Selling Your Value Proposition
Page 14
These thoughts occur in all prospective customers – whether the selling is transactional or consultative.
Negotiating
The negotiating stage occurs when final contracts are discussed and then signed. Negotiation is not about whether the customer will buy, because by this stage the customer has already said ‘yes’. Rather, negotiating is about the terms – price, quality, delivery, etc – of the purchase.
In practice, a sale must be won (or lost!) three times:
First, during the qualifying stage when a salesperson asks ‘If I could show you the way to… would you buy from me?’
Second, when the prospective customer says ‘yes’ to the proposal.
And finally, when contracts are signed.
A good deal can be lost at any of these stages, if and when the sale process is badly handled.
One big mistake that is frequently made is to begin negotiations too early in the sales process. Negotiating on price or delivery too early reduces the seller’s final negotiating leverage at the end of the sales process and negotiation will always occur at this stage. Such a mistake occurs most frequently in a transactional selling environment and when dealing with procurement or purchasing departments. A good salesperson will try to agree to everything else about a deal, in principle, before agreeing on final terms.
At the negotiation stage, the customer’s thoughts tend to be:
‘I need to be certain that I am getting the very best deal.’
‘I don’t want to feel like I have been “taken advantage of”.’
The negotiation phase tends to play a big role in large, transactional sales deals, but is rarely a big issue after the ‘close’ of a consultative sale.
Transition
Once contracting is concluded, customers may be subject to ‘buyer’s remorse’. It is a natural emotional response to surrendering power by agreeing to a business deal. Care should always be taken at this stage to ensure that the customer remains happy with the decision to buy. The emotional elements of the buying/selling process come to the fore at this stage.
The customer is now thinking:
‘Once I buy, will the company still pay attention to me?’
‘I’m worried that I won’t see anyone from Company X now that I’ve signed on the dotted line.’
Transactional salespeople are typically measured on the signing of a contract so are far more likely to abandon a customer at this stage. Good consultative salespeople tend to manage the transition phase as part of the selling process.
There are many important lessons that may be illustrated by studying the sales process and some can be gleaned from the preceding paragraphs. When properly conducted, the sales process should be managed and led by the salesperson or selling team, not the customer.
Figure 5.5 The customer journey – selling through to delivery
SOURCE Verve Consulting, 2016
In driving the process, the salesperson should be aware of the rational reasons for buying, but also understand the emotional state of the buyer at each stage. Finally, when selling to large corporations, company politics can play a huge role in who needs to be consulted and how the sales process is driven.
Selling successfully is much more than a verbal, intellectual process. A good salesperson will make key customer contacts feel comfortable and must engage with the customer (one or many) in an honest and open exchange and not look away or act embarrassed. A successful salesperson is not apologetic and asks for what he or she wants and asks clearly. Most importantly, every representative from the selling organization should believe what is being said. Customers pick up on this lack of belief and it can erode trust. Finally, it is important that a customer feels ‘heard’. Never ignore customer objections.
Objections handling provides an excellent illustration of why a salesperson should understand exactly where he or she is in the selling process. The subtext of objections will often vary with each phase of the process.
Objections can mean different things at different stages of the sales process and provide good clues to a prospective customer’s state of mind.
In dealing with objections, knowing the phase of the sales process helps the salesperson to provide the best answer.
Figure 5.6 Later prospect issues and sales activities
SOURCE Verve Consulting, 2016
TABLE 5.1 The subtext of objections will often vary with each phase of the process
Stage of Sale
What the Customer’s Objections at this Stage Indicate They are Thinking
Cold calling, initial meeting
‘I don’t want to change!’
Qualifying
‘I don’t trust you yet!’
Selling
‘I’m worried I will make a mistake.’
Closing
‘I plan to buy from you but I’m still a bit nervous about it.’
Negotiating
‘How do I know I’m getting the best deal?
SOURCE Verve Consulting, 2016
The four sales types
The sales process is extremely important. It provides a road map for sales staff to follow and, if done well, can show insights into the customer’s state of mind at various stages. All good salespeople follow this process, but how they behave and how much time each spends at various stages will depend on what they sell and to whom they are selling. To gain a clearer picture, it is worth spending a bit of time understanding the different types of salespeople and the different styles of selling that are appropriate to each.
