| In today's marketplace, offering discounts
seems to be the number one technique people are using to try and get business. Management
has bought into the age-old argument that the only reason their salespeople can't sell
more is because their price is too high. It's time to put this to rest. This argument of
cutting prices actually reveals the lack of selling skills by the salespeople who are
using it. It also indicates a management team failing to provide necessary strategic
planning and direction for the company.
Rarely does a salesperson say that the reason for a lost
sale was their inability to uncover the customer's true needs or to create a sound
price/value relationship. Salespeople are by nature confident people, so they
automatically assume the loss of a sale couldn't have anything to do with their own
skills. The natural progression in their logic is that "it is management's
fault" or "the price is too high."
I am not offering specific steps a salesperson can do to
alter a customer's behavior. Rather, I'd like to focus on the steps a salesperson must
take in how they view their role in the sales equation.
It starts with the salesperson no longer going into a
selling situation believing they are all-knowing in terms of how they will handle any
situation. Too often they walk into a situation and within 30 seconds believe they've
summarized how the sales call will go, and that their incredible selling expertise will
allow them to close the sale. Here is where I start to laugh, because the solution the
salesperson always comes up with is the exact same process they used yesterday. In fact,
it's the same sales strategy they use on nearly every sales call. Then, as if on cue, as
soon as the customer starts to show any signs of resistance, the salesperson immediately
starts to think the only way to save the sale is by cutting the price.
Behavior modification on the part of the salesperson is the
only way to get around this problem. Many people believe if they just give the salesperson
some new marketing materials, some really great testimonials, or a proven list of
questions they can ask, they will be able to overcome the urge to offer a discount. Yes, I
agree that each of these do help, but the problem is they tend to be short-term solutions.
When a salesperson is given new tools like these, many
times they will go out and find some success in closing more sales and doing so without
offering a discount. Eventually, however, the newness of the sales tool wears off. The
salesperson before long is facing a hesitant customer, and they fall back into their old
habit of offering a discount.
Long-term behavior modification comes only when the
salesperson truly believes in their pricing strategy. This seems obvious, but I have often
found that salespeople don't believe in their company's pricing strategy. This perception
is then reinforced (sometimes subconsciously) by emails from management about the state of
the business and the pressure to make a number. A key behavior killer is when management
puts out a report detailing sales results. Many companies release reports stating why
certain sales did not occur. When companies do this, they encourage (or expect) the
salesperson to provide reasons. The salesperson is often going to point to price. Do you
see the vicious cycle that occurs? Price cutting becomes the "go to" method to
keep bringing in sales (but quantitatively, profit is going down).
In my 10 years of sales consulting, I've watched this
single report do more to kill the behavior of salespeople than anything else. There is a
stigma that prevents the salesperson from admitting that the reason they didn't get the
sale was because of their own doing, not because of price. To eliminate the effect of this
stigma and the "price is too high" excuse, management needs to stop compiling
reports that require a salesperson to say why they didn't get a particular sale. There are
other far more effective ways to measure the value of a salesperson than by creating a
report that encourages a salesperson to not state the truth.
A second matter that requires management's attention is to
stop cramming every cost reduction technique into the laps of the sales team. When the
majority of correspondence a salesperson sees from management has to do with how and why
they need to cut expenses, it only winds up reinforcing in the minds of the salesperson
that they too need to cut the price they're charging customers.
Yes, this is a challenge – finding ways to hold down
expenses without deflating the pricing perception of the sales team. It might be a
challenge, but this is what management gets paid to do – to make the tough decisions
without impeding the end goal of making quarterly sales and profit numbers. This is no
different than a parent/child relationship. There are many times a parent will make a
decision that impacts the child but doesn't tell the child in a way that leaves the child
feeling upset or scared. For example, a parent tells their child to fasten their seat belt
while in the car. They do this to protect the child, but they don't go into detail about
all of the things that could occur to them should there be in an accident. An approach
like that would leave the child feeling scared about riding in the car. When we apply this
same concept to the environment of sales, I think we would all agree that management
doesn't want their sales team "scared." Fear is not the greatest motivator for
long-term positive results.
A third behavior change is one the salesperson must do
themselves. It starts with removing from their thought process that offering a discount is
even an option. If a salesperson knows a discount is an option, they'll take it. I call
this the "last-dollar principal," which says it's amazing how fast your money
will go until you suddenly find yourself down to your last dollar. When you have only one
dollar left, it's amazing how far you can stretch it. You could have handled your money
more frugally when you had more, but because you had more money at the time, you didn't
feel the same pressure to save and protect it. When you get down to your last dollar, you
sense that pressure more acutely.
Management can help their salespeople steer clear of
discounting price by not allowing salespeople to have control over price discounting. In
my years of sales consulting, I've worked with many companies that have taken away from
the field all pricing flexibility. After the sales force gets over their whining about the
loss of control and their proclamations that the world will end, it's amazing what happens
to the bottom-line. In each case, the bottom-line profit has gone up. Many times profit
has increased not because of more sales, but because the sales that are made are more
profitable (no price discounting has occurred).
Finally, a salesperson needs to believe in their pricing as
much as they believe in their selling skills. Management and a sales team need to work
together to continually reinforce why their pricing is correct. It's no different than a
coach and team working together to achieve the highest potential possible. Discounting is
for losers, and there's not one person out there in sales or management who wants to be a
loser. We all want to be winners, and that means we are proud of what we provide our
customers. In the end, it's not the price that matters. The quality of the salesperson
will determine the outcome. |
