Navigating Price-Driven Markets

Negotiations with procurement specialists in large organizations can really be brutal.

More than ever they seem to be driven by a sadistic combination of corporate edicts. These might include: sourcing overseas, reducing commodity costs by some per cent annually, reducing the number of suppliers by 20% and driving to 60-day payable policies – all while achieving the lowest piece-price possible.

These selling conditions define a prototypical “price-driven” market – though I have heard it called other things NSFW.

Sadly, some small B2B firms never actually do anything meaningful about these challenges. Year after year they eke out marginal success by squeezing their prices and margins, repeatedly trying to sell to the same hard-nosed customers, continually targeting the same markets and agreeing to be victimized by abusive procurement conditions.

There are ways to reduce the effects of these challenges. Some of the solutions are quick and some take time to develop. But, one thing is certain, if there is no action taken, there is no improvement likely.

Self-Diagnosis: A Reality Look in the Mirror

Step 1 is understanding what has brought you to this situation. If you are struggling with price-driven markets, one or more of the following statements are likely contributing:

  • Your product offerings and your company actually have no meaningful differentiation
  • You are aimed at the wrong markets and customers
  • You are unable to quantify the economic value you can deliver
  • You are doing a poor job of communicating your economically quantifiable value
  • You have not established true strategic partnerships with your customers

The first step to freedom, is identifying which statement, or combination, is true.

Doing something about it.

Salvation can actually be easier than you might imagine. Here are some paths to consider.

Path 1: Market Refocus

You must focus on markets where your unique product and corporate capabilities have real meaning to customers.

A client of ours had a new product that was significantly price disadvantaged in the general market. Despite this reality, the new business development team was hustling to set up distributors across the country for that general market, betting on corporate approval of a major price reduction to spur sales – when, in fact, corporate was quietly considering shutting the product line down.

Surprisingly, some handful of customers had actually bought this grossly overpriced product – a certain hint that someone was seeing value that others were not. When asked “Why they bought?” those customers explained that the product, even at that exaggerated price, solved a unique set of problems for their situation.

By quickly shifting their sales focus to this market, the business was saved without any change in selling price. In fact, customers in that market requested additional features which eventually lifted the selling price to 4X its original.

Path 2: Understand, Quantify and Communicate Your Unique Economic Value

Everyone in your organization that deals with customers must be able to understand and communicate the economic value of your products.

A client was puzzled by the slowness with which their new product, designed specifically to help customers save substantial amounts of money, was not selling better. The choke point was discovered to be the distributor sales manager who simply did not believe the economic argument. He had quietly avoided promoting that benefit to his distributors, in spite of customer testimonials validating the savings.

A rapid individual re-education was required, followed by a re-training of the distribution sales force. Product sales turned up significantly shortly afterwards.

You cannot assume that your benefits are being accurately communicated. Check the communication choke points.

Path 3: Tell the Whole Story

Your customer cannot make a decision based on anything other than price if that is all she sees. There is much more than price that is critical to the success of a supply relationship. A single-page quote sheet cannot communicate that larger story.

Here are some items to consider. Each can create additional value around the price.

  • Who is on the team you will dedicate to this supply relationship – their names, experience and roles? This information builds trust.
  • What is the detailed schedule, timeline and check points? This information builds credibility.
  • What approach will be used to assure success? What examples of this approach have been successful in the past? This information reduces perceived risk.
  • What is the quality story? This information also reduces perceived risk.

A client of ours increased their bookings by 20% in just one deal using this “whole story” approach.

Path 4: Build a true partnership

A one-salesperson-to-one-procurement specialist link does not define a strong and defensible relationship – even if they play golf once a week and belong to the same ski club. Multiple connection points must be developed: engineering to engineering, quality to quality, customer service to planning, shipping to receiving, manufacturing to manufacturing. The trust that is built up by these multiple open communications channels has real value in terms of problem solving, getting things done and creating a strong tough-to-break bond.

Path 5: Challenge the Chief

I once asked a group of 12 B2B CEOs, during a talk to take out a blank sheet of paper and write down what they perceived as their best product offering – the product that they thought customers should appreciate the most.

I then asked them to identify the value factors delivered by that product. and calculate what economic benefit that ideal customer was likely to receive from that product. Remarkably, they stumbled. None of them could do it in the 15 minutes allotted.

If the CEO can’t do it, how can they expect it of the rest of their team? That kind of understanding and expectation sets the tone for the whole organization from engineering through shipping.

Final Words:

We have offered 5 diagnostic questions and five paths out of the briarpatch of a price-driven market. It will take some serious self-examination and require some analysis and thought, but it is definitely achievable.

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Copyright Jerry Vieira, CMC and The QMP Group, Inc. 2015 All Rights Reserved

If you’d like to learn more about dealing with price-based competition call Jerry Vieira, CMC at 503.318.2696 or email to Jerry@qmpassociates.com. The QMP Website is at www.TheQMPGroup.com and more insights can be found on the subjects of Market Strategy, Business Business Development and Sales at Jerry Vieira’s QMP Insights Blog. If you have an immediate challenge, please communicate it through our Contact Us page.

Reaching the CEO

 

Here is a reprint of a recent interview Jerry did with Kevin Price, author, publisher and radio host for the “Price of Business”.  Kevin is a syndicated columnist, both writing for the Huffington Post and appearing on Fox News. The interview explored professional approaches to reaching the CEO of small to midsized firms.

 

Price: Tell me about your firm (number of employees, location, type of companies you work with, etc.).

The QMP Group, Inc. is a Portland-OR-based management consulting firm whose mission it is to help small to mid-size, Business-to Business firms increase their market valuation. We accomplish this by helping them adopt the rigor and disciplines of the QMP (Quality Marketing Process) methodology. That methodology is embodied in our  Marketing & Sales Engine model. We install, repair, replace, align or supercharge whichever of the gears need attention.MarketingandSalesEngine

While The QMP Group itself operates periodically with only one or two employees, we service a wide range of our clients’ needs through close collaboration with highly qualified and experienced consultants of other complementary specialties: Finance, Organizational Development, IT, Operations, Supply Chain Management and Manufacturing.

Price: Tell us your story about reaching C-Level executives to do business?

I started reaching C-Level executives through Thought Leadership, that is, sharing my insights on market strategy through public speaking and writing for business journals. Basically, I was driven to passionately share my beliefs on the subject of the overriding importance or market strategy. I believed then, as I do now, that there is no more important management function than formulating a good market strategy, for the well-being of all stakeholders in a firm: the employees and their families, owners, shareholders, suppliers, customers and the community in which the business resides.

