Complex Selling Made Effective

Don’t Sell Yourself Short on Pricing Strategies

Louis Columbus
Cincom Systems

 Impatient with stalled sales cycles, protracted lead generation programs, and competitors who bundle services or related products, companies are throwing down pricing too quickly to clinch deals and leaving money on the table as a result.

This may get a few deals closed yet it doesn’t really fix the more fundamental problems that lead to maverick pricing overtaking sales cycles in the first place.

At the center of pricing becoming the competitive weapon of choice is the fact that businesses seem to have lost touch with what really makes value-based pricing work. Being able to anticipate their customers’ needs and develop solutions for them quickly – earning a higher value-based price as a result is what matters most.  Not just putting prices into freefall but anticipating and responding with exceptional value is the solution.   

 What Does Your Company Value More: Trust or Transactions?

Keeping deals going forward and selling is of course the life blood of any company – yet there are way too many companies sacrificing their innate value to just get the next sale.  It’s time to stop and think: “Are your pricing strategies setting the expectation you will always bend on price?” or “Will your pricing strategies redefine your channel management programs due to price protection and co-op changes?” These are important questions to confront when price becomes the weapon of choice.


The Truth about Value-Based Pricing: Art Form in Enterprise Software
 
The enterprise software industry has had the inside track on value-based pricing for some time.  Some would argue this industry has turned it into an art form. 

I recall discussing value-based pricing with one pricing vendor and their unique contracts with a major PC manufacturer that re-set the value levels every fiscal year.  In other words, this PC manufacturer would re-evaluate the contribution of the software vendor yearly and cut them a royalty check based on the value delivered.

The software vendor was indexing online sales and upsells through the customers’ global websites and had been able to index down to each channel they sold through. Value-based pricing measured to the multi-channel level.  It was impressive and they could clearly quantify and communicate their value.

A business intelligence (BI) vendor heard about this practice and attempted to migrate their customers off of maintenance pricing to value-based pricing.  You can imagine this caused a revolt with customers adopting competitor’s apps that had migration support for this vendor’s data models. 

So between these extremes – the foresight of the pricing vendor and their ability to anticipate value delivered over time through multichannel strategies on the one hand – and the BI vendor who tried to play hard ball with its customers and failed.  The answer lies in the depth of insight these two companies had into their customers and how they were changing.

Bottom line: Value-based pricing has more to do with knowing your customers’ unmet needs so well you can anticipate them and be right the majority of the time – earning the value they are willing to pay.  A sure sign a competitor is out of step with the needs of customers is to see their pricing go into freefall.

flickr attribution: http://www.flickr.com/photos/rivard/67698728/

4 Ways Guided Selling Improves Ability to Compete

By Dale Wolf

Guided Selling begins with understanding that manufacturers must deliver exceptional value to customers. In the world of highly complex products with hundreds or even thousands of configured product options, it is alarmingly easy to miss the mark. It is easy to order a product that cannot be built, or to build a product that fails to meet customer budget requirements, or to get so tangled in the complexity that delivery totally misses the customer’s timeline.

Manufacturing managers, at least for the past 30 years, have been almost exclusively focused on cutting cost and reducing risk. Raising revenue has not been the focus. But to ignore the revenue-raising side of the business has enormous cost in a world where supply far exceeds demand. Never before has raising revenue been so critical to your CEO.

But with all the focus of past years on cost cutting, selling processes and supporting technologies have been ignored. Far too many manufacturers of complex products are now logged down under inefficient internal processes, bad habits and internal confusion that winning new sales is a faint hope.

The good news is that manufacturers are waking up.

They are beginning to see selling as a total end-to-end process where field sales activities mesh with internal back-office people and systems.

Guided Selling and Product Configuration enables organizations to analyze and automate customer needs, determine the proper product modules or components, respond rapidly with estimates and bids that can more quickly result in final proposals, quotations and contracts that fit the customer’s unique needs.

Guided Selling automates a company-wide information system and supports the use of this knowledge with channel collaboration between customers, dealers or sales representatives and internal engineering, finance and production expertise. The specific functions of Guided Selling are product configuration, technical calculations, product catalogue, financial calculations, document generation and production.

This results in a simpler, more efficient, error-free and more responsive sales process. Because expert or tribal knowledge is formalized and captured in the guided selling system, sales representatives have direct access to all relevant knowledge and information and the dependence on technical specialists is reduced. Sales representatives using guided selling processes and supporting systems require less specific sales or product knowledge – they can focus on what they do best: learn about the customer’s needs and build closer relationships rather than spending their time chasing down pieces of information for proposal generation.

