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T h e C h i e f S a l e s O f f i c e r |
There Is A New Normal In Sales - CAUTION
Value-Added Discounting
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On rare occasions I have taught clients how to capitalize on Value-Added Discounting. With the economy still struggling, I am now making the principles of this important concept public. However, be forewarned, do this one wrong and it can be business-threatening.
Value-Added Discounting is NOT arbitrarily lowering our price. When we do that, we compromise our price integrity. Our pricing no longer has any value to our customers and we become commodities!
This is a complex process; do it wrong and you will have a tough time bringing your prices back up during and after the recovery. Don't do anything now that will complicate your future.
I am summarizing the concept here; for a comprehensive look at this important topic, you will need to study the White Paper on Progressive Pricing which is available to readers of this newsletter at the link below:
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Value-Added Discounting
There is a new normal in value-added selling - and it requires the best in sales strategies and skills |
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Value-added selling is the process we use to sell around the price objection. At its bet, it can eliminate the price objection. In any case, it can be used to overcome the price objection. But what happens when the price objection is actually a price restraint? It's a restraint because for many of our customers right now, they simply do not have the funds. The best sales presentation in the world cannot overcome an empty bank account.
When the price objection is actually a price restraint, it's time for value-added discounting
SCENARIO
Customer: I really want to buy from you, so what's the bottom line?
Salesperson: Our normal price is $100.
Customer: I only have $80 - take it or leave it, we simply do not have the funds.
What are you to do? If the customer truly only has $80 - and today that's the case! - hold your price point and you'll lose the sale. Give in to the price pressure and you just devalued your product and your new normal price is $80. Other customers will expect the same pricing. Even after the recovery, customers will expect the normal price to remain the same.
Uh-oh! What can you do? PRINCIPLES
Never lose sight of some of the basic principles of value-added selling:
- Once you give something to a customer it is theirs for life. Once they taste the lower price, you will have to sell harder to restore your original price later.
- People who pay less expect less. They may not say so, but they realize that paying less will mean they receive less.
- Whatever we do during the down economy will influence what we are able to do when the economy turns around.
PROCESS
A new White Paper is available that explains all of this in great detail. For now, consider these principles for Value-Added Discounting:
- All discounts must be justified. The customer must clearly understand how you were able to reduce your price. Otherwise, your pricing may seem arbitrary.
- All discounts must be quantified. As you reduce your costs by $1, you can understandably reduce your price by the same amount.
- Offer Progressive Pricing. Have tiers of deliveries, beginning with the highest. For instance, our normal price is $100 but if we ship it with a 30-day warranty rather than a 1 year warranty, we will sell it for $90. If we paint it rather than coat it, we can sell it for $80. As we progressively reduce the offering, we reduce the price accordingly.
- Look for headroom. When the customer says "This is as high as we can go," are they referring to their budget for this purchase? If so, are there other budgets that could be tapped?
- Sell outcomes. The way this works is that instead of doing a traditional needs analysis, we ask the customer for their desired outcome and their budget. Then we show them what we can do to impact the outcome within their budget.
HOW I'M USING IT
There are fewer meetings now than there have been since I went into the profession. Conference budgets have been cut so professional speakers are seeing fewer opportunities. When clients want me to help their sales teams, budget can be an issue. If they convince me that they see the value in having me be the one to help their team but their budget just isn't there, I find a way to make it work. Some things I'm doing:
- Let the client produce the training materials (reduces my print and shipping costs)
- Ask the client to provide the plane ticket in advance (reduces my carrying costs)
- Take on additional assignments while at their conference
- Conduct Q&A sessions rather than prepared, rehearsed and structured presentations (reduces my preparation time)
- Offset my cost by adding post-conference services: webinars, SaleSSuiteS access, etc.
So, try me! Tell me the outcome you would like to have and tell me what your budget is. I'll show you how we can work together.
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Help Is Available!
Give me a day with your sales team and I will help them use value-added selling more effectively - including the use of value-added discounting. I will help them prepare for the recovery - which is beginning in many sectors already.
Give me two days with your people and they will begin reversing the damage done from their previous use of discounting, they'll develop powerful new habits and they'll kick-start your recovery. Give me more time and we may revolutionize selling in your industry.
If I'm not the right trainer for your team I will help you find the right one. Need help now? I have limited availability some months and may not be able to help you so I will lead you to someone else who can. Like a different approach? Let me help you find the right person for your situation.
Remember: I'm using Progressive Pricing right now so tell me what outcome you want and what your budget is and I'll show you how I can help.
Whatever you do, seek out the help your organization needs
and do it now.
1.800 MR. REAVES (800.677.3283)
Or email me by clicking on the link
at the bottom of this edition
Or just click on the Reply button on your browser
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| Need Someone to Establish Your CSO Position? |
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 I know just the person
Don't try to reinvent the wheel. Let me set up your CSO position, write your job description and help you find the permanent CSO. Among other things, I will:
- Assess your current CSO functions
- Align them with your 3 - 7 year goals
- Develop your unique sales analytics
- Quantify profit drivers and profit robbers (expect surprises)
- Create the CSO position
- Implement whatever sales development is needed (training,tools, etc.)
- Leave everything behind for you to use
Check previous issues of this newsletter for other CSO perspectives. Or let me know and I'll send you the library.
Contact me for more details.
770.965.5595
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| Thinking About Selling Your Business in the Next 2 - 5 Years? |
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Begin NOW to enhance the market value of your company. It takes months or years to groom a business to attract the best buyers and to sell for maximum value.
Reaves Jackson Partners specializes in enhancing your top line and your bottom line so you can reap the full rewards from the sale of your business. Plus, we profit when you do - after the sale. If yours is a privately-held company, you're considering selling and your revenues are between $5 and $50 MM, we can help. Call me and let's chat:
404.822.6171
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