In the early days of my consulting practice I would give a talk at venues where CEOs convened to hear about specific topics of interest. I would give my talk and folks would walk up to me afterward, hand me a business card, and say, “That’s real interesting stuff. I think it might be able to help us. Please give me a call to arrange a time to get together and talk.”

Those introductions led to client engagements. Engagements led to client successes, and successes led to CEO-to-CEO referrals. QMP’s business is still largely maintained through talks and referrals.

One more point about talks. I call talks “Networking from the front of the room”. How else can you get 20 to 80 CEOs and Executives to give you their undivided attention for 45 minutes (with 15 minutes for questions afterwards). Not only that, whoever is sponsoring the venue does all the prep work: food, invitations, scheduling, room set up, etc. There is no more efficient way to reach Executives and CEOs en masse.

Of course, we are not talking about a 45-minute sales pitch here. There is no quicker way to destroy your reputation and credibility as a Thought Leader than trying the hard sell in a talk about insightful business practice. We are talking about a sincere exchange of insights that will help the listener.

Price: Do you know of other examples of businesses being creative in this endeavor?

Let me answer with a story. Several years ago our local chapter of the Institute of Management Consultants convened a members-only working session for the purpose of sharing our personal stories about what we attributed out personal consulting success to. Most of us in the chapter work with the CEOs or high level execs in our client firms.

Naively, I thought that all would say the same thing that I said, namely Thought Leadership – leading to CEO-to-CEO or advisor-to-CEO referrals.

As we went around the room giving each member a chance to tell their own story, I was amazed at the variety of “secret ingredients” of success in reaching CEO’s. Some said their personal network, some said referrals, some said their coaches driving them, some said, believe it or not, cold-calling! Being an engineer I became fixated with finding what could possibly be the common thread in such a diverse set of paths-to-success – and here’s the conclusion I arrived at.

In each case, what the consultant was really saying is, “This is what has worked for me, because this is who I am – naturally.” The individual who said networking is well known in the organization for having and staying connected to a personal and professional network that rivals God’s. The individual that said cold-calling teaches sales and cold-calling techniques for a living.

What I am saying here is that, a person’s path to connecting with a CEO inevitably follows the path of, and leverages, who they naturally are. It builds on what their natural affinity is and how they have channeled it.

A final note on this point: Once you have made your first CEO contacts and built first level successes – the referral machine (CEO-to-CEO or advisor-to-CEO referrals) takes over a fair share of the burden of CEO introductions.

Price: What lessons, if any, do you derive from these stories?

Great Question! Find out who you really are. Discover the thread in your life that is constant, and I believe you will find that it has consistently driven your past successes. Find it then extrapolate it. If that all sounds too esoteric, talk about it with a personal or business coach about your search for the thread. Strengths Finders (the book and the self-assessment) are very helpful. Here’s a link http://strengths.gallup.com/default.aspx.

Remember, your first CEO success can create a flywheel of CEO referrals. So give it all you’ve got. Leave nothing on the field.

Price: Tell us why it is important to for you to pitch to the CEO.

The owner of a privately-held firm is typically its CEO. The firm’s market value is connected directly to that owner’s wallet and net worth – and that individual’s personal wealth (short and long term), and the future of his or her family, are tied to market valuation of the business. Decisions about how to invest to increase that valuation are exclusively the realm of the CEO.

In addition, we are typically executing business process and organizational transformations in our engagements. These process changes have broader and longer term implications on employees, customers and owners, than say, paving the parking lot. The CEO must be involved and actively participate.

Price: What are some unique things you have done to get the attention of CEOs?

CEO’s trust their peers and their advisors. As a consultant, a CEO is not likely to quickly trust you, because they don’t know you. So, getting to CEO’s usually requires a bank shot of trust. A referral from a CEO’s advisor or respected peer is that bank shot of trust.

In turn, for a referral to be made to a CEO by an advisor or peer, that advisor or peer needs to: a) trust you and, b) believe in your expertise, either through personal experience or reputation.

Consultants accomplish this transfer of trust by either; a) demonstrating a track record of success that the CEO’s peer or advisor has witnessed firsthand, or b) building their reputation as substantive Thought Leaders, i.e. speaking and writing on topics germane to the CEO’s circumstance. Those written opinions, talks and successes need to be insightful and substantive.

Your track record and reputation as a Thought Leader, in the minds of a CEOs peer or advisor, is your CEO magnetism.

Price: Tell us about the type of companies with which you like to do business.

We prefer to do business with firms with CEO leaders that are,

1) open-minded,

2) decisive,

3) foster a company culture of accountability and expectations and

4) actively participate in the business.

Formulating an improved market strategy takes knowledge, expertise, analysis and creativity, but more importantly, execution takes real leadership. So, I guess, I am saying the type of leader is more important than the type of company.

Price: What suggestions do you have for others trying to reach CEOs.

Become a Thought Leader. Write, blog and speak to CEOs and CEO advisors.

Build Your Trusted-Advisor Referral Network: Research into how ideas and innovations diffuse into a market place indicates that intra-market network communications (peer-to-peer, or trusted-advisor-to-peer communication) is 13 times more effective in the spread of that idea than mass communications.

Make sure your network knows how to recognize clients you can help:… and, don’t be shy to ask for referrals

Treasure, Preserve, Respect and Thank that Network: Stay in communication, acknowledge and appreciate former clients, advisers and referrers.

Always Act in the Best Interest of Clients: Trusted advisors are trusted because they are transparent and the CEO believes that they are acting in his best interest. Sublimate your needs to the client’s best interest in all that you do. That reputation will me your badge of behavioral honor.

Document your Successes: Measure and record the indicators of your success – and assure they can be validated by references from that engagement

 

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The Six Common Sales Myths

 

Over our 20+  years of working with sales teams in a wide diversity of industries, we have seen and noted Six Common Sales Myths, each of which hinders success. They are explained in a series of articles published in our QMP Insights Blog. The article titles and links are listed below. Simply click the title link to open and read each.  

 

Dispelling these myths can quickly improve the productivity of your sales team. 

Be forewarned, however. Some of these concepts might be controversial or run counter to the established sales culture within your firm. So, handle them with care.

Myth #1 – “A Sales Person’s Job is Just to Sell, Sell, Sell

Myth #2 – “You’ve Lost to an Inferior Offering

Myth #3 – “Sales is all About Relationships” 

Myth #4 – “It’s a Price-Driven Market

 Myth #5 – “Closing Techniques are Effective

 Myth #6 – “The Biggest Accounts are the Best Targets 

Click here to read the complete Six Common Sales Myths Series.

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For information on the QMP Sales Process Improvements and Sales Training Programs call us at 503.318.2696, email to qmp1@qmpassociates.com or visit our Contact Us page and tell us of your challenges. We’re here to help.

