On this episode, Paul addresses the frustrations of working for a price seller.
There are different ways to go to market.
Ask your boss “Why do we sell on price?”
Remind your manager that once you discount, you are losing out on ….
Conduct a value audit and help your manager realize just how much value you deliver.
Understand the power of 1%!
Purchase Value-Added Selling for your manager.
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What if my manager is a price seller?
(Transcribed from podcast)
We have a question today from the website. So this is proof positive, if you go to the website and you ask a question, I’m going to turn it into a show.
This question comes from John. John is a construction equipment salesperson, and John’s actually been through our value-added sales training in the past. And here’s situation he’s dealing with. He’s got a manager, or boss, who is focused on selling price. The manager uses price to sell instead of selling on value. In fact, John has mentioned that this sales manager—his boss—will actually discount even if the customer does not ask for discounts. So they are selling on price. And John wants to know how do you handle that?
And you could imagine the frustration, right? If you’re a value-added salesperson and you’re going out there trying to compete on value and not on price. And then you’ve got your manager, your supervisor, selling on price and then telling you to sell on price and giving discounts even when the customer doesn’t ask for it. So that’s what we’re going to focus on in today’s show: What if your manager is a price seller? Let’s get to it.
Before we get into that question though, a quick shout-out to Andrea over at The Creative Impostor Studios. If you’re starting a podcast, if you’ve been thinking about it, hey, now is the time to do it. Podcasting is a great way to connect with your audience or build your brand. And you’re going to need some help as you build that podcast. You’re going to need to get set up. You’re going to need tech advice. You’re going to need a lot of things. Reach out to Andrea. She can help you. She does a wonderful job. Again, The Creative Impostor Studios. We’re going to have a link to her website on this episode’s webpage.
Also, we’re going to talk a lot about Value-Added Selling on this show today. So just a reminder, go to Amazon, Chapters, Barnes, and Noble, wherever you get your books and pick up your copy of Value-Added Selling. We’re on the fourth edition now. It’s updated with the latest information on price sensitivity. If you’ve got a manager who’s struggling to sell value, you need to teach them how to do it. Hey, pick them up a copy of the book.
Let’s get back to that question. What if your manager is a price seller? You have to realize there is more than one way to go to market. You don’t have to be a value-added organization. That’s the methodology that we teach. That’s what we focus on is how you can compete on value and not price. If you want to be the low-cost provider, if you want to sell on price, hey, that’s up to you. There are successful companies that do it. You know, you think about the Walmarts of the world, Amazon selling on price. These are some successful companies, so you can’t argue with success. But what I found is that most sales organizations choose to focus on value and not selling on price. So John, keep that in mind. I’m sure it’s frustrating but bear in mind that there are a couple of different ways to go to market.
Here’s couple things I would do. Number one: I would ask your boss why. Just ask him, “Why do we sell on price?” and have a conversation about that. Highlight a couple of examples where they’ve discounted. For example, in your question you mentioned that the sales manager will actually discount when the customer doesn’t even ask for it. I would ask why, and don’t let them off the hook. I mean, challenge them a little bit. I know it’s your boss, but you’ve got to be able to challenge them and challenge the mindset a little bit and just ask why. And as you’re having that discussion, remind your boss that “Hey, once we discount, that’s pure profit that is coming out of the deal. It’s pure profit that is affecting my bonus or my commission.” Remind them that every discounted dollar is pure profit coming out of the company.
In fact, there’s a great article—we’re going to put a link to it the transcription from this podcast—it’s called Managing Price, Gaining Profit. And this is an old article. I think it was originally published in the nineties. But this article talks about the power of just a 1 percent price increase. What they found is that if your volume stays the same and you’re able to increase your price by just 1 percent, just think about it, just 1 percent, that will impact your operating profit by adding 11 percent. So a 1 percent price increase yields an 11 percent increase in operating profit. Now, what’s interesting about this article, it also shows that a 1 percent discount will decrease operating profit by 11 percent. That’s the power of 1 percent. That’s the power of discounting and the magnitude of it. So again, John, I would just have a conversation and ask the question, “Why do we sell on price?”
Couple of other things to do. I wouldn’t keep your manager or your boss at arm’s length from some of your deals. Try not to get them involved. See if you can almost keep secret, some of the deals that you’re working on because you don’t want your manager, your boss, coming in, becoming part of the deal and then discounting and focusing on price. They’re undoing all of the good will that you have built into that sale. So, I would keep them at arm’s length. That’s probably easier said than done, but, that’s what you’re going to have to do.
A couple other things, you’re going to have to sell the manager, sell your boss, on the idea that you don’t have to be the cheapest to win business. And, personally, I would send him to one of our training seminars. You’ve been through Value-Added Selling, you know how powerful that message is. Send them to one of our training seminars or pick them up a copy of Value-Added Selling. Especially when we talk about price, because we have research, we have proof that shows price is not the most important thing. You’re going to have to sell your boss on this idea that value is what really matters.
Here’s one way you can do that. Conduct a value audit. A value audit is simply auditing your company’s value: how you deliver that value, how it impacts the customer. Sit down with your team, your colleagues. You may have done this exercise when you went through our training seminar, but you basically sit down and you talk about all the ways you bring value: from the company standpoint, the products that you sell, and then also you as the salesperson, the personal value that you bring, that your people bring, the services you provide. The goal here is to amass a list. Try to come up with 30 value-added extras that you offer.
Here’s why you should do that. Do this with your manager. He has to be part of it. The reason we do that is it helps that manager realize that you’re bringing more value. As you go through this exercise, if he sees 30 value-added extras, he’s going to start to think, “You know what? Maybe we don’t have to be the cheapest. We bring all this value. This is what really matters.” Conduct a value audit. That’s going to help convince.
Next thing you want to do, make a joint call with some of your least price-sensitive customers. I know I mentioned earlier, keep your manager at arm’s length. And that’s true for the deals that you’re working on now. But think about some of your existing customers, customers that don’t even really ask about price. You treat them fairly. You create a lot of value. I would take your manager to go visit with those customers and ask those customers, “Hey, what matters to you? Why do you do business with us?” And keep price out of the conversation and keep your manager’s mouth shut if he’s going to start talking about price. The key here is you want your customers to tell your manager, who’s a price seller that, you know what, it’s not about price. As your manager sees this, as he witnesses it, he’s going to start to believe. He’s going to start to realize that price is not the only thing.
So John, those are the tips for you. I hope that helps.
Make it a big day.