Fear of Discussing Price

"Just don't mention price. I did it once, but I think I got away with it." - a paraphrasing of Basil Fawlty.

I have been working lately with a few sales teams where the topic of discussing pricing during the sales process has come up. Or rather, the strong desire to avoid discussing price until the very last minute has come up. These teams have pushed back strongly against the idea of introducing pricing – in any format – into the conversation until the customer absolutely demands it.

And, I believe, their sales are suffering because of it.

In a customer-centric sales approach – where we consider what is going on inside the customer’s mind and their needs, not just our own sales process and goals – it is important to recognise that any buying decision is a complex and multi-phased decision. Successfully giving the customer what they need at that point will help advance the sale. But customers’ needs vary at each stage.

In the initial phase, when the client and the supplier (you) may still be working out what a solution might look like, or what the problem really is, the client organisation needs to become convinced that there is a big enough reason to change. The reason might be lost sales, operational inefficiency, poor quality, etc.

(For those of you who follow Imparta’s Creating Client Value approach, you’ll know I’m talking about clients in the Awareness of Needs phase.)

Once key people are onboard with the need to change, there generally needs to be an approval from someone higher in the client organisation, a Centre of Power, for the idea to move ahead. This does not mean that the supplier might be awarded the deal! At this point, the client is merely saying, ‘Yes, this is a big enough opportunity that it makes sense for my team to spend time and energy looking into it, to pick the right supplier and the right approach.‘

As we’ve discussed in previous postings, decisions are being pushed higher and higher in the organisation. But many sales organisations are not recognising this key fact, and their proposals at this point focus on technical specifications, company capability and generic suggestions of business impact. Fees and implementation costs are left out of the discussion; they fear that they will get locked into that price, even as the solution evolves with continuing discussions.

And that’s where these sales organisations lose out.

Clients at this point, in order to make a commitment to moving ahead, need to see clear business logic – a Value Proposal in our parlance. Again, let’s remember that this decision is being made by a more and more senior audience, so their interest in the details of the solution is likely to be much less than the overall impact on the business performance. So a successful salesperson needs to be able to talk about – and show quantified examples of – the business impact. Consider the strategic impacts – sales growth, improved customer retention, etc – as well as more tactical issues such as productivity savings.

This impact, though, MUST be coupled with the costs to get that impact. If you’re saying that your solution can help create $5 million in additional sales, it absolutely matters to the client whether it will cost them $4 million to get that impact or $1 million. And the costs should be complete – if there are implementation costs associated with the solution, then include them. Consider the impact of leaving these additional costs out: eventually your client will realise that they exist, and if you haven’t revealed them your trustability quotient is likely to be hampered.

Senior audiences expect to see Impact and Costs to be able to assess the total Value they’ll be seeing. Doing so will increase the speed of your sales process, and increase the likelihood that an account will commit to the idea and move ahead in their buying process. Lots of our accounts (before we start working with them J) have genuine opportunities that have fallen dormant because of their inability to present this simple Value = Impact minus Costs argument effectively.

I am NOT suggesting that a consultative sales person should pull out a price sheet early and often. The key point here is that price can’t be ignored, but the key corollary is that price must always be discussed with a senior audience in the context of impact. Price on its own shifts the conversation to discounts. When paired with knowledge of how your solution will impact their business, it can become a discussion of how to move forward!  

So, review your opportunities and consider which ones are at this point: key people within the business support your idea or solution, but you can’t get their boss – or their boss’s boss – to buy in. Make sure that the costs are all in there, and that you can show true Value, and you just might move it along!

Selling in the Post-GFC world: Renewal Business

I have had a few conversations recently with senior sales executives in the packaging and office automation space, and, once again, we focused on the issue of Selling in the Post-GFC space. A few of these conversations were with clients, so the degree of intimacy and insight was quite deep, but even with the non-clients, another key theme emerged – Increased Difficulty in Renewal business.

In past entries I’ve not really focused on new accounts versus renewal business versus new opportunities in existing accounts. This is because the themes I’ve identified apply equally to all of these situations.

However, this time we’ll focus on renewal business, as there are a few key interesting issues – and lessons. Whether in telecommunications, office automation, equipment repair, packaging, or other industries, a salesperson is often selling in a time-based solution. In other words, the supplier is the exclusive supplier during that time period. At the end of the time period, the contract is up for renewal, and it is during these times when competition can win the business. Fairly standard stuff.

In the past, generally speaking, these renewals were fairly heavily weighted towards the incumbent. What we’re seeing now, though, is that the renewal process is much more difficult, and much more fraught with danger for incumbents. Put simply, lots of incumbent suppliers are being cast aside when renewal time comes.

The reasons are many, and include some of the themes that we’ve touched on before. Certainly one issue, raised in other entries, is that in tighter financial times decisions are being pushed higher in the organisation. Simple contract renewal decisions that used to be made at the operator level are now being made two or more levels up.

