Protecting margin is one of the key aspects of “perform” for a sales force.
Recently we were gaining insight into one of our customer’s sales goals. To do this we explored the current Key Performance Indicators (KPI’s) they used to measure sales success. We then asked them to share how top performers were doing against the KPI’s.
What we heard was not as uncommon as you might think. The senior team shared that they were having challenges around defining their top performers. Why? There are several reasons top performers are mislabeled. In this case, it was one of the most common mistakes.
This company realized that they had been rewarding and celebrating high-volume producers. When they peeled back the curtain, they realized these high-volume producers had extremely low margin. On the other hand, they had been ignoring low-volume producers with high margin.
With further investigation, the company realized what they were celebrating was actually business that was costing them money. Surprisingly, some of their low-volume producers were contributing more profit than their high-volume producers.
The message? It can be easy to do high volumes if you are a price seller.
The bottom line is the company had to redefine what makes a top performer in their business.
Whether you have control of price as a seller or not, weak skills around handling price objections often mean you are constantly begging your manager for better pricing.
This all takes time and is actually unempowering you with your customer.
Here are 6 Rules to follow to help you create price leverage:
- Be prepared. It is no accident that in a negotiation he who is most prepared wins.
- Be Preemptive. If you are a price leader or expect certain price objections, address the objection before the prospect has an opportunity to address it. It illustrates competence and confidence in your value proposition.
- Be Mindful of Leverage. Your role is to understand the hopes and fears at the table. Whoever feels he has the least to lose by saying no deal has the most leverage. Find ways to create leverage, and be okay with some will, some won’t, next.
- Be Diligent. Scope out price objections when they arise. Be sure they are real and if they are – handle them. If they are smoke screens, look for other ways to create leverage. A great question to smoke out a price objection is: “Just suppose price wasn’t an issue, is there any other reason why you would not proceed?”
- Competence Builds Confidence. Read, practice, take advantage of every learning opportunity, review sales calls and reflect on what you might improve or do differently. Competence breeds confidence.
- Challenge Your Beliefs. If you believe your product or service is too costly, the buyer will believe it too. One approach is to build a repository of stories in your company where customers gained high value, made money, or saved money from your product or service.