There are basically four types of salesperson:
transactional;
expert;
solution;
consultative.
Each approach, when done well, is designed to deal with different sales situations and all have some common characteristics:
good listener;
knows his/her company’s offerings and/or expertise very well;
personable;
can ask challenging questions.
If you were looking for the attributes of a good salesperson of any type, you might list: creative, directive, entertaining, instructive or teaching and able to guide others. This is what Matthew Dixon and Brent Adamson explain clearly in their book The Challenger Sale (Dixon and Adamson, 2011). In this way, the salesperson can respond to new and challenging situations while educating and guiding a prospect or customer through the sales process. It should feel as though the two – sales and customer – take the sales journey together. So, having said these attributes are the same across all sales types, what is different?
The buying cycle
The simple answer to the above question is that what differs is what the prospective customer is buying and where he or she is in the buying process.
In the buying process, what is driving the prospective customer can range from a distinct malaise or discomfort around how to tackle a business issue or opportunity, to knowing exactly what is needed to solve a recognized and well-understood problem. There are also stages in the middle in which a prospective customer believes he/she has an idea of what to do, but is unclear on all the details. Each of these stages demands a different style of sales approach and a different relationship with the person who is doing the selling. The Value Pyramid™ and market positioning will dictate what sales approach is more appropriate. The rest of Chapter 5 will help illustrate how the sales process can be used to identify the optimum approach.
8th Law of Value Proposition Selling: use the sales process as a guide and select the appropriate sales approach and style for your market positioning.
Figure 5.7 illustrates the different stages of the buying cycle, from left to right.
Figure 5.7 Needs-based buying
SOURCE Howard, 2014
Starting on the far right, where the buyer knows exactly what he or she needs to buy, transactional selling comes into its own. The salesperson only has a limited range of offerings and needs to assess quickly whether anything fits th
e prospective customer’s requirements. There is very little ‘wiggle room’ in this situation. These purchases are often made by individuals in procurement who are far removed from the business people who have the issue being addressed. The salesperson’s offering either fits or it doesn’t. Most successful selling comes down to price, service and determining whether unique product features are important. This situation is ideal for the transactional sales model.
A competent, transactional salesperson is very directive and good at trying to uncover needs that map onto his/her offering’s unique features. The conversational style is questioning, so as to qualify and guide the prospect or customer to the next stage of the sales cycle. Most of the time and effort is focused on qualifying and closing, and they will race through the selling and proposing stages, doing only the minimum required. It is only a bad transactional salesperson who may try to sell an inappropriate offering when the prospective customer clearly does not have a need.
The next sales type, the expert salesperson, is typically a consultant and sells his or her own expertise. The appropriate phase of the buying cycle depends on whether this individual is a content expert – in other words, expert in a very specific field – or a process expert, usually a project or programme manager, or a change manager. These individuals sell most successfully when the buyer is not quite certain about some aspect of a solution or lacks specific technical skill. A good expert salesperson sells by displaying his/her expertise and generally spends a higher proportion of a meeting with a customer doing the talking than does any other sales type. The objective in talking is to display knowledge and expertise. This type of salesperson rarely closes and, in fact, selling consists of getting the customer to buy from him or her by them asking ‘Do you think you could do that for us too?’ Qualifying is cruder – the expert talks about his/ her area of expertise and the prospective customer either ‘bites’ or doesn’t. Control of the sale is clearly in the hands of the prospect.
This expert approach tends to work when a customer needs only one or two experts and does not lend itself to selling product or a complex solution. A solution salesperson or a consultative salesperson is far better when a customer needs a complex or individually configured solution.
The solutions salesperson works best earlier in the buying cycle when a prospective customer is not sure exactly what is needed or how to resolve a business issue. However, different from the transactional salesperson, solutions selling deals directly with the person who owns the issues and has the authority and budget to take actions to solve them. This type of salesperson feels comfortable talking to people in the business, but still approaches them in a sales role.
The sales style employs a directed questioning technique that enables the salesperson to lead the conversation while letting the customer do most of the talking. The objective is to get the customer to elaborate on issues and opportunities so as to latch onto and shape solutions that his/her own company can deliver. To sell in this manner takes a great deal of preparation before interacting with a prospective customer.