The 8 Client Personality Types

 

Aristotle, (though some attribute it to Mary Poppins), is purported to have said, “Well begun, is half done”. We’ll stipulate that neither Ari or Mary were talking to a group of consultants, or consultative sales folks, but consultant types quickly learn that early preparation can make a big difference in their ability to achieve a client success.

Beginning well requires quickly determining whether all the key ingredients of a “complete” success even exist. These ingredients include; 1) a client executive that has the personality to affect organizational change, 2) the potential of a major economic benefit for the client, 3) a style match of the consultant to the culture of the client organization and 4) solid gains beyond just your fee, for you, the consultant.

The Executive Personality Factor:

Early in their careers consultants learn that project success is rarely generated solely from their own catalytic, outside-in efforts. Every success needs internal collaboration with a client executive to affect change, assure Facial expressionsexecution and sustain the economic benefit of a project beyond the engagement.

Recognizing the critical role the lead executive plays in client success, we conducted an analysis of the last ten years of QMP engagements. We wanted to discover the earliest predictors of success from personality-reads on the lead executive. Why did we do this? Because, not all engagements are “complete” successes, and we recognized that achieving a complete success significantly multiplied the economic benefits for both us and our clients.

That analysis brought us to this conclusion:

“The personality type of the highest client executive involved in a specific consulting engagement, not simply his title or position, is the best predictor of an engagement’s ultimate success and the longevity of economic benefit received by both the client and the consultancy practice”

In your career, you may have participated in any of the myriad of commonly practiced personality profiling exercises. Myers-Briggs may have awarded you the distinction of an ENTJ or ISFP. Another test may have designated you a color personality, such as an Orange, or in the DISC profiling system, labeled you an “S”.

While self-knowledge is valuable, it’s not likely you will be able to ask your clients to subject themselves to a battery of personality tests before you provide them a proposal or start an assignment. So the problem remains. How can one identify client types and predict success from the earliest discussions? How can one know when to stay and when to run?

Sorting through hundreds of transactions resulted in our Approach-to-Business (ATB) scale for classifying executives. Admittedly, it wasn’t the most scientific of studies. We don’t have a research psychologist on staff. We simply sorted and grouped like-client individuals, named the groups and then regrouped by project success.

The grouping resulted in eight categories. Only three of the types seemed to have the key success gene, which we identified as the ability and courage to drive change.

So that this last point is not lost, it deserves mentioning again. The key factor in the successful types is their ability to manage and execute organizational change. In our experience, all types will say they are prepared to affect change but only three types actually do.

It’s Not the Title, It’s the Type

It is common to hear among consultants that “executive buy-in” is essential for engagement success. Our data refuted the generality of that claim. We restate it this way, “buy-in from executives at the right level and of the right ATB types is essential for success”. To truly be valuable in generating success, executives must be both the right ATB type and high enough in the organization to marshal resources and get attention when needed.

We have tested our ATB classification with consultants from around the country. They almost universally and immediately, recognize their own current and prospective clients among the types – as well as their project and proposal successes and failures. Once the patterns of these ATB personality types are recognized, one can adjust tactics, refocus resources appropriately and save an enormous amount of time while increasing the probability of “complete” success.

The 8 Client ATB Personality Types:

STUMPs: STUck in the Mud People will never change, they will never buy. They have a limited point of view and don’t move very far from it. Even if you are convinced, beyond any doubt, that they need your help and could reap enormous benefit, it is irrelevant. They are simply disinclined to buy professional services. Don’t try to convince or educate them, because they really don’t care. Politely walk away. Don’t persist. Unsolicited proposals will simply frustrate you, while bemusing them. It’s futile.

Takers: Takers know how to take. They take great notes, your time, your materials, your ideas, your concepts, and turn them into their own. They use your materials surreptitiously, under the radar. Credit or compensation for your ideas? What ideas?

Imagine having your third meeting with a client who appears to be interested, has taken a lot of notes but little or no action. Now, imagine the time and frustration you could have saved had you known from the outset that this potential client was a Taker. These prospects are experts at appropriating concepts and ideas, often asking during preliminary discussions if they can have copies of some of your key documents “to review with their people”. Don’t go there.

Opportunists: Opportunists want to purchase the minimum, bare bones package of services. Their hope is that purchasing the minimum will generate great results. Their expectation is first class results for the “economy” investment. Follow-through to success is rare, since they don’t have the expertise required to execute. Quite often the Opportunist will start many small projects. They will lose interest quickly if results are not immediate or if it seems like too much effort.

Boss-Made-Me-Do-Its: BMMDI’s (pronounced “Bim-Me-Dees”) are the political hangers-on of the corporate world. They provide lip service and public support for an improvement initiative but usually have little sincere enthusiasm—particularly if the consulting assignment has the likelihood of revealing and correcting weaknesses in their own department or function. They will engage, but only long enough to satisfy the boss. If the boss’ attention goes elsewhere, the engagement will die on the vine – as will success.

BMMDI’s have no personal commitment or belief. They may even engage in “lipotage” – public lip service, followed by indifference, or worse, sabotage. (The word “lipotage” was coined by my colleague Bob Phillips and co-author Larry Johnson in their book “Absolute Honesty” published by AMACOM Press).

A particularly hopeless combination is a BMMDI with an Opportunist boss.

Terribly Troubled: TT’s really need help and are willing to invest in serious solutions. Their level of pain is high, as is their motivation to fix the problem. They may research alternatives, but will make a decision quickly. They are typically in a rush to get started and consequently may miss some alternatives – but they will move forward. Spend quality time with these prospects to ensure they understand what will be done (deliverables), what’s required for success (commitment) and how you will fix the problem (approach).

Frustrated Drivers: FD’s can be very intense and quick in studying alternatives. Many times these are executives that inherited a family business or took over after a long oppressive or “old-fashioned” leader – perhaps a StuMP.

They have been waiting a long time for the opportunity to straighten things out. Their drive and motivation is high. They usually understand the weak points, the resources and commitment needed and, upon decision, will drive for quick, visible results.

Establishing well-defined goals, benchmarks, checkpoints and progress measurements will help FDs satiate their sense of urgency. Communicate frequently, clearly and succinctly. Emphasize speed, drive for quick traction and show results.

Sincerely Growth-Oriented (SGO): SGOs are there for the long term. These are clients that readily recognize they have issues and challenges, and demonstrate a sincere and strong desire to improve. An ideal type of client, they understand performance excellence and are motivated by it. They thrive on achieving goals and are constantly improving basic business processes. They are the best-of-the-best clients, intellectually, emotionally and financially. If you consistently provide high value to them in your engagements, SGOs will remain loyal for a long time and continue to award you new projects and referrals.