With a Guided Selling System in place, manufacturers can implement new ways to win business.

I suggest four such rules that are easier after adoption of guided selling and product configuration:

First, Be Different.

I particularly like the slogan used by Mercedes Benz … they claim their cars are UNLIKE ANY OTHERS. I hear too many companies saying the same thing. As a customer, we all want to hear about innovations rather than a "me-too" strategy. What made companies like Mercedes or Google so interesting is that they fundamentally changed the way they help customers solve a problem? These pioneers attacked a customer behavior from a completely different angle to modify an existing behavior, fundamentally changing the ways in which some individuals ride to work or other consumers find information on the Web.

Second, Be First and Fast.

To sell products in an environment of speed and change, companies need revolutionary ideas to draw the attention of those around them. It is important to be first. There is tremendous leverage in being first. Indeed “firstness is more important than fitness” when it comes to gaining economic value from investments in products. Being first in any category is going to give you the edge - being the leader comes from being first.

It's much easier to get into the mind of consumers first that try to convince people you have a better product or service than the one that did get there first. Once you are the leader, a position mostly gained by being first, it is pretty hard for competitors to knock you out -- as long as you keep your products up to date and of comparable quality.

Third, Be Relevant.

In a world of over-supply, customers quickly figure out they are in charge. If you want to create value, you must be focused on what they need rather than what you want to manufacture. Ford originally sold only black cars until Buick discovered customers liked color options. Manufacturers have been racing ever since to create products that are more relevant to the lives of their customers. To create “new and valued” value, we must know our target market inside and out. We should understand their pains and needs. We should be able to anticipate what they don’t now have … problems for which they don’t yet have solutions.

Fourth, Integrate People and Processes

While the processes for manufacturing complex products are almost beyond imagination, consider at least that these processes occur within our own 4-walls. We have considerable control on what goes on inside our plants. The variables are ours to determine.

But this is not so when it comes to the teams responsible for marketing and selling your products. Their variables are largely in the hands of prospects and customers … who have infinite needs … complex specifications to capture … constant negotiation … constant change.

From the world of Henry Ford where all cars were the same … now to the reality of a one-to-one market where we are asking not “what color of black would you like?” but literally “what is it that you want?”

Guided Selling and Product Configuration are Enablers for Sales Reps

Sales representatives using guided selling techniques or systems require less specific sales or product knowledge. Guided selling greatly reduces errors and provides consistency in needs analysis, product configuration and proposal generation. Company knowledge is applied in a better and more consistent way. Quotations are made with less effort, in less time and at lower costs. Win rates of quotations increase due to higher quality quotations including proposals that better match customer needs at prices that are calculated more precisely.

• Guided selling ensures consistent selling best practices
• Guided selling delivers on pricing and order commitments
• Guided selling eliminates errors that lead to configuring the wrong products, pricing, and proposals
• Guided selling increases responsiveness to customer opportunities without incresasing cost
• Guided selling improves profitability by eliminating non-value added activities into the manufacturing process

The Need for Discipline in Selling

By Dan Barrett, CEO, SalesBlade

I read a recent account of a company that brought its field sales team into their contact center to qualify prospects ... alongside their existing telemarketing team. The executives were a bit surprised when they saw the less-expensive telemarketers outperform the field sales team by two to one. I think the answer is fairly obvious to those of us who have come up through field sales. These sales reps got frustrated at the number of calls they had to make just to get one live connection.

Can we outhit an All-Star Baseball Hitter?

The telemarketers were better because they are trained in a process for managing the frustration and for making continuous callbacks as they nurture prospects over the phone. Far too many sales reps are great when face-to-face with a prospect, but working on the phone is a different matter. It can take a hundred calls just to get 10 live connections ... even a baseball hitter with a .332 batting average has a better chance of getting on base. Sales is more difficult.

But here's the rub.

If a salesperson is not actively working the phone to call prospects in his or her territory ... calling every day, then that salesperson is not likely to succeed in the field. When a salesperson masters the phone and makes friends with a discipline that sets aside an hour a day for cold calling and repetitively calling back to the same prospects, that salesperson will be a winner.