How does the salesperson prepare? Typically, the selling company has already gone to the trouble of configuring some outline solutions that can serve as templates in solutions selling. This work is vital in order to provide guideline pricing and positioning. For this style of selling, no solution will be off-the-shelf but there will be building blocks that can be assembled and configured to provide the basis for a proposal. The salesperson should be well versed in the common issues and opportunities facing companies in his/her prospective customer’s market niche and feel comfortable taking part in a business discussion. Because of this business orientation, often solutions salespeople focus on selected markets, but are able to sell a broad range of their own company’s products and services packaged as a market specific solution. These individuals need to be creative and be able to shape solutions.
The final sales style is consultative selling – a term often misunderstood as ‘selling consulting’, but nothing could be further from the truth. These professionals are closest in type to solutions salespeople. Where possible, they focus very early in the buying cycle on the key decision maker who feels the pain or an issue, or wants to exploit a market opportunity. A prominent difference between the two is that the consultative sales approach is peer-to-peer and conducted by a very senior individual in the selling company. This style is the only approach that works for joint ventures – both parties must be empowered and able to respect the expertise and authority of the other. Clearly, this style works best where a company – or a division of the company – sells few, very large and complex deals.
For large, complex deals, there is yet another sales approach: ‘team selling’. This approach is invariably used in consultative selling situations and the overall sales lead deploys this style. However, the team may consist of many individuals, some of whom are expert salespeople, some are transactional salespeople and some are people who have no sales experience at all. To detail how to employ team selling successfully requires a second book, but what is critical about this approach is that the selling company defines and uses a clear, team selling process with a salesperson in charge of the overall activity. The rest of the team need to understand that, whatever their expertise, they are playing a role in a selling activity and should adjust their usual behaviours accordingly.
An important point for sales meetings is stated in Law 9.
9th Law of Value Proposition Selling: you cannot mix your selling styles in one meeting, eg consultative with transactional. For team selling scenarios, you must have a team selling process with clearly delineated roles and responsibilities.
The key lessons from this chapter are:
1 There is a well-defined selling process that all companies should understand and use.
2 Businesses should map all their selling and sales support activities along this process to ensure that all activities work to progress sales engagements to the contracting phase.
3 There are four distinct types of salespeople, each appropriate to different stages in the buying cycle and different sales offerings.
4 Different sales types sell to different individuals in the prospect business and use a different selling style.
An authentic business applies Law 4 of selling your value proposition to all sales opportunities.
4th Law of Value Proposition Selling: sales behaviours must be directed towards helping the customer gain maximum value from your offerings.
Therefore, understanding these sales basics is critical when selling a company’s unique value proposition. To do so takes the right people or team, the right process and a common understanding throughout the whole company, of what sales is trying to sell.
Self-test: what is your sales philosophy?
From each pair of descriptive statements (A and B) note which statement more closely resembles your sales philosophy:
A
Select
A or B
B
1
Focus on revenue and/or volume
Focus on margin and/or profitability
2
Pursue a capacity-driven strategy, eg keep the factory going
Pursue a value-driven strategy, eg focused on solving customer problems
3
Believe customers are only motivated by price
Proactively use insights from customers to improve the value of your offerings
4
Use price concessions and discounts to win business
Flex your approach to match the customer, eg look for the ‘win–win’ result with collaborative customers but ‘take a position’ and negotiate hard with the ‘hard ball’ customer
5
Sell primarily on price comparisons with competitors
Sell primarily on customer total cost of ownership (TCO) comparisons, helping customers assess buying from you versus buying from competitors, (considering the nontraditional options)
6
> Gain repeat business by lowering prices
Gain repeat business at the same price or improved margins
7
Give away services for free to close the deal
Use services to generate additional business/ revenues
8
Give price concessions to customers without changing the offering
Give price concessions to customers only in exchange for cost-saving reductions in the offering
9
Offer unsupported claims about value to customers
Provide evidence of superior value to customers
10
Customer experience is a sales and marketing responsibility with no ‘back office’ accountability
Customer needs and expectations are understood by the whole business and are a positive reflection of the company brand
If you have scored:
Mostly As: your company is feeling pressurized. You are selling on price not value. Work on your value proposition is imperative.
50/50 A and B: your company has some insight into its value proposition to customers but is missing key elements. Working on your company value proposition will make a material difference to your sales performance.