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Selling Value Vs. Being a Commodity
Written by: Greg SchinkelArticle Overview: Buyers and sales reps are in a constant battle. The buyer is trying to strip away the perception of value to drive down prices while the sales rep is left to defend why the buyer should be willing to pay more. The sad truth is that sales people are often lacking in the skills required to sell value. These tips will help you defend your profit margins from erosion.
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Selling Value Vs. Being a Commodity
Do your customers keep pressuring you to reduce prices by saying that they are getting more favourable terms from your competitor? It is in the buyer's best interest to convince you that what you provide is a commodity. That way, they transfer more profit margin from your company to their's.
Is what you provide really a commodity? Perhaps to some extent, however your company likely offers a bunch of value-added features to your customers, and they are willing to pay for it, but will take it for free if you give it away.
Purchasing agents get considerably more training than sales people. There are more professionally trained buyers than professionally trained sales people. And so the sales people can get slaughtered in negotiations, coughing up concessions and getting little in return.
Action items to justify value:
- List all the features and benefits your company offers, that provide some value to your customer. These may include convenient location, no charge freight, expedited shipping, smaller order minimums, onsite merchandisers, consignment stock, informative sales people, helpful customer service, accurate billing and credits, flexible payment terms, industry leading products, in store point of sale displays, large selection, etc.
- Determine which customers value these features and benefits the most. If your customer doesn't value something you offer, you have a choice: Find customers who do value it; or stop offering it and reduce cost.
- Communicate the Value: Sales people need to be able to articulate the value proposition to the customer and ask great questions that build the desire of the customer to want those value elements.
- What if your competitor gives it away for free? If your competitor gives it away, chances are they are making it up with margin or volume or have found a way to offer the benefit without incurring cost. Or they may have given it away because everyone else was. That doesn't mean that you have to.
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Article Tags: commodity, leadership, perception, profit margins, sales reps
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About the Author: Greg Schinkel RSS for Greg's articles - Visit Greg's website  Greg Schinkel and his team help entrepreneurs and business leaders improve profit and grow their business by providing management training, supervisor training, team leader training, lead hand training and executive coaching. The challenge for many successful organizations is that leadership becomes diluted from the senior leadership team to the front line leader. For organizations who choose to be union-free, Greg and his team equip leaders to maintain excellent employee relations while focusing on results. For unionized workplaces, the focus is how to effectively lead employees within the boundaries of the collective-agreement while achieving results. Greg Schinkel has reached more than half a million people through his writing, broadcasting, speaking, training and coaching. Greg has appeared on television, radio and in print more than 200 times for his leadership expertise. He is co-author of the best-selling book Employees Not Doing What You Expect, published in North America, India, Latin America and Korea. Since 1992, Greg has owned and operated Unique Training & Development Inc., a leading provider of supervisor training, management development, team leader training and lead hand training. His website is http://www.UniqueDevelopment.com Click here to visit Greg's website   Managing Change Engage people to implement change Selling Value Vs Being a Commodity Great Leaders Know the Value of Candid Feedback Leadership Tips to Maintain and Cultivate Innovation and Creativity How Leadership and Corporate Culture Impact Profitability |
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Re: Kevin's Case Study #10 - When to become an entrepreneur?
- When the bug bite you. A lot of successful entrepreneurs started in their teens or at school. Selling sweets to fellow students or lemonade to firends in the neighbourhood.
Re: This is Marketing Warfare!
- Hey GT,
I guess this was from a while back, and it'll test your memory a bit but could you possibly elaborate on Unique Selling Proposition?
Can you give us some examples of good USPs?
Blog pinging
- Thanks Martin - yes, I do ping and it has been very effective. I'm currently on the first page of Google for Mastermind Group and on the second page for Selling to Small Business.
Business magazines
- Fast Company is pretty good if you're into technology although it can be very on the edge.
Entrepreneur has become one giant advertisement and I cancelled my subscription.
Selling Power also has some useful content if you're looking at improving your sales skills / presentations.
Del Castienne - International Business and Project Brokers
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Del Castienne is more than just a brokerage, as we facilitate Private International Venture Capital for Business and Projects from Commodity Speculation Transactions, MBO, MBI, M&A, Bridging Finance, Patents, Branding, JV, Corporate Advisory Services, Business Plan Development, etc..
Del Castienne is linked to 1200 private international Venture Capital consortiums and Funding Syndicates with a funding capacity of $ 115 billion and 5000 international Investment Bankers and Business & Project Brokers. This in itself should provide you with a gateway to the best source of funding in the world.
Through Del Castienne any entrepreneur can have up to a potential success rate of 25% (conditions apply) with absolutely no up front costs.
Del Castienne charges a maximum of 5% commission which is far below the international standard of 10% - 12% on project value.
If you are tired of running back and forth with countless dissappointments, please give us an opportunity to assist you. Our minimum Venture Capital amount is $1 million and we a Commitment Letter can be provided with in 30 days after formalities are in place and your information was received.
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