According to Hugh Macfarlane, the managing partner at the Melbourne-based sales consulting group MathMarketing, a common problem in technology is that sellers get too caught up in the technical capabilities of their products, rather than taking the time to assess the needs of the potential client. He says ultimately they fail to understand the buyer’s problem and why it is that they need their value.
“Understanding what the customer’s pain is takes no longer than pulling out your brochure,” Macfarlane says. “It’s a salesperson’s job to understand how that plays out per client. It is a questioning technique that you can train for -- continuing to ask ‘why?’. That consequential logic flow is a technique that people can understand, but they need to be trained in it to follow it in the cut and thrust of a sales call.” Macfarlane notes that salespeople are often capable of meeting the needs of the client, but fail to motivate them to do anything about it.
“If you understand the problem from the customer’s perspective, then you’ll understand why they want the value, but you’ll also be able to help the buyer understand why they should act, and the cost of not acting.”
“If you don’t understand why the customer should be buying something, then you simply put more sugar on it. And that’s really lazy selling. It is all about failing to understand why it is in the best interest for the customer to act, and helping them to understand that. And if you don’t know the problem the customer is going to face if they don’t act, then all you are going to talk about is your product.”
Gil Thew has spent much of his working life in value-added sales, with companies such as the Apple reseller Logical Solutions, and later as the head of local operations for Sun Microsystems’ software arm, SunSoft.
Now Thew finds himself trying to teach others what he has learned as head of the sales consulting company Wolken.
“You’ve got to understand the customer’s problem so well that they will pay at a premium to get you,” Thew says. “The important thing about a professional salesperson is they don’t qualify just on price. They qualify on their having a compelling reason to buy, and having the right product and right time frame.”
“And if the answer to any of those is no, they walk away. The amateurs think you have to win every deal that you go for. But you don’t -- you pick the deals you can go for.”
According to Thew, the first key issue in selling value is understanding the customer’s decision-making process. Those companies that can map their offering against the decision-making process of an organisation become price-makers, rather than just order takers. Thew says that in most organisations there are multiple personnel that will influence the outcome of a sales pitch, including finance and procurement, as well as the IT manager and chief executive. To focus on one is to fail to take into account the role of others in influencing the outcome, and is a common factor in losing business.
Also, there can be a big difference between what is specified in a tender, and what is actually purchased, as the requirements specified are often merely the minimum that the customer believes they need to achieve their goal. “Rarely does a good CFO want the cheapest deal -- they want value,” Thew says. “So they start working on total value, with minimum risk. And to them, higher price gives them that. This is what the value salesman works on -- he finds out what the individuals in the decision-making process want.”
Thew says it is also important to qualify whether a decision is even going to be made. Questions to ask include: what are they making a decision on, what is their budget, when will they make their decision? The salesperson will also benefit if they can demonstrate that every month spent in bargaining and negotiation is costing the client money.
“You are wasting your time talking to someone who is not going to make a decision, and no amount of discounting is going to convince them. But if somebody is asking ‘how soon’, rather than ‘how much’, then you can set prices.”
Discounting the sales profession
Discounting erodes margin, affecting the health of the overall business. But the temptation to cut prices is easy to succumb to when the client starts dithering over a deal.
So what is it that enables one salesperson to convince the client of the value of the deal, whereas another wilts under pressure and drops the price?
The general manager for sales and marketing at the Melbourne-based integrator Brennan IT, Matthew Lovegrove, has seen examples of both types of sales person. The latter sales behaviour he ascribes to a lack of confidence in either themselves or their product. But even when the salesperson understands the requirements, Lovegrove says many are too afraid to ask the required follow-up questions, such as what the budget is, and when are they looking to spend it.
“[As a manger] you always want to try and knock that out of people, because it does become an ingrained behaviour,” Lovegrove says. “It means making sure you train your sales people so they can talk about your value-add -- what is it that your product has over competitors that are charging less. So you have to be able to arm them with those explanations for why there is a premium for your products.”
“And you need to help them understand that if the customer is providing an objection, it just means that you haven’t uncovered something or addressed something properly.”
Some companies even go so far as to open their books to their clients, in order to demonstrate exactly how much margin they are making. The NSW state manager for sales at Dimension Data, Michelle Tea, has at times asked trusted clients how much margin they think her company is making off their deal. “They actually always say higher than what we actually make,” Tea says.
“Then we will look at all the things that they absolutely want, such as warehousing, logistics, staging or whatever, and cost them out. So the deal is priced per item. That gives the customer a level of trust with us, and they like that.”
So-called drive-by shootings still happen, where the client tries to pressure a supplier to match the cheapest quote. But by opening the books to a client, Tea says Dimension Data has been able to demonstrate the true cost of its value-add, and retain a premium price for component pieces of a deal.
“We did get shopped on price. We did have to drop out price a little. But we didn’t get shopped to the bottom level price.”
Building value
At Brennan IT, Lovegrove has implemented a 10-step sales methodology, to guide his salespeople through the value-added sales process. This formalisation or process assists in eliminating the “luck” component from selling by ensuring greater consistency.
One of the keys items is research, with the first step being the creation of a pre-meeting plan. The methodology then moves through other stages, such as uncovering needs, discussing budgets and meeting with decision makers.
But according to Tea, nothing beats longevity when it comes to building a value-based sales relationship. “If you don’t have a long-term relationship and haven’t been involved with the sale for many months and been able to demonstrate value through that cycle, then the only thing you can really do is drop the price, because a lot of people can offer a similar type of value to you,” Tea says. “If you don’t have that previous relationship, and have demonstrated your customer service and demonstrated some of the skills of the company, then it is very hard to demonstrate that value.”
But not impossible. Tea says that when it comes to greenfield clients, her approach is to start small, and identify the one thing that the client is having the most trouble with.
“They start you out on a little thing, and then they give you another thing, and another, and another. A lot of it is about patience. You just have to keep going back. And they’ll open up more and more about their problems. Because you want to talk to a customer about their problems, not what you can provide them. You’ve got to build trust with a customer. Once they trust you, they tell you everything. And that’s how you build value.”
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