If you are working in a traditional repeat-business company, you probably have a field based sales team. If so, the team are probably calling on the same customers on a monthly (maybe more frequent) basis. Because your sales team is well trained and enthusiastic, as well as servicing their existing customer base, they will be trying to follow-up new leads and find new customers by networking with other sales people, searching directories and asking existing customers who their main competitors are.
In a nutshell, they’re pretty busy!
There is also a good chance that they have some latitude to negotiate prices; I don’t mean customer terms here, I mean the price of individual items. The customer asks, “how much are your widgets?” and your sales guy replies “£11.29”. The customer then says “Acme Widgets is doing them for £10.99”, so your guy matches the price and walks away with the order.
Well, that’s a result isn’t it?
I don’t know, because, just like you, I don’t know the price at which Acme is selling widgets!
Here are 5 good reasons why your sales team shouldn’t do it:
1. Because if the customer can buy from Acme at £10.99 then, a) your price is too high; b) your product is better, c) your service is better, d) your availability is better. If it’s a), then your prices need reviewing generally and papering over the cracks with one customer won’t resolve the wider issue and not all customers will tell you, they’ll just buy elsewhere. If it’s b), c) or d) then you deserve a premium don’t you?
2. Because they don’t really know the Acme price, only the customer’s version of it and buyers always tell the truth don’t they? What’s needed here is some properly structured market research rather than one buyers opinion.
3. Because by freeing the sales team from price negotiation, you enable them to get back to real selling; for example, explaining the company’s proposition and waxing lyrical about your service, quality, availability, delivery frequency, superb sales team, extensive product range etc. Let’s face it, Acme probably doesn’t have them in stock anyway and if it does, it’ll be next Friday before it can deliver them.
4. Because the customer may not be set-up on the right deal. Sales people can be dilatory about reviewing customer terms – it’s admin and their job is selling, right? If your widgets and Acme’s are the same and all other things are equal, it may be time to review customer terms.
5. Because it wastes time and effort. Customers will soon understand that your prices are competitive and the sales team has no price flexibility, so that game has gone away, leaving more time to discuss new ranges and extensions, this month’s specials and new product launches.
The sales team won’t like it much to start with, but the good ones will soon see the benefits as will the company from the extra sales at higher margins that will result from it.
Happy New Year!
Crockett. January 2007.
Do you wish you could increase prices, but are afraid you will lose customers? The answers may be right here: Please tell me how to increase prices without losing sales!
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1 comment:
Nice to know that you shares the reasons what shouldn't the sales team do in discussion about channel management solutions. it would help to go forward to their goals.
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