and tell them it just isn't possible. What will they do then? My clients tell me that more often than not, they'll go for the Gold or Platinum option. ©2004 The Stein Advantage, Inc. All Rights Reserved. Before founding The Stein Advantage, Inc. in 1997, Dave Stein spent more than 20 years employed in a diversity of executive sales and marketing roles for corporations worldwide. Dave consultants with, coaches, speaks and trains on competitive selling strategies, helps companies to strategize specific, complex opportunities, organize a sales organization, present and position themselves with analysts in the best possible light, as well as to recruit and hire the best sales reps. He is the author of the Amazon best selling business book: How Winners Sell: 21 Proven Strategies to Outsell Your Competition & Win the Big Sale, Dearborn Trade Press, May 2004. For more info: http://www.HowWinnersSell.com or contact his office at viv@HowWinnersSell.com or call (845) 621-4100.
MORE RESOURCES:
Sales - Google News |
|
|
|
RELATED ARTICLES
Im A Second-Story Man Can you say who you are and what you do in two sentences or less?If someone should ask (in an elevator, get it?) what do you do? You should be able to recite the answer as fast as Robin Williams comes up with a quick one liner.Robin Williams can do it because he has rehearsed every line. Diverting the Flow of Customers to Your Business I was a lucky kid when I grew up. Lucky, because I had a big back yard for playing. Why There Will Always Be High Paying Sales Jobs With the dot.com revolution crushing once solid business models on an almost daily basis, the question surely crosses one's mind "am I next?". Secrets to Buying Without Being Sold Have you ever asked yourself, now how did I let that guy sell me on something that I had no real need for at the time? Do you ever get a sneaking suspicion that your probably not going to really use whatever it is that your buying in the way that it was presented? If this is true which is often the case, then why in the heck do we give up our hard earned money for something that until we heard some sales spiel, we really had no need or want to have.Please allow me to expose what marketers do to us on a regular basis in an effort to develop those perceived wants, needs and desires in us which drive us to buy what is being offered. What Successful Sellers Know - Others Dont ... The Subtle Art of Closing Ask any salesperson, "At what point in the selling process does the 'Close' take place?" Eight out of ten will answer, "at the End". To be fair, they are not totally incorrect but they are, nevertheless, more wrong than right proving in principle and in practice, Perado's Law: Twenty percent of the sales force make eighty percent of the sales and profitability. Top 10 Ways to Sell your Product or Service While you Sleep - Part 1 Have you wasted valuable time and money on promotion that doesn't work? Have your announcements and news releases been ignored? Have you been too quiet about getting the word out how your product or service will help solve people's problems? Most of us are passionate about our work. We put a lot into coaching training; we know that we want to help others to create a better life or business. 10 Amazing Product Selling Formulas 1. Sell your products at a wholesale price to retail web sites. Connecting with Customers I just got off the phone with a friend of mine. Business is up he said, but he didn't know why. Winning Sales Proposals Your proposal is selling for you when you're not there, so it must reflect your standards of professionalism.Like it or not, sales proposals are a tool of the trade, and writing a well-crafted proposal can mean the difference between winning and losing a client's business, especially if you are selling to major accounts. 101 Ways to Improve Your Direct Mail Response 1. Mail to your customers more often. How to Give Your Customers a Choice Between You and the Competition and Have Them Choose You Instead of giving your customers or potential customers a choice between you and your competition and having them choose the other guy, have them choose you.Michelle Dunn's new book" Become the Squeaky Wheel," says creating a credit policy can have surprising results. Just Ask! Instilling urgency in a prospective customer can make the difference between achieving a sale and losing it altogether. If your prospects cannot vividly see personal benefits from taking action, there will never be the sense of urgency needed to follow your suggestions. Write On The Money: The Ten Commandments (Plus Five) Of Profitable Sales Letter Writing According to the Direct Marketing Association, in 2003 U.S. Referrals: Getting Good Business By Doing Good Business Whether you're a conventional sales person, a professional - such as a dentist or lawyer or doctor - or a business owner, you've got to have clients to stay in business. There are several ways to do this: either continue to find new customers, keep all of the customers you've ever had, get old clients to return, or get customers to send in referrals. The Benefits of Buying Used Store Fixtures The difference between antique or vintage store fixtures and used store fixtures is simple: antique fixtures have a classic look and style. In many cases they are brand new but manufactured in a style of the past such as deco or minimalist. Model Dell: The Art of the Affiliate Coupon Along with having an innovative supply chain, there's another reason Dell is the largest computer company in the world. They always offer great coupon codes to online affiliates that let the buyer "in" on deals that they otherwise wouldn't get. Everyones Favorite Topic - 3 Tips for How To I believe that everyone understands that no matter what business you are in- Real Estate, Financial Services, Teaching, Auto Sales any other profession, we are all in the PEOPLE BUSINESS. It's been said that fully 85% of your success in life is directly related to your ability to effectively work with people. How To Write A Riveting Sales Letter That Closes Sales How do you get people's attention and build their interest to take the time to read your sales letter? Let's face it. If you can't get the attention of prospects and keep their interest your sales letter will just fall flat on it's face and thus not make you much money. 15 Ways To Get Really Motivated First, recognize that motivation is an inside job. The word motivate means to impel, inspire, hope, stimulate, incite, propel, spur, goad, move, induce, prompt, instigate, fire, provoke, actuate, cause, egg on, drive, excite, and to trigger. UK Sales and Marketing Terminology Terminology / AcronymsABC figures: This is the independently audited sales figure for all recognised publications in the UK. By using the ABC figure, you can quickly establish how much the advertising will cost per 1,000 readers.
|
| home | site map |
| © 2006 |
