Problem: Sales is a mystery to many people. Why has that “superstar” you hired a few months ago failed to produce? What happens in that foggy area of the sales cycle between the initial meeting and when the order is received (hopefully by you, but often when your competitor gets it)? What’s really going on there anyway? Why do customers give their business to someone else, when clearly you have the best value proposition? Why are sales forecasts nearly always totally out of whack with reality? Why do most companies only “hope” that they’ll make their numbers, instead of actually controlling the result?
The hard truth is that really managing sales is, for the vast majority of companies, a very difficult proposition.
There seems to be only one control mechanism that can be applied to the sales process to ensure that something happens, and even that does not always work.
I’m talking about DISCOUNTING!
Analysis: When a sales opportunity starts to go south, give ’em a discount to get the business closed. That’s the default solution used by most companies, and it’s very costly in three important ways:
- The financial impact on your profitability (a 5% discount comes off the bottom line, and if your net margins are 10%, you’ve just given 50% of your profit away).
- You’re training your customers to “expect” a discount.
- You’re training your salespeople to rely on discounts to close business.
All of these have a devastating impact on your business.
Solution: One of our clients had an epiphany the other day. His proposition was as follows: If I was selling my product or service to a very close friend, would I give him a discount? He concluded that he would not. His reasoning was that if he cut his price, this would not leave him enough profit to deliver the quality and the service that his friend would expect, and his friend would be disappointed at having bought from him. He might even lose him as a friend.
Is that line of thinking a stretch? Not really. Actually it makes a lot of sense.
If your only closing skill is discounting, you’re setting the stage for a sales future in which you will struggle to make an above average income, be passed over for promotions, and end up working for barely viable companies when you are older.
If you want to control your sales destiny then figure out what your customers truly value. The answer to that question cannot be found at the buyer’s level in a company. The buyer is mostly concerned about you making his/her job easier. Value becomes more important as you ascend the chain of command in the company’s organization chart. Find out what level in the organization cares that value is being generated. It is this person who understands the fundamental law of economics – you primarily get paid for value.
Once you locate this person – don’t schedule a sales call with them. Schedule a time to meet to get an understanding from him how his company is staying competitive in today’s marketplace, i.e. generating value. Explain that you are not making a sales call but taking a formalized survey of your top customers and it will only take 40 minutes.
Once you find out how they create value and what they value, you will understand where your products or services fit in and you’ll understand how you can support that.
This is not an entry-level sales activity. You have to be prepared to ask good questions, you have to be professional, you have to be genuinely concerned about providing value, and you have to put into practice what you learn. But once you master this, you’ll write your own ticket to the top.