Dreamers: Imagine Don Quixote, the idealist and self-imagined white-knight savior. Dreamers are lofty in their vision and motivation, perhaps even charismatic, yet impulsive and occasionally misdirected. They are typically challenged at getting organizational buy-in and support, based on a history of failed past initiatives. Their grandiose visions of the corporate future are rarely realized. They talk enthusiastically but show little interest in getting deeply involved in the details of execution .

According to our research, Terribly Troubled (TT’s), Frustrated Drivers (FD’s) and Sincerely Growth Oriented (SGO’s) generate the most meaningful successes by an order of magnitude, in terms of the highest long-term value for all concerned.

But wait! Good ATB genes are required, but not sufficient.

ATB considerations create opportunities for complete success only if the three other raw ingredients exist as well.

Ingredient #1: Strong Economic Benefit:

Business-to-business executives buy consulting services because of a basic belief that the money invested in those services will return significantly greater economic value than the cost. If there isn’t a meaningful economic benefit to be achieved for the client, com “complete” success may end up a ‘Pyrrhic” success.

Ingredient #2: Consultant Style, Capabilities and Personality

These ingredients must Blend with the Client’s Culture: Clients want a consultant whose expertise is well-matched to their specific needs. Furthermore, the ideal client relationship must be based on mutual trust and open communication. But even with these factors covered, execution remains the biggest challenge, because the people in the organization must change the way they do things.

The ability to affect change is enhanced with good communication – and communication is most effective when the consultant’s personality and style match the personality, style and culture of the client organization.

Ingredient #3: Wins for the consultant:

Beyond the economic payoff, other rewards await a complete success: case studies, new tools and techniques, raw material for articles, referrals, follow-on business and new networking connections. If you are going to invest the next six months in a major client engagement, it’s better to find one of that holds the promise of the multiple rewards of a “complete” success.

Personality to Profit

A consistent challenge in selling consulting services to a new client is getting an audience at the right executive level. It is a coup. But when the actual discussion starts, it is common to get so focused on the problem at hand that one can easily forget to look for all the key ingredients of success.

We started this article with a quote from Aristotle, so it’s only fitting to end with a quote from the great American philosopher, Yogi Berra. Berra is purported to have said, “You can observe a lot, just by watching”. Let me add this, “..but you must remember to observe.”

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Learn more about the QMP process for reading people and creating winning sales strategies in our one-day Sales Skills and Process Training Workshop, 60/90 minute on-line Sales Webinars or, for consultants, our Consultancy Navigator program.  If you have special need let us know of them through our Contact Us page, or call us at 503.318.2696.

Finding New Markets

 

Where does one begin the search to find new markets?

The good news is: new high-potential market opportunities are typically discovered closer-in than you would imagine. Some await discovery hidden in the clutter of your current customer list. Others find you, not the other way around.  In either case, your task is to recognize and quickly assess their viability.

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The biggest barrier is not that opportunities do not exist, but rather that firms have not dedicated a resource, and put in place the discipline to continually explore, vet and test their viability. New market opportunities can quickly and positively impact the bottom line. So, the key to growth is learning a) how to consistently be on the lookout, b) how to recognize possibilities and c) how to test their reality and viability.

Places for discovery:

Here are six places that have created the biggest up-sides for our clients.

  • Current customer list: it’s the small customers, not the big ones
  • Fulfilling customers’ unrecognized needs: the iPad and the SUV are good examples
  • Your competitors’ current markets: they are not as homogeneous or impenetrable as you might believe
  • Channel-to-market: is your channel providing more or less value to your customers than your customers need?
  • The sales pipeline: most sales people are poor at assessing an opportunity for its real, bigger-picture potential
  • International: some international demographics and economics are compelling

If you think you’ve already looked in these places, you might want to check again after reading this blog post.

Your small customers:

Some of the most significant growth opportunities we have seen have come from analysis of small, unexpected customers that have, under the radar, slipped into a firm’s customer list.  They are typically considered insignificant and/or outliers for two reasons: 1) the revenue amount represented was relatively low and 2) they came from outside the primary market targets of the firm. However, a quick analysis in several cases revealed that these customers were actually representative of much larger markets – markets with large numbers of customers with the same significant unmet needs that were already being satisfied by the firms’ product lines better than any other offering available.

In one case, the small “insignificant” customer was representative of 20,000 similar organizations nationwide, none-of which had as good a solution to their problem as was being delivered by the firm’s software. This new market opportunity was tested and validated within 90 days. Growth over the next two years in that market more than doubled the company’s revenue

Well-known business thought-leader, Peter Drucker, in his book “Innovation and Entrepreneurship”, named this phenomenon “the unexpected success”. “Unexpected successes” are characterized by customers buying your product from markets you had not considered, getting benefits you had not conceived because your solution was inherently better than alternatives they had to consider.

This common dynamic means that someone in your firm should always be asking your “unexpected-success” customers these four questions:

  • Why did you buy our solution?
  • How many more people like you are there, out there?
  • How many of those other people have a good solution now?
  • Where do these people hang out?

The lack of a consistent asset dedicated to this analysis, delays the discovery of breakthrough new opportunities.

Your customers’ unmet needs:

The iPad, the SUV and the microwave oven are examples of new product ideas that were formulated to meet customer needs that were “subconscious” or simmering just below the surface of a customer’s “experience” with current solutions. The key words in this sentence are “subconscious” and “experience”.

Typically, in smaller companies, not enough time is dedicated to thinking about the subconscious needs of customers and the customer use experience.  Most product development roadmaps we have seen are driven by; a) urgent responses to competitive moves, b) the drive to reduce product costs, and c) evolutionary feature extensions to current offerings. None of these create new market breakthroughs.

New market breakthroughs come from insights into customer behaviors, problems and product usage.

Your competitors’ current markets:

In the 1970’s GM (50%), Ford (25%) and Chrysler (15%) collectively owned 90% or more of the United States automobile market. Now some 40 years later, imports represent a huge portion of that same market. The lesson learned is that if you do not fragment your own market, a competitor will do it for you.  The caveat: In each segment of the competitor’s market you target, you must have a relatively advantaged solution.

Imports won their initial US auto market share by fragmenting the US automaker’s markets and offering a value proposition that represented a significant value proposition improvement in one specific segment – the industry’s most vulnerable – small, economic compact cars. After establishing that foothold and clinching their quality reputation in the compact segment, they then stepping-stoned through the other segments – leveraging that quality reputation.

Your new market opportunity may simply be created through a focused initiative at a segment of your competitor’s markets that is most vulnerable due to that competitor’s neglect of the segment. This is particularly effective if the competitor is much larger.  You should never attack a competitor on all fronts at once.  However, all competitors are vulnerable to fragmentation and differentiation aimed at dissatisfied or under-satisfied customers in some sub-segment of their business.

