Focus on World-Class: Part 12: Selling value to avoid unnecessary discounting
Sep 28 2017
In this 12-part series, each blog examines one of the 12 best practices identified in the 2017 CSO Insights World-Class Sales Practices Report. Today’s best practice: “We are effective at selling value to avoid discounting, or gain comparative value in return for price concessions.”
We’ve been talking about selling value as an industry for a long time. Yet, we usually leave it in vague terms. Value is in the eye of the beholder. If you closely examine this practice, you’ll see that what we are looking at here is much more precise. Can you identify equal, tangible value for the discounts that you have awarded?
Discounting is the pet peeve of many a sales operations Leader. Much time and effort goes into modeling, establishing and communicating list pricing. Even more effort goes into enabling sellers to justify those prices. Yet, discounting is bound to happen. And, it’s not always a bad thing. The key is figuring out how to discount only when you are gaining comparative value.
World-Class organizations do exactly that. In fact, 75% of World-Class performers report this to be a strength of their organization, compared to on 24% of all survey respondents.
The problem that most organizations have is that they treat this as a negotiating problem. While certainly negotiations skills are involved, that is just the most visible symptom. Before narrowing in on the later stages of the customer’s decision-making process, look at the experience holistically:
- Ensure that you have formal qualification criteria, including budget, before you put an opportunity in the pipeline. Our survey shows that today’s sellers spend less than 30% of their time in selling conversations with clients. Don’t waste this precious time on those who are unlikely to be able to afford what you offer.
- Yes, train on negotiations, but also train on value-based selling methodologies that emphasize questioning skills (to uncover sources of value) and teach ways to add value within the selling process itself. You should never start negotiating until you have tried to resolve pricing concerns with selling skills.
- Build and train people how to use ROI Templates. Over ½ (53%) of survey respondents said their team’s abilities to effectively demonstrate ROI needed improvement or major redesign. Provide the tools, create templated examples and then help sellers tailor these to very specific client situations.
- And when you do train on negotiations, make sure that your experience is consistent. You can’t teach sellers a win-win approach for the selling and proposal phases of a sales process and then revert to win-lose for the closing stages.
- Treat negotiation as a business process, not just a skill. Put in place clear guidelines for acceptable discount tiers/marketing programs, walk-away criteria, responsibilities by role and flow of the approval process. Every request for a discount should include a quantification of what is gained in return.
- If you are going to allow exceptions (and chances are you will) make them transparent to sellers so that they understand the what and why. Be warned. Sellers have long memories. One of the most interesting client coaching sessions I ever sat in on was with a seller who had decided to slow roll an opportunity until end of year because he knew that his senior leader would be open to much larger discounts and it would be much easier to sell. To my horror, the manager said, “Yeah, you’re probably right. Let’s do that.”
- Create a short-list of options for comparative value to guide (not limit) the possibilities that you will consider: longer contract terms, shorter payment terms, joint speeches, larger deal sizes, access to data to create tangible case studies, references, pilot testing of new offerings.
Put in place the tools, skills and processes needed to thread value throughout your sales process.
And, stick to your best practices, no matter what time of year it is!
- Is selling value a focus of the sales process from the very beginning?
- Do you have a clear negotiations process in which comparative value is quantified?
- Is your organization consistent in how they treat this practice? Or do the rules change at end of fiscal quarter or year?
Related Blog Posts:
- Focus on World-Class, Part 1: Solutions Aligned to Needs
- Focus on World-Class, Part 2: Why are some of your salespeople so successful?
- Focus on World-Class, Part 3: Brand Promise and Customer Experience
- Focus on World-Class, Part 4: The Linchpin Role
- Focus on World-Class, Part 5: Why do we lose salespeople?
- Focus on World-Class, Part 6: Sharing Best Practices
- Focus on World-Class, Part 7: Personalized Performance Improvement
- Focus on World-Class, Part 8: Effective Value Messaging
- Focus on World-Class, Part 9: Channel Consistency and Customer Experience
- Focus on World-Class, Part 10: Our culture supports continuous development
- Focus on World-Class, Part 11: When customers walk out on you