One Word Separates the Pros and Amateurs:

Discipline This discipline on the phone, backed by a solid process and great messaging is what separates the pros from the amateurs. That's my opinon ... actually it's not opinion ... it is experience talking. 20 years selling and making millions of dollars for my clients has taught me that you need the intelligence and the product knowledge, but more than anything else, you need the discipline to use the phone -- day in and day out.

Making Guided Selling Pay

Louis Columbus

Cincom Manufacturing Business Solutions

Guided selling is new battleground online due to the success of online catalogs and the increased reliance on sales and product configuration online selling strategies. For an excellent overview of this area be sure to read Rob Bois’ report, Sales Configuration – From Efficiency to Excellence. Rob is Research Director with AMR Research and a member of the Market Services team. He is the best analyst covering product configuration in the industry today.

Just serving up selections based on guided selling selections is not enough to compete anymore. Serving up knowledge and insight is where competitive strength in this online selling strategy is found.

When retailers, mass merchandisers, manufacturers and supplier networks get into this perspective the use of guided selling opens up many more opportunities. They include:

• New product introductions of more complex, difficult-to-sell products. Consider guided selling as part of your evangelism efforts on an entirely new product category. Granted, face-time of your best sales teams are required to close on these opportunities yet guided selling is a great tool for evangelizing a new product category and educating the industry and your customers.

• Guided selling isn’t just for commoditized or close-out products anymore. Instead of using guided selling for products competing only on price or being closed out, consider making this sales strategy an integral part of any multichannel launch strategy. There are manufacturers including Suzuki, Toyota, and others using guided selling to rejuvenate selling strategies on their mainstream vehicles.

• Guided selling works as a lead generation strategy when they are designed to solve customers’ complex problems first and sell second. One manufacturer of power systems relies on guided selling to continually keep resellers, dealers, and distributors informed of how their products can be combined to solve customers’ complex problems. Guided selling is becoming their knowledgebase.

There’s a difference between sales and product configurations strategies and the use of guided selling. Rob Bois makes this point in the report mentioned at the first part of this blog entry.

Defining the differences between assemble-to-order, built-to-order, configure-to-order and engineer-to-order by their use of sales or product configuration and guided selling is briefly defined in the table below.

Fitting the Customer's Needs with Guided Selling

Guided Selling simplifies and automates the maintenance and deployment of all company knowledge and information that is required to effectively analyze customer needs, define the right solution and generate a proper and relevant proposal. A functional definition of the solution is provided to the customer, complete with commercial aspects of the proposal, such as prices, margins, texts, illustrations, lay-outs etc. In addition, the technical specification of the solution (such as bills of materials and routings) is generated for manufacturing and distribution.

How Guided Selling Works

Guided Selling is put in practice by means of an information system that supports the central management and maintenance of company knowledge and that supports the use of this knowledge by customers, dealers or sales representatives. Such company knowledge is stored in models, which are published to users by means of interactive questionnaires. The knowledge stored is related to functional, commercial and technical aspects of the customer needs and the solution. The proposal specific functions of Guided Selling are product configuration, technical calculations, commercial calculations and document generation.

Benefits of Guided Selling

Guided Selling ensures a simpler, better, more efficient, error free and faster sales process. Since customers, dealers and sales representatives have direct access to all relevant knowledge and information, the dependence on others, such as technical specialists, is reduced. Sales representatives using Guided Selling techniques or systems require less specific sales or product knowledge. Guided Selling greatly reduces errors and provides consistency in needs analysis, solution definition and proposal generation. Company knowledge is applied in a better and more consistent way. Quotations are made with less effort, in less time and at lower costs. Success rates of quotations increase due to higher quality quotations including propositions that better match customer needs at prices that are calculated more precisely.

Sales representatives using guided selling techniques or systems require less specific sales or product knowledge. Guided selling greatly reduces errors and provides consistency in needs analysis, product configuration and proposal generation.

Company knowledge is applied in a better and more consistent way. Quotations are made with less effort, in less time and at lower costs. Win rates of quotations increase due to higher quality quotations including proposals that better match customer needs at prices that are calculated more precisely.

·       Guided selling ensures consistent selling best practices

·       Guided selling delivers on pricing and order commitments

·       Guided selling eliminates errors that lead to configuring the wrong products, pricing, and proposals

·       Guided selling increases responsiveness to customer opportunities without incresasing cost

·       Guided selling improves profitability by eliminating non-value added activities into the manufacturing process