Friday, September 16, 2011

Sales approaches

There are a number of different selling approaches. A good brief article about the different types of sales approaches can be found at:

In addition to the different general selling approaches there are also a number of different sales focuses. The sales approach or sales focus are frequently intended to drive buyers away from negotiating on a cost basis.

Cross selling as part of servicing an account, offering additional or add on service is something that we see every day. Have a bank account? How many other products or services has that bank tried to sell you? That’s cross selling in action. The goal isn’t to help you. The goal is to use the existing relationship to have you use them instead of others and not consider any differences that may exist between their products or service and their costs versus others.

Solution selling has been one of the most common approaches to selling. Years ago I read Xerox sales training materials that were focused on solution selling. First you identify the problem or pain the customer has. Demonstrate how the features of your product or service help solve that pain. Convert those features into benefits that the customer will see and be willing to pay for. The goal in solution selling is not just to make the sale, it’s also to differentiate your product from the competitions so you can charge a premium over the competition. When buyers see solution selling, they need to do feature / value assessments to determine if the difference in the features provides significant incremental value to substantiate any price difference.

Up selling is sales approach that you all should be familiar with. A company advertises a low price product and as soon as you get there they try to get you to purchase something different that costs more. I also think there is such a thing as down selling and that usually occurs when a buyer sets a target price they want to pay for an item and rather than negotiate price on the original item they offer a different lower cost model that fits within the Buyer’s targeted price. The goal of down selling is rather that sell for less they want to give you less.

Value added selling is not much different that solution selling. It’s focus is on highlighting the value a product or service will provide, again needing the customer to convert that potential value into a benefit that customer will be willing to pay for. Suppliers want to use their unique value to differentiate themselves from the competition so they can charge more. In my December 15, 2010 blog post I wrote about the concept of value equivalence that some companies use for strategic price setting. Value equivalence is also a tool negotiators can use to negotiate cost. If you know what others charge that don’t have that feature you can identify the incremental cost a supplier is asking you pay for that additional feature. Use that difference to negotiate a better price that is consistent with the real value of the what’s different, not the price they want to charge. Make sure that the Supplier doesn’t know that you need or want that feature so you can use the other products as competitive benchmarks.

Return on investment or ROI sales approaches are intended to do two things. First, it is to make the sale easier.What could be easier than buying something that pays for itself? It’s also intended to get the focus away from negotiating cost and have you focus on the savings you will get from the purchase. You’ll save even more if you purchase it at the right price, so don’t be blinded by the savings. Always think about the cost.

Companies also have selling focuses that are intended to try to reduce your negotiating on a cost basis. It can be the prestige of the company or the product or services they sell. It may be the distinctiveness of their product. It can be the simplicity of doing business with them. It could be the design or aesthetics of the product. They could have planned limited availability of the product where “only a select few” can buy it. Service support and commitments to customer satisfaction can do it. Having unique or special things that other suppliers don’t offer can also do it especially for a unique portion of the customer base. A good example of that in today’s market are products that are green / environmentally friendly. Want to bet that a large percentage of those are sold at a premium over products that aren’t green? Every go to a grocery store and see regular tomatoes and organically grown tomatoes? The organic ones always cost more. Does it really cost that much more to grow them organically or are they just charging a premium for customers that want to buy organic? Every company that has these individual selling focus has or will negotiate on price, they would just prefer not to because if they can avoid it they make more money.

If you walk through the door of a Rolls Royce® dealer and they have only one car in stock a sales person will react differently than if they had 20 sitting in inventory that they had been paying floor plan interest on for a while. In the first example the selling attitude may be that “if you need to ask the price you probably can’t afford it”. In the second example the attitude would probably be more like “let’s find a way for you to take this car home today”.

The more you know about sales, sales approaches,sales focuses and sales channels,the better prepared you are for the negotiation.

To learn about channels check out one of the April 11, 2011 posts called Channels.