Value Trumps Price – Consultative Selling Pays
Consultative selling techniques are key to winning sales where premium prices are the norm. With a focus on value and benefits, this style of selling has an excellent track record for producing results.
Dozens of corporate buyer surveys regularly indicate that price is not the number one or two factor in their purchase decisions. Other factors, such as vendor reputation, product quality and overall value usually ranked higher than price.
Yet buyers often convince salespeople that price is their primary buying criteria. Why? They obviously want all the benefits the salesperson can provide but at a lower price, further boosting the value they receive. Indeed, it’s really about maximizing value, and price is just one of the components of value.
In today’s competitive environment, buyers often have the upper hand, especially when a consultative selling approach has not been used. Many buyers are even taking sales training and negotiations courses to be able to outmaneuver salespeople who try to sell products and services at healthy margins. Below are just a few of the techniques we teach for selling value.
Avoiding the Price Trap
So, how can salespeople use consultative selling avoid the price trap and instead sell value?
- Assess how prior purchases were made. What were the most important criteria at that time?
- Gather information on expected financial results and perform a ROI analysis
- Understand the prospect’s buying criteria and ensure you meet that criteria better than your competition
- Understand how the prospect benefits personally by a successful implementation of your solution, and explain how you’ll ensure those benefits are realized
- Gain strategic commitments, such as the prospect providing financial or competing vendor data, that boost closing odds
Using Consultative Selling and Concessions Strategically
But, what happens if you do need to make some concessions or help your buyer save face?
- Practice consultative selling and perform a complete needs assessment prior to entering into a negotiation
- Make sure you’re dealing with the ultimate decision maker before agreeing to any concessions
- See if you can trade a reduced price for a higher volume commitment, more favorable terms or referrals
- Offer high-value, high-margin services instead of cash discounts. These services could include extended warranties or upgraded maintenance contracts
- In heavy negotiations, pre-plan your approach with negotiation tactics like the walk-away point or splitting the difference
- Make sure you don’t grant concessions too early — tie any concessions to a signed agreement
Those adept at consultative selling often out-earn their product-selling counterparts. Why? Because value-oriented salespeople are great at selling premium-priced, high-margin products and services. Typically, these high margins provide for fat commission checks and better job security.
Not only does value trump price in the minds of buyers, salespeople using consultative selling have more success and bigger paychecks than the more product oriented salespeople.
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Tough Times Sales and Marketing Strategies
Tough Times Sales Strategy Ideas
1 – BOOST THE PERCEIVED VALUE of your product or service. During tough times, buyers have less to spend and are looking to stretch every dollar and maximize the value they receive. The two ways to improve value are 1) lowering your prices and 2) boosting benefits your customer perceives. Less experienced salespeople and organizations adopt the price-cutting sales strategy. So, how can you implement a sales strategy of improving customer benefits?
- Do some financial justification work to ensure that your customer has an excellent ROI on your product or service
- Gain stronger prospect commitment by involving her in each stage of your sales process (e.g. having her supply financial information or talk to your references)
- Bundle in extra products or services with a high perceived value and a low incremental cost
- Provide additional warranties (that also have a low incremental cost)
- Agree to lower prices only when other key concessions (e.g. longer-term contracts, higher volumes) can be obtained or if you have a low-price sales strategy
2 – GENERATE HIGHER QUALITY LEADS. Closing rates tend to decrease during hard times. To combat this phenomenon, salespeople and their firms will need to improve lead quality in order to obtain prospects that are more likely to buy. Methods for obtaining better leads include:
- Enhancing the sales qualification process by adding or refining prospect qualifiers or elevating the requirements for “A” prospects
- Focusing on target markets and customer types in which high closing rates have been experienced. Successful firms and salespeople analyze their performance to pinpoint which market niches, sub niches and characteristics (e.g. demographics, psychographics) are common to profitable sales versus lost and unprofitable sales.
- Upgrading your marketing campaigns and tracking the success (and cost vs. return) of each campaign
- Meeting with more decision makers by enhancing your sales prospecting techniques (e.g. devising ways to meet with more decision makers, minimizing obstacles such as voicemail) and prospecting results (e.g. your appointment close rate, your proposal acceptance rate).
3 – ENHANCE CURRENT CUSTOMER RELATIONSHIPS. Your best prospects are often your existing customers. There are a number of things you can do to find more business in existing accounts including:
- Conducting new needs assessments with accounts you’ve been selling to for quite awhile
- Refine your sales strategy for each account
- Expanding the number of contacts you have within your accounts and probing each one for new opportunities
- Exploring possibilities in any divisions, other locations or firms your customers are aligned with
- Conducting key account analyses with your peers or manager to identify or create sales opportunities
- Identifying competitors who have a foothold in your accounts and devising strategies to displace them
Without a doubt, many companies are impacted by tough economic times. But truly world-class companies and salespeople use adverse market conditions to beef up their sales strategy, outmaneuver competition and boost their market share.
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Improving Sales Results and Performance
Our proprietary Sales Improvement Model has been developed and refined over a 20-year period and has helped us increase sales results at over 250 large, medium and small companies. Although presented in a simple format, this model contains up to 50 best practices, sales management systems and sales processes.
For a description each building block of our Sales Improvement Model, click here.
All Rights Reserved. The Sales Alliance Inc. San Diego, California.
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