Your channel to market:

Most firms decide on their channel-to-market based on what benefits it provides in market coverage. The market (customers) really only care about the services the channel provides to them – not the exposure it provides to the firm. If the channel is under-satisfying the needs of the customers’ this represents an opportunity for a) increasing value delivered and compensation received, or b) increasing market share based on service.

Amazon was launched as a channel alternative to brick and mortar book stores.  It didn’t capture all book customers – but it did exploit a vulnerability and weakness of the then current book stores by offering convenience and in-home browsing. It created the on-line-bookstore market.

Your sales pipeline:

A sales person’s effort in pursuing an opportunity is typically influenced by three factors: a) the anticipated initial purchase amount, b) the magnitude of the long-term opportunity as communicated to the sales person by the customer’s purchasing department and c) the commission rate associated with the opportunity.

The first thing to recognize is that customer predictions of ultimate volume activity (part b above) are typically overstated – many times to hold up a carrot in order to exact the best pricing for whatever it is you are going to quote. More important than the volume prediction, is its logic. It should never be accepted at face value. Discovering the logic is what separates pursuit of a typical opportunity from discovery of a breakthrough market.

To test the validity and logic of a large prediction the savvy sales organization pursues a revealing question chain:

  • What ultimate economic, regulatory or demographic market factors will drive such high demand for your customer’s product?
  • Is this product introducing a whole new revolutionary value concept that no one has offered before (like the first microwave oven) or is it an evolutionary product (like current microwave oven offerings) – just bouncing along an incremental improvement curve?

Purchasing managers almost always over-predict the anticipated adoption of their new products. However, the answers to the two questions above may reveal a truly large and compelling market opportunity. For example, a firm that makes metal fabricated parts for military and aerospace customers may find in its pipeline an opportunity for a part for a medical device.  That opportunity may represent a number of situations: a) someone looking for a competitive quote to replace their current supplier, b) the need for a part for an evolutionary incremental product or c) a breakthrough new product.  Looking at the face value of the opportunity may not reveal the truth behind the opportunity.  Only by delving deeper can the truth of new market opportunities be discerned.

International:

The demographics and economics of India and China are intriguing. The average age of the population is much lower than in the United States, their educational levels are growing, their income per capita is growing and their middle class is also growing.  Indra Nooyi, the current CEO of PepsiCo, when asked where her company will be investing in the near future stated those facts – along with two population statistics that clinched the answer.  India has a population of 1.1 Billion people and China a population of 1.5 Billion people. (Current stats are 1.2 Billion and 1.3 Billion people respectively).  For PepsiCo the investment decision is made.

Those investments will require infrastructure and support – a “demand-halo” – from smaller companies, creating an opportunity for international expansion.  Navigating the local laws, regulations, cash repatriation and other idiosyncrasies of international expansion is a bit of a challenge but it can be done.  If you don’t do it, someone else will – likely some competitor.

Conclusion:

Given the incredible amounts of money spent today on branding, websites, Search Engine Optimization, sales promotions and tradeshows it is sad that a small portion of those funds do not find their way to support a “market opportunity sleuth” (MOS).  Even if your firm has only 10 people in it – assigning the job of MOS to even one-half a person would be wise.  That person should be responsible for scouring the areas listed above and reporting monthly on findings. After all, even if only one breakthrough opportunity is discovered in the course of a year – the investment would be worth it.

Read our related posts “Diagnosing Stalled Sales” and “Foundational Marketing – and please send us your comments.

For more information about Finding New Markets and Assessing their Viability call QMP at 503.318.2696 or eMail Jerry Vieira at jgv@qmpassociates.com

Copyright Jerry Vieira and the QMP Group, Inc., 2012

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Common Sales Myth #1 – A Sales Person’s Job is Just to Sell

After many years of both conducting sales training workshops and personally selling, I have come to recognize six popular misconceptions about selling. And, I must say, every time I broach those myths during a sales training session I get push-back, disbelief, the wagging of heads and several audible “No Way!’s”. So I am braced for your blog comments.

I have chosen to address each myth as a separate blog post, to make it more convenient to get through in the smaller and smaller free time chunks we all seem to be experiencing these days. Here’s the first.

Myth 1: A Sales Person’s Job is Just to Sell

We understand that sales people are under a lot of pressure to spend time face-to-face with customers and on the road – rather than behind a desk.  But pushing, or allowing, a sales person to only sell is counterproductive. That approach would be the equivalent of saying, “A soldier’s job is just to shoot and kill the enemy.” Good soldiers do a lot more than simply shoot. They are part of a team that sometimes requires them to play different roles and take on different duties. Here are some examples, along with their contrasting business function.

They collect and report field intelligenceGood soldiers are trained, not only to shoot, but also to observe and report on the enemy (competitors), their armaments (competitive advantages and value propositions), their location (markets and customers) and their strong points (where they have impenetrable positions – be it markets or accounts). Soldiers also report on the enemy’s weaknesses and gaps in their lines (under-serviced customers and under-served markets).

Any General, coming onto the battlefield needs, first and foremost, intel – to be able to formulate a strategy. Business managers need intel as well, for the same reason.

They report on the effectiveness of their own, and the enemy’s, weapons: The business equivalent is reporting on customer receptivity to the sales tools in use, the sales approaches, product capabilities, product reliability, product effectiveness, installation problems, quality, training problems and a host of other relevant experiential aspects of selling, delivering and using the product.

They dig in and defend the ground already captured: In business terms they defend their current accounts through disciplined customer service and make sure they are secure.

They exploit a victory, charging after a retreating enemy, or pouring through a breach: When something works in the field they use it again and again, winning repeatedly over weak competitors and landing new customers until the territory is “owned” and they move into a temporary “hold and defend” mode – until the next opportunity for an offensive.

BocageBuster

They share techniques and victories: In World War II, shortly after the Normandy invasion, the allies, having driven off the beaches into western France found themselves in bocage country . Bocage country is best described as countryside spotted with crop and grazing fields that are edged on all sides by 6 foot earthen walls entangled with scrub brush, vines and trees. These barriers have been built up over hundreds of years, a result of field-tending by farmers. From the air, bocage resembles a bunch of egg-cartons set side by side as far as the eye can see – each carton with deep, rectangular recesses. (Though at the time of the invasion, aerial observers did not recognize the impenetrable nature and height of the actual barriers.)

Capturing each field required soldiers to climb up one side of the barrier wall, scramble through the brush, trees and tangled vines, enter the field and charge across it to the bocage wall on the opposite side of the field. Tanks could not climb and penetrate these natural walls. The soldiers had no cover when entering the field. Casualties were high. The enemy simply placed machine guns at the opposite side of the field and mowed down any soldiers coming over the opposite wall. Progress in liberating France, ground to a halt.

