How to get your sales team selling value instead of discounting
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Does your sales team sell your products (like, in exchange for money), or does it give them away as generous sweeteners to guarantee the sale of something else that will hit their targets? Or to put it in another way, does your sales force truly understand the value of your products and can it articulate the benefits to the customer?
I’ve observed a couple of extremes of sales behaviour in enterprise sales. At one end of the scale, there’s the misconception that a product is worth far in excess of what the market and competitors expect “because that’s how we’ve always done it”. In these cases a customer will tolerate the pricing for just about as long as it takes them to find a cheaper alternative.
At the other end of the scale, the sales guys and gals don’t see themselves paying more than a certain price for a product and so can’t see the customer ever will either. So they go in on the back foot to the customer and guess what, the customer negotiates the price down with ease. This is a major issue because the perceived lack of support for the value of the product shown by the salesperson will create doubt and uncertainty in the mind of the customer.
If your sales guys and gals don’t see themselves paying for the product, they won’t expect the customer to either.
A variant on this is where the salesperson sees no value at all in the software and gives it away to sweeten a tricky negotiation for something they are more inclined to sell, either because it benefits their commission plan or because bringing in something over nothing gets them that little bit closer to target. After all, software doesn’t cost us anything, right?
Sound familiar? The problem is that at this point the salesperson is no longer selling, but is simply distributing free gifts.
So here you are as the product manager. As is typically the case, you have no direct authority over sales behaviour. So what can you do?
Chances are that you’ll struggle to change behaviour if you try to talk round each and every salesperson individually. If you want to influence sales behaviour, you’re going to have to demonstrate there is a sufficiently significant problem to mobilise senior management to effect a change on your behalf. Tricky, but by no means impossible.
A good start is to gather some evidence to illustrate the problem:
- Establish the current level of discounting on your product
- Find out whether your list pricing is indicative of the market value of your products
- Benchmark your typical sale price against equivalent competing products (if you have that competitive intelligence)
- Show how much revenue would have been made if sales had sold the products at list (or expected sale price if more appropriate)
- Ask your salespeople one question: how confident are you at selling the value of product X to prospective customers? Make them answer on a scale of 1-10
You could then approach the VP Sales with some ideas that will help him/her reach corporate targets. Some great ideas I’ve seen work wonders have been:
- Training, formal assessment and accreditation for the sales force. This will make the sales force more effective by equipping them with the knowledge and confidence to sell the value and benefits of a product to a customer. Heavy discounting can be a symptom of a lack of this type of knowledge.
- Restructured incentives to encourage the desired behaviour. Simply put, salespeople tend to be in their line of work because of the potential return. A balance of carrot and stick in the incentives can be an effective instrument of change. Beware though, as this can be easily construed as you attempting to tell Sales how to do their job.
- Concise product crib sheets. The idea is to provide at-a-glance soundbites illustrating the benefits and value of the product that the salesperson can weave into their conversation with a prospective customer. I’ve seen mouse mats, one-page laminated sheets, flipbooks – all are good.
- Case studies and customer references. These are immensely valuable for overcoming objections, particularly if the salesperson can cite a positive ROI story from a company the prospective customer has heard of, or even better, measures themselves against.
- Sales workshops. Encourage the sales team to attend short (<1 hour) sessions with their peers and you, the product manager, to share the challenges, obstacles and objections they’ve encountered when selling your product. Rather than attempt to answer each point yourself, open up the problem to other salespeople. Get them to share experience of what works – they love to talk about their own successes. Use these sessions to improve the product crib sheets.
If all of this is already happening, re-evaluate how effective each area is by asking your salespeople. This can give you a point to start investigating.
I hope these practical suggestions are helpful. Let me know what you think in the comments.
Further reading #
- A great post on Jason Cohen’s blog, a smart bear: Discount gambit
- Forrester’s Counterintuitive CEO blog: CEOs want better sales forces
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