Teaching Your Salespeople to Sell at Higher Prices than the Competition
One measure of a manager's ability is how well he maintains his company's profitability. Customer service is critical -- and so are sales -- but if a dealer can't maintain his profitability, he or she will never make it.
The profitability of your company lies in your hands and the key may be in your ability to teach your salespeople to sell at prices higher than those of the competition. The question is: how do you do this in what management guru Tom Peters calls the "the age of the never satisfied customer"?
Have you ever had a customer get mad because she purchased a better carpet? I doubt any of us has ever heard a client utter, "Gee, I wish I would have spent less and bought a cheaper quality carpet."
Usually, all we hear is that the customer wishes she'd have bought a better quality carpet. That's why 49 percent of all claims filed with the mills relate to the end user's unrealistic expectations.
We all know that the bitterness of poor quality remains long after the sweetness of a low price is forgotten. A study conducted by the Chicago-based Industrial Performance Group found that a whopping 60 percent of all customers who buy carpet should have purchased better quality based upon their personal expectations and needs. Is this why the carpet industry is losing market share to other types of floor covering?
The lowest bidder is probably low for a reason"It's unwise to pay too much, but it is worse to pay too little," said John Ruskin, a renowned thinker of England's Victorian era. "When you pay too much, you lose a little money -- that's all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.
"The common law of business balance prohibits paying a little and getting a lot -- it can't be done. If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better."
Hall of Fame baseball player Yogi Berra said, "If people don't want to come out to the ballgame and watch, I can't stop them." This quote also could apply to salespeople who sell cheap carpet. "If customers don't want to buy better carpet," they might say, "I can't stop them." Certainly, you can't stop them in the absence of salesmanship.
Why don't or can't average salespeople sell better products? Sometimes, salespeople are price shoppers and will not buy better quality products for themselves. In my seminars I ask, "How many of you would not spend $90 a square yard -- or $10 per square foot -- on yourself?" Almost everyone in the room will raise their hands. I think that response indicates it's probably also difficult for them to sell premium-priced goods as well. "Oh, you don't need to spend that much!" they'll tell a customer.
Some salespeople are afraid of price, and consequently assume that better quality products are too expensive for the customer. Some may have sympathy instead of empathy, and ultimately they feel the pain of customers departing with their money. The biggest problem is salespeople who lack selling skills or simply don't know how to sell better quality products. They use price as a crutch.
Isn't selling all about getting people to buy something they might not otherwise consider simply because they lack knowledge or information?" It has been said that, "Nothing happens until someone is sold."
Do your people sell or just take orders?There is a world of difference between order taking and selling. Are your employees salespeople or order takers? The key to selling better products, or selling at prices higher than the competition, is a threefold strategy. First, the salesperson must sell with conviction. Then, he must differentiate his product and service. Finally, he builds value by explaining why the product is worth more.
Salespeople who sell with conviction are able to send emotional messages that influence the decision-making process in the emotional right hemisphere of the customer's brain. For this reason, the emotional state that the salesperson is in will influence the customer more than anything that he says. The emotional sale is critical because all buying decisions are first emotional and then are justified with logic.
In order for a salesperson to convey conviction, he must believe in himself, his product and his company. Salespeople find it difficult to sell products they don't believe in.
When a customer says, "Your price is too high," the salesperson can respond by saying, "You're right, this product's price is higher." The message that is sent is that the salesperson believes the price is equal to the worth of the product. He conveys conviction.
Differentiation may be the most important strategy in selling. It's why the best companies strive to acquire product leadership by branding their products. A branded product implies quality and helps the customer make decisions. In fact, Harvard Business School goes so far as to say, "Without a brand identity, you will forever compete in a marketplace dictated by price and delivery. Worse yet, you will have to compete with each new competitor who comes along - not a fun or profitable place to be."
Customers who are wary of making a mistake look for a difference. And they will never believe you are the best, unless you are different. Customers have a need to make comparisons. They like to compare apples to apples and oranges to oranges. Great salespeople don't allow comparisons. They realize that to concede sameness is to give away their competitive advantage.
The strategy of differentiation helps create an identity that makes customers want to buy. The challenge is to decide how your product and service is different, and how to communicate that difference to the customer. The key, of course, is to articulate so clearly to customers that they immediately see and understand that there is a difference in your salespeople, your company, your services, and/or your products. If they can't see any difference, price becomes the differentiator. When the decision is boiled down to that criterion, the lowest price always wins.
Step 3 of selling higher quality products is to build value (the Value-Added Strategy). Adding value, in this context, includes anything that you can do or say to give the customer a reason to buy from you. It requires that the salesperson give the customer emotional and rational reasons -- based on what the salesperson identifies as important to the customer -- for buying a better product. When a salesperson does this, he increases in the customer's mind the perceived value of that product.
Here's how you would use the process in a selling situation:
Customer: "Your price is high."
Salesperson: "You're right, the price on this carpet is higher. But it is a different kind of product."
Customer: "What do you mean?"
Salesperson: "This carpet is made from a branded nylon and carries a 10-year texture-retention warranty. What that means to you is this carpet will look better longer because it holds the twist better. That is important to you because you said your last carpet got ugly shortly after it was installed. It will be such a relief for you not to worry about its performance. All you have to do is properly maintain your new carpet."
Power, whether you have it or not, is in your own mind. If you or your salespeople don't believe in the worth of your product's price, fail to understand why it is different and neglect to explain that difference to the customer, you or your salespeople will never rise above being mere order takers.
Don't let that happen to you. Learn how to sell at prices higher than those of your competitors. It's easy -- just follow the three steps. Now, go teach it to your salespeople.