That was, until some innovative engineer found that welding a fork-like scoop on the front end of a tank allowed it to tear through the walls, enter the fields ahead of the Allied soldiers and place heavy covering fire on the enemy gun emplacements on the opposite bocage wall. The success of that technique quickly spread to other infantry units. The casualty rate dropped. Progress accelerated. Eventually France was liberated.

When a sales person finds, discovers or invents something that succeeds and creates breakthroughs – it must be shared with all.

They train: To think that basic training is all that soldiers go through is a myth. Soldiers constantly repeat their training and hone their skills to a razor’s edge. They train on new techniques, new weapons, new systems and capturing obstacles and enemy positions in different terrains. Then they re-train on what they learned in their first training. Sales people, sadly, might train once a year. New sales people joining the team, may have to wait as long as 11 months before undergoing their basic training. Lack of training puts the team, the company and the product reputation at risk.

One more point: Training has two parts: basic physical conditioning (sales skills and disciplines) and weapons training (product and sales tool training).

Yes, there is more …

We could go on with the “good soldier” analogy, but by now, if you are a salesperson, you’ve probably reached your reading time-limit and need to run to do something else.

Have a good day.

Read the complete set of  The 6 Common Sales Myths.

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Click to learn more about the QMP Sales Process and Skills Training, call us 503-318-2696 or connect through our Contact Us page

 

 

 

 

 

 

 

 

Common Sales Myth #2 – You’ve Lost to an Inferior Offering

When we ask salespeople in our workshops to raise their hands if they have ever lost a deal to an inferior competitive offering, they almost universally raise their hands – even though we have told them ahead of time, “It’s a trick question.” 

The truth is: No one ever loses to an inferior offering.

iStock_000010460151XSmall

“How can that be true?”, you ask. “How,” you may ask, “could anyone consider that crap, superior?” 

If you lost, all the evidence indicates it wasn’t really an inferior offering, after all. That truth of it lies in two facts; 1) the decision-maker’s perspective and the values from which the relative superiority and inferiority judgement arose both differed from yours and 2) the outcome satisfied only one person’s needs – and that person wasn’t you. But, ultimately, the outcome is the final proof. 

At the moment a customer, and/or the ultimate decision maker, makes a decision to buy another “inferior” offering instead of your “superior” offering, that other offering is being perceived as a superior alternative in the eyes of that decision maker  – by a unique, hidden or secret set of evaluation criteria that you simply don’t understand or chose to ignore. Your personal opinion doesn’t, and didn’t matter. Relevant value is only in the eyes of the beholder – not the seller.

There are several reasons we are led to self-deceptively believe this harmful myth.

1. We, in sales, think all value is economic. That’s the reason we put so much emphasis on price competitiveness. 

Perceived value can be economic, but it can also be emotional or physical. When my family was young, I remember spending a lot of time analyzing car models and test driving a half dozen or so, narrowing them all down to two finalists. I sequentially drove both of them home for my wife’s final OK. She ran out to the driveway, a new-born in her arms and our other child, a two-year old, clinging to her jeans. She sat in the first car while I held the baby. She didn’t drive it. No excitement.

I returned that car and came back with the other option – a different brand and model from a different dealer. We repeated the drill. While she was sitting in the second car, she reached down, ran her hand across the seat (not leather in those days) and said, “This is it. It feels right.” We bought that car. It had nothing to do with the performance, reliability, handling or any other criteria I was discussing with either sales person. I didn’t have a clue that a “feel” test was going to be the ultimate consideration and the final decision point. I thought, as the salesperson did, that I was acting as the “official” power purchaser and “ultimate” decision maker. 

This “feel test” was an obvious physical value – not an economic or emotional one – and it held importance in the criteria by a “hidden” decision maker. 

2. We don’t understand the real decision criteria. In the story above, I narrowed down the choices. However, there was another final hurdle that neither the sales person or the purchasing agent (me) knew of.

3. We don’t understand all the decision makers  (See my new car story, above)

4. We emphasize the wrong product (or service) strengths. Not all strengths are meaningful to all buyers – or with the same relative importance. There is nothing more irritating and distracting than a salesperson spewing data, stats and features when you are trying to focus on the one, two or three most important things in your personal decision tree. 

5. We try to sell to the wrong target customer in the wrong target market. We continually hear, particularly from inventors and entrepreneurs when we ask them who their target customers are, that “everyone” can use their new product, service or invention. This leads to inefficient use of sales time, and significant mismatches in message. Telling the whole story, while missing the relevant customer or market-specific benefits, is common and leads sales people to say things like, “They (the customers) just don’t get it.” 

We have witnessed a company that believed so strongly in the universality of their value proposition nearly go out of business as they scattered their message as broadly as possible. Panicked by their rapidly dwindling marketing and sales pocketbook, lack of success and anxiousness to avoid failure, they engaged us. We told them to focus very tightly on markets and customers where the value received was the greatest. They finally agreed and the business began to turn around in less than 3 months. That simple change resulted in a four year run of breakthrough growth.

6. We don’t understand our own value proposition and differentiation: Each of our products or services should have a clearly articulated value proposition and differentiation in all three value areas; economic, emotional and physical. These values must be enhanced by the corporate brand – the ambient light that our products shine in. Johnson & Johnson, 3M, GE  and Apple (to a somewhat lesser extent these days) all bask in the glow of that favorable corporate light. The corporate light typically shines an intangible emotional and implied physical light on products and services.

Don’t bail on price as a last desperate attempt to fix your perception mistake.

One final point: To think that price is the only variable available to trigger a buy is flat wrong. But that is the topic of another myth. Suffice it to say, if that were true we’d all be driving the cheapest cars on the road.

Watch our QMP Insights blog for Sales Myth #3: “It’s relationship business”

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Copyright  The QMP Group, Inc. 2013 All Rights Reserved

Click to learn more about the QMP Sales Process and Skills workshops or call us at 503-318-2696 or through our Contact Us page .

Common Sales Myth #3 – Sales is all about Relationships

It’s a Relationship Business!

That four-word phrase is probably the most common statement we hear when we talk to sales people about their business.  It is even more common than the statement, “It’s a Price-Driven Market” – though more often than not those two statements travel closely together.

Relationship

Do You Have Brothers and/or Sisters? The Limits of the Relationship

To challenge the assumption that businesses are primarily relationship-driven we ask salespeople the following questions.  Here they are, with the typical answers.

Q.  “Do you have a brother and / or a sister?”      A. “Yes.”

Q.  “Do you have a good relationship with your brother or sister?”     A. “Yes”

Q.  “If your brother or sister tried to sell you something that would be detrimental to your business, would you buy it?”     A. “No (expletive deleted) Way”

Q. “What if they threatened to would tell your Mom that you refused to buy from them, would it change your mind?”    A. Laughter.  “No”

Here’s the point: All relationships, even good ones, have their limits

Relationships are based on trust.