As decisions move up the organisation, they are looked at through a much more strategic and commercial lens than lower in the organisation. And here’s where incumbents can fall down: without the commercial acumen skills to demonstrate the impact on the account’s performance, and to position the repurchase in a strategic context, they are vulnerable. Competitive suppliers selling higher in the organisation, and speaking the language of the executive, can knock out an unprepared incumbent.

Incumbents generally have a huge, and fairly obvious, advantage here: they are already in the client. This should give them a privileged opportunity to retain and grow business. But unless they change their approach in ‘these difficult times’, they’ll lose out.

Here’s where we see incumbents making mistakes:

1. Focusing too much on one part of the organisation. Sales and account management teams generally have very strong relationships with the part of the client that uses the product or service. However, they need to build a network of relationships across the business, horizontally, and up the seniority chain. More relationships will mean more opportunities to create value for mare parts of the organisation, and to position yourself as a useful partner in general.
2. Focusing too much on performance against specifications. Certainly, demonstrating that you have met the terms of the contract is important, but the senior executives that are making the decision care more about the impact on the business as a whole. Focus on how you’ve helped them to take costs out of the business, to identify new customers or markets or segments, to differentiate their offering, etc. The Business Case for keeping you needs to be a strategic one. Oh, and it helps if you’ve proactively identified new opportunities along the way.
3. Waiting until contract renewal to re-engage the account. It’s not unusual for companies to pass accounts over to Customer Service (or similar) for 21 months of a 24 month contract, then pop up just before renewal. This behaviour, in the context of a marketplace that is looking for strategic partnerships, is a recipe for losing an account (or getting pummelled on price).
   
   The renewal process starts on day one of the contract, an old colleague used to say. If you want to keep a customer, keep working with them after implementation. Look for new opportunities to help them to meet their business goals, and be proactive in bringing them to the account. One customer that I work with quite frequently, a business process outsourcing company head-quartered in India, expects their teams to bring at least one “unsolicited proposal” to their accounts each quarter. Now that’s a proactive supplier!

This is basic stuff, really, but we do see companies out there, clients and non-clients, falling in the trap. In the modern economy, this kind of behaviour won’t work – your competitors are getting smarter, faster, more active, and more commercially clever, and you’ll need to raise your game to hold onto customers.

So what can you do? Think about a few of your key customers that are in the early days of their contract:

• Do you have a plan for how to continuously create value for them throughout the course of the relationship?
• Are your sales and customer-focusing teams looking for new opportunities to help the account meet their goals (as opposed to just selling in more of your stuff)?
• Does your team have meaningful *business* relationships with a wide and senior range of contacts at the account?

If the answers to the above questions are no, get ready to lose this client. Or get to work creating value for them! 

Selling in the Post-GFC world: Phasing

Continuing the theme of what works in post-GFC selling, another pattern has emerged in my research and discussions. For the time being, let’s call this theme Phasing. Like other themes I’ve discussed, Phasing is not really a new concept. Nor was it unsuccessful or useless before the GFC. What we’re seeing is simply an acceleration or an amplification of an existing trend.

I had a very compelling and inspiring discussion the other day with two colleagues in the sales effectiveness field, Tamera Lloyd and Mark Lloyd at Candescent Consulting. Tamera reinforced the Phasing theme as we talked about the challenge of growing business in difficult times: Phasing, or down-scaling, is an approach that has been a successful strategy for both Candescent and their clients.

As I’ve mentioned earlier, there is immense pressure on budgets, and even projects that seem to have merit and impact get knocked back simply because of a lack of funds. One approach to combat this is to outline the programme or investment, and to also demonstrate how it can be phased in over time. The first phase might be a relatively lower investment, obviously with lower impact, with future phases implemented when budget is available, e.g. in future financial periods. Hopefully, financial periods where budget is available .

This Phasing approach can be a very nice way to build intimacy and credibility with the account. The salesperson demonstrates that they can understand the pressure of the current environment, and is working to find a way that will create value for the account.

The Phasing approach is more than just throwing out features, functionality, or components in order to drive the cost down to an acceptable budget level – that’s just dickering. What we’re seeing among successful organisations here is a consultative approach that keeps the overall goals intact, but looks for ways to get there over time. As Tamera phrased it, and I’m paraphrasing here, Phasing allows you to grow the client when we can, and focus on a few key bits for now.

There is an implied collaboration in Phasing, and one that should be leveraged by the salesperson. Defining what are the key pieces of the product or service can and should be a discussion. The sales team can certainly come with some ideas, but the process should be one that engages both sides, allowing for a potentially robust discussion of business drivers and business needs. Engaging with the client also prevent this from becoming just a negotiation; it is a process of searching for the best impact that can be built for the account, given the current constraints.

For sales teams that are seeing pushback around budgets, size of investment, etc, the Phasing approach is an easy one to try out, and an easy one for managers to coach with their salespeople. Suggest another conversation with the account, where the scope of the project is divided into “Now” and “Later”, and potentially you’ll see progress.

Of course, price objections can mean many things, which we can cover later. But ‘in these difficult economic times,’ it’s worth having a go. Sometimes a lack of budget is just a lack of budget.