In a negotiation, we often see either the customer or the seller try to leverage the conversation into an apples to apples comparison. In this video from Tom’s Intentional Success® Selling series he explains how to avoid the apples to apples trap.
The struggle is real. I have spent most of my professional life managing the tendencies of sales and operations teams to conflict with one another. I have a mantra and it goes like this:
“Sales’ job is to sell what Operations can support. Operations’ job is to support whatever sales sells.”
The battle field is much more sophisticated than it was when I started. We no longer rely on paper files and clip boards to do our work. I can’t just stroll over to a salesperson’s desk and find a phone number in his Rolodex or search his phone messages for the latest changes in projects. Likewise, it is nearly impossible for a salesperson to monitor all the operation and logistics processes that touch their projects.
Consider this, if you could generate a complete design and cost estimate with the push of a button and only had to choose which profit to go with, wouldn’t you spend more time trying to win higher margin jobs? Instead, the proposal process is so expensive and time consuming that once you have started the process, you cannot afford to lose opportunity. You end up selling on price instead of selling your craft. Then you do it again. Workload increases and margins shrink.
When I ask, what prompted you to start your AV business? The answer I hear most often is, “I started this company because people wanted my expertise.” They will quickly add, “I was never trained in business. I don’t think of myself as a salesperson.” Designer, programmer, technician, visionary, or specialist – small business owners are typically everything other than a salesperson. Yet, every business owner I have worked with is by far the best salesperson in their company.
In this podcast, Tom Stimson talks about rethinking how you approach the RFPs that come your way, and how it can help you get a better response to your proposals.
I have been saying for many years that we have to sell the end result and not the plan. That means focusing on outcomes for the customer instead of the parts and pieces of the transaction. In order to do this, AV companies must first do three things: 1. Identify (and understand) the Ideal Customer 2. Develop and promote a compelling Value Proposition 3. Understand how your Pricing affects gross profit If you have taken the time to truly understand the three points above, then you will have taken steps to change how you market your services. Customer qualification will be taken seriously. Value will replace price in conversation. Margin contribution will supplant gross profit when evaluating pricing. Your pitches and proposals will look dramatically different. Negotiation will be peer-to-peer instead of fear-based. However, I must caution that these steps alone are not enough to undo years of selling on price. As an industry, AV companies have trained their customers to be excellent price-shoppers. Line item proposals and head-to-head competition on cost give the buyer a satisfying victory in negotiation, but often fail to deliver the outcomes they were seeking in the first place. Changing this circular logic takes time […]
Sometimes we have to deal with price shoppers, but they aren’t necessarily bad business – if you know to play the game. Actually, it’s more like a war. “The Art of War” by Sun Tzu teaches us lessons in strategy instead of battle because, “He will win who knows when to fight and when not to fight.” When it comes to price shoppers, you have to beat them at their game before negotiation ever begins. “Attack is the secret of defense; defense is the planning of an attack.” One of the tools of the effective buyer is to allow you to burn out then take you at a weak moment. The more effort the seller puts in, the more he or she expects to win, which leads to ‘winning at any cost.’ Buyers know this and will allow you to expend as much energy as you want as they wait patiently. Remember, money is more valuable than time to a price shopper. “If he sends reinforcements everywhere, he will everywhere be weak.” Sometimes salespersons will attempt to inundate the buyer with information: options, variables, data, you name it. Too often, buyer incentives get mixed in and the savvy price shopper knows that the […]
As an advisor, there is nothing more cringe-worthy to me than hearing a sales team discuss how their proposal is supposed to win a piece of business. “We need to blow them away.” Agreed, but if we are relying on the proposal – have we done everything we should have done to develop the opportunity? Are you really going to stake your business on a proposal? It needs to be said that what follows are ideas about what to do after you have failed to properly develop the opportunity and succumbed to using a proposal to do your marketing. However, I know reality is that sometimes the opportunity gets wiggly and a proposal seems like the only way to settle things down. Before You Send a Proposal as a Last Resort: If the opportunity in front of you is dependent on what’s in the proposal you are about to send, and you are not CONFIDENT that you have already won the business, then STOP. Here are five TEN things you can do right now to reduce your risk of failure on your next big proposal: With so many great options – why send a proposal that doesn’t guarantee the win? Change […]
The sales meeting started like this, “We aren’t going to make our sales goal because we lost this big job. How are we going to make up the shortfall?” My questions were, “What changed? You did not have this revenue before; you still don’t have this revenue.” And, “Were you going to stop selling because you won this project? Isn’t there other revenue in play?” A quick review of the pipeline told the story. About fifty organic leads a year generated 25 prospects, which turned into 12-14 proposal opportunities. The 80% close rate earned the 10 or so new clients they needed a year. So why did one lost proposal mean so much? Do the Math Think about your business. Let’s assume you want to win ten projects a year. How many do you need to quote on? If your close rate is 20%, you need to write 50 quotes. You will lose 40. Do you have 40 lose-able quotes per year? If you want to write 50 quotes, how many opportunities do you need to process? If your conversion rate from opportunity to quote is 20%, then you need 250 opportunities. Do you have anywhere near this number? If […]