Any activity that violates trust, violates and detracts from the relationship.

Let’s look at the Trust Equation, developed by David Maister, Charles Green and Robert Galford in their wonderful book “The Trusted Advisor“.  According to Maister et al,  Trust equals the sum of= (Credibility + Reliability + Intimacy) divided by (Self Interest).

 T = (C + R + I) / SI

Anything a sales person or their company does to lower Credibility, Reliability or Intimacy, lowers Trust and damages the business Relationship.  As you can also see from the equation, anything that blatantly demonstrates your, or your firm’s, Self-Interest also damages Trust and thereby the Relationship.

Nothing in the equation can affect Trust more than the amount of your self-interest perceived by the customer.  The higher the Self-Interest perceived, the lower the Trust.

Here’s the point. Depending on the Relationship alone can be perceived by the customer as inherently demonstrative of high Self-Interest.  In Relationship terms, “They want me only for my money.”

What Relationships Can and Can’t Do

Relationships can:

  • Get you an audience to make your case
  • Buy you some time and patience when you or your company screw up
  • Get you early, but not necessarily exclusive, notice of a new opportunity at an account

Relationships can’t:

  • Make up for a significant competitive shortcoming in your product or service offering
  • Repeatedly cover for your operational team’s inability to deliver
  • Make up for poor product or service quality
  • Find and win completely new accounts
  • Provide you more than a few percent price premiums
  • Make up for poor market targeting
  • Make up for fundamentally slow market momentum
  • Fix functional short-comings in your products

Here’s the Point: Don’t get complacent because you have good relationships.

Don’t Shoot Yourself in the Foot

Believing that your relationships give you enormous power is, for the most part, fallacious thinking, and can actually ill-inform you on what you and your company need to do. Here are some examples:

  • If it’s all about relationships, what impetus will your engineering team have to design better products?
  • If it’s all about relationships, why should your firm ever reduce prices or negotiate terms?
  • If it’s about relationships, why should operations need to worry about quality? Or delivery?

Here’s the point: Bragging about the customer relationships you have can simply provide unjustifiable cover for others in the organization to not execute their job as effectively as they should.  Remember, it’s still a very competitive world out there.

One More Point: The Fallacy of the Rolodex of Relationships

More often than is advisable, a client will enthusiastically recruit a sales person based on the contacts that sales candidate has amassed during their illustrious sales career.  Sales people treasure and protect to the death, their sales contacts and consider that list as a strategic personal asset.  It becomes a key feature in the personal selling proposition they use in seeking a new job.

Rolodex provides a great tool for managing those.  However, even the best list of Rolodex or CRM-managed contacts, can rarely, for the long term make up for business shortcomings in product, service, delivery, quality, competitiveness and value.

Let me illustrate.  In 1970, General Motors had roughly a 50% share of the US auto market.  That market share was supported by an incredibly, well-established national network of dealers and sales people.  Everyone knew everyone.

Since 2000 General Motors had lost roughly 50% of that 50% share.

Here’s the Point: Relationships aren’t everything.

Recommendations:

As much as has been written in this blog about the fallacies and dangers of dependence on customer relationships, let me make a final few points.

  • You must continue to develop your business relationships
  • You must continue to nurture those relationships based on paying close attention to each of the key elements of the trust equation
  • You must not, for a moment, let the rest of your business team off the hook by bragging and convincing them they only need to depend on your ability to develop and maintain good customer relationships

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Copyright 2013 The QMP Group, Inc.   All Rights Reserved

Click to learn more about standard and tailored QMP Sales Skills and Process Workshops or Contact Us at 503-318-2696 to discuss your sales and sales management challenges.

Common Sales Myth #4 – It’s a Price-Driven Market

I truly sympathize with sales people who are dealing with commodity managers in large corporate purchasing organizations.  Those procurement specialists can be brutal in negotiation.  More and more they are driven by corporate edicts to “source overseas” or “reduce commodity purchase costs by 3% per year” or to “reduce the number of suppliers by 20%”. 

The truth is, classifying what they do as “Negotiation” is not fair to Merriam-Webster’s definition of the word – or to anyone for that matter.

Can it get any tougher for manufacturers? The RockiStock_000011042796XSmall

These days, sales people and their parent manufacturing companies commonly find themselves confronting a series of “non-negotiable” buyer requirements that would be laughable, if they weren’t so real and becoming more common:

–          90 day payment terms

–          Guaranteed cost-downs

–          The lowest cost – period!

–          The highest possible on-time delivery

–          Impeccable quality

–          Unlimited time frame on returns

–          “No-questions asked” returns

–          No-charge, collaborative up-front engineering and/or marketing cost sharing

–          Transparent margin calculations

–          And the requirement to keep a buffer inventory of finished parts in the factory – owned, of course, by the supplier

 The not-too-thinly veiled threat hidden among those requirements is, “If you can’t meet these terms, we can always find someone else to supply that part/service in Mexico, Asia, Brazil, India” or even, “We’ll build those parts here – ourselves, inside”.

We talked about the Rock above.   Here’s the Hard Place.  

 In the banker’s office the CEO and CFO of the small manufacturing firm are hearing:

–          Your cash flow is slowing

–          Your margins are slipping

–          Your credit line needs to be reduced and renegotiated

–          We need to see your financials, monthly

–          We need to tighten up our loan portfolio because of the lending debacle of 2008

–          and… “No, you can’t have any more leeway”.

So, between the banks pushing for higher prices and margins on your products to improve cash flow (or you lose your financing), and your big customers pushing for lower and lower prices, what’s a small manufacturing firm to do?  And, how does a sales person make a living if he isn’t price competitive.  Isn’t some margin, albeit low margin, better than losing a customer?

What Price Competition Really Means

Price-driven competition means that one or more of the following statements are true:

  1. The buyers in your target market perceive no meaningful performance or value differences between products from different suppliers – including yours
  2. Your product offering actually has no real and meaningful differentiation compared to your competition for those customers in that target market segment
  3. You, as a sales person, or your marketing team, are doing a very poor job of communicating your meaningful, market-specific differentiation to customers in that market
  4. You are unable to economically quantify the value your product can deliver to customers in that market
  5. You are aimed at the wrong market and customers – a market for which your differentiation does not actually deliver meaningful, economic, emotional or physical value

We have seen all of these situations in our client engagements – typically disguised and drowned out by the sales person’s pleading and cries to “drop the price”.

So What Can Be Done About This Kind of Situation?

The simple, yet most effective answer is: Decide which of the five statements above are true – then set about fixing them.

It is actually easier than you might imagine.

A Case in Point 1: Wrong Market Targeting

A client of ours had a new product that wasn’t selling well.  It was price disadvantaged by a factor of 3 over competitive offerings in the general market!!  In spite of this, the new business development team was hustling to set up general distributors across the country.  They were counting on a major price reduction they were politicking for with corporate to spur sales – when in fact corporate was quietly considering shutting the product line down.

We were asked to determine whether the product line was worth saving.

What little sales there were, were focused in two very narrow markets.  Simply by asking customers that bought the few units that were sold in each of these markets why they bought this “over-priced” alternative, a set of inherent, here-to-fore un-promoted competitive advantages were revealed.

Then simply by pivoting the sales team to focus on the market in which the most compelling benefits were revealed the following results were realized:

–          Not only did the price not have to be reduced, the market’s desire for added features quickly brought the average selling price of the top model to 4X the original price!

–          The single largest order for this product had been $20,000 – now with focus and a re-promoted and re-emphasized set of market-specific benefits the largest order from a customer exceeded $1,000,000

–          The number of new customers buying this product quickly rose from 2 to over 150

–          Price reductions were no longer discussed

–          The effort to saturate the market with distribution outlets was no longer considered necessary and saved a ton of money

Case in Point 2: Poor Economic Benefits Communication

In another instance a client was puzzled by the slowness with which their new product, designed specifically to help customers save substantial amounts of money, was not selling better.  The root cause was discovered to be the distributor sales manager who simply “.. did not believe the economic argument” and refused to promote it – in spite of the customer testimonials to the effect of the savings realized.

A rapid individual re-education was required, followed by a re-training of the distribution sales force, and the product’s sales turned up shortly afterwards.

Case in Point 3: The CEO Gap

I once asked a group of 12 B2B CEOs to take out a blank sheet of paper and write down what they perceived as their best product offering, the product that they thought customers should appreciate the most. I also asked them to identify an ideal customer for that product.

I then asked them to identify the factors and calculate what economic benefit that ideal customer was likely to receive from that product. They stumbled. None of them could do it in the 15 minutes allotted.

If they can’t do it – can their sales people? 

The Point:

Price-driven markets and situations are often a symptom of; a) misdirected market targeting or b) a lack of understanding of, and poor ability to communicate, market-specific economic, emotional or physical benefits of your product offerings to potential customers. 

Customers buy for their own reasons, not yours. No matter what you have convinced yourselves about the value customers should see, they saw what they were looking for when they decided to buy.  Sometimes it’s not what you want them to see, but if it worked it is delivering real value.

So, if your sales people are screaming for price reductions and you have customers buying when you are not the cheapest price – those customers are seeing something you are not. You need to find out what that is and why. And if they are not buying when the economic case is real, independent of the price, your communication is broken somewhere along the line.

Oh yeah, one final point. If price was truly the ultimate deciding point for decisions, we’d all be driving Versas.  If it helps, here’s a link to Car and Drivers article on the 10 Cheapest Cars

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If you’d like to learn more about dealing with price-based competition call Jerry Vieira, CMC at 503.318.2696 or email to jgv@qmpassocites.com. The QMP Website is at www.TheQMPGroup.com and more insights can be found at The QMP Insights Blog

Common Sales Myth #5 – Closing Techniques are Effective

Let’s start this discussion with a stipulation that all successful sales have to go through some sort of closing stage.  Nothing happens until a customer or client agrees to pay your company for the delivery of a service or a product.  So, in the strictest sense, I guess we can call that a “close”.  We can also imagine that all commerce in the world would come to a screeching halt unless some kind of transaction closing happened. Sales Person

So, good closing techniques are essential – right?  And if that’s so why am I targeting closing techniques as a myth?

A Closing Process is Different than a Closing Technique

A “Closing Process” is likely to be mechanistic.  Get the quantity and delivery dates correct, get the PO issued and confirm with the customer your ability to meet the delivery schedule.  These days that process may be enabled by all sorts of mobile systems, and field inventory accessibility tools.  That’s mechanistic closing.

“Closing Techniques” are something different all-together.   Closing Techniques are many times designed to manipulate the emotions of the buyer, or to create a sense of urgency, guilt or fear, toward the end of triggering a commitment to buy.  At one level, an example might be a car salesman saying something like, “Well, these models are going fast.  In fact, there was a guy in here earlier that test drove and liked the exact car you just expressed an interest in.  He said he was bringing his wife back this evening for a final decision.”  Or, in a business-to-business environment, “We are just about at capacity and if you really need delivery in July, we need to get your order committed and on the schedule no later than end of this week.”

Well before you assume that closing techniques are cool, perhaps even having been indoctrinated by the training your own sales management required, consider the following information – then decide for yourself.

The Impact of being “Closed” by a “Closing Technique” 

Neil Rackham in his book “SPIN Selling” reveals the results of 10 years of research done by the Huthwaite Center into high $-value sales success, analyzing 10,000 sales people and 35,000 sales calls in 27 countries.  They studied 116 factors that might contribute to sales success.  

The results of that study concluded that customers with which “Closing Techniques” were used (emotional, urgency or fear) were:

  1. Less likely to buy
  2. Less likely to re-buy
  3. Less likely to be satisfied after the buy

Admittedly that is an extremely brief description of his work and its conclusions.  But it is compelling – and I strongly recommend all sales managers read “SPIN Selling“.  It may alter, for the better and forever, your thoughts about training your sales people to use “Assumptive” closes, the “Standing Room Only” close, the “Alternative” close, or any other trick closing technique.

The Huthwaite SPIN model offers an excellent, and more effective, sales process alternative.  SPIN is an achronym, and stands for Situation, Problem, Implication and Need-Payoff.  The SPIN selling process trains people how to use questions of each type to win a sale.

So, Why is So Much Emphasis Still Placed on the Training and Use of “Closing Techniques”?

Today, the pressure on Sales Managers to produce sales results is higher than it has been in years.  Foreign and price-based competition, combined with a still iffy and sluggish economy is resulting in significant pressure on small-to-mid-sized firms.  The result is that CEOs, Owners and Sales Managers believe that closing techniques will somehow move a sale forward more quickly.  But, in my experience I find that they are, for the most part, ignorant of what the data from the Huthwaite study reveal – and ignorant of other more effective sales techniques.  And, they may be pressed to find the time or money to embark upon such a change of direction and approach in mid-stride.

Curling

Customer and Client Collaboration Works Much Better

So rather than disenfranchising your sales prospects with slick closing techniques, consider a sales approach more like the Winter Olympics sport of curling.  A good sales person is like the “sweeper” who, through patient and detailed questioning, problem solving and collaboration leads the customer to the best answer to help them achieve their goal.  

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