Sales 102 - The Pitch Deck, the Price Reduction and the Data

Posted by Dave Kurlan on Thu, Sep 29, 2016 @ 09:09 AM

Pricing.jpg

Recently I met with a CEO whose salespeople were not closing enough business.  We had just evaluated their sales force and I had the answers as to why their sales were so underwhelming.  Before we could explain what was causing their problem, the CEO said something along the lines of, "We are going to create a new pitch deck and reduce our prices. That will solve the problem!"  

They weren't suggesting a small price change either.  It sounded like an 80% reduction and their reasoning overlapped with one of the contributing issues that we identified.  Their salespeople weren't reaching decision makers which raises more questions.  Why weren't they reaching decision makers and could anything be done about it?  Would lowering their prices solve the problem or did the issue go deeper than that?

It's not terribly unusual when salespeople are unable to reach decision makers but there are always several potential reasons as to why:

  • Tactical - they simply don't know how to get the decision makers engaged in the conversation
  • Conceptual - they don't think they need to
  • Sales DNA - their weaknesses won't allow them to ask to get the decision makers engaged
  • Commitment - they give up when the going becomes too difficult for them
  • Fear - they aren't comfortable speaking or meeting with that level of decision maker

What did the data from the sales force evaluation tell us?

In the case this company, the salespeople didn't believe they needed to reach the decision makers.  As it related to reaching decision makers, their Sales DNA was OK.  Commitment and Fear factors were OK too.  So if they didn't believe they needed to, isn't that lack of direction, inspection and accountability on the part of management?

The other big issue for this sales force was their Sales DNA as it related to money and decision making.  To the salespeople, the amount they were asking for was, "a lot" but the new reduced amount will probably be a lot too.  They also "understood" when their contact stalled to talk with a decision maker who would routinely not be interested in spending that much money.

The Solution

The appropriate solution would be for us to help their salespeople become more effective at getting the decision makers engaged in the conversation and at selling the value of their offering, while helping management coach to those outcomes.  

Lowering the Price

Their reasoning for lowering the price is that the contacts their salespeople are talking with would supposedly have the authority to spend the lesser fee without requiring approval from the decision makers.

Can that work?   

In my experience, if the salespeople don't reach decision makers it won't matter how much they are charging.  They'll continue to hear the same stalls, especially if they continue to begin their first meetings with the pitch deck!  The pitch deck is simply a crutch that turns a potential two-way conversation into a one-way presentation and that makes matters worse instead of better.  If they do convert more often with the lower price, they'll still have to close 5 times as many deals to bring in the same revenue.  So if they are closing 1 of 10 today, and they close 3X more deals but at 1/5 the fee, they will lag 65% behind their previously unacceptable run rate.

On the other hand, if they become effective reaching decision makers, their sales cycle will be significantly shorter, their win rate will improve by 3-5X and at the original fees, their revenue will increase by 3-5X as well.

Hermann Simon wrote the bible on pricing and questions related to how your product or service should be priced can be answered in his book, Confessions of the Pricing Man.

"The question to be answered is, should they do what's easiest and lower the fees, or do what's best for the company and fix the problem?"

It's an obvious choice unless you're the one who has to make the choice, with the future of the company depending on the decision.

Topics: Dave Kurlan, Sales Force, Sales DNA, pricing, selling value, OMG evaluation, pitch deck

Key Account Sales - More Than Just Important Accounts

Posted by Dave Kurlan on Mon, Nov 02, 2009 @ 09:11 AM

Over the last several months I have engaged in several on line disagreements about the importance of asking questions early in the sales process.  More than one sales expert has claimed that asking questions violates trust.  More than one marketing expert has claimed that asking questions is offensive.  My position is that unless your salespeople are asking lots of good, tough, timely questions, they won't uncover their prospects' compelling reasons to buy and buy from you instead of your competition. In addition, you won't create the urgency you need to move the opportunity forward and prevent delays, put-offs and ambivalence.

My guest on last week's edition of Meet the Sales Experts was Sales Development Expert Hal Thorsvig.  We were talking about psychology, the art of asking questions and listening and he said that "when people are sharing their emotional reasons for buying they are into the highest level of rapport there is!"  He added that you should "ask questions with a true sense of wonderment and curiosity".

Hal also had some interesting thoughts on Key Account Sales where, according to Hal, there is much more to it than just identifying important accounts and assigning account managers to them.  He said you must have:

  • strategy to ward off competition
  • ability to deal with multiple buying influences
  • great control/understanding of the needs of each of those influences 
  • ability to maintain the account (maintain should be interpreted as retain)
  • ability to grow the account

Are you or your salespeople struggling with ways to justify pricing that is being attacked with unrealistically low prices from your competition?  Listen to the show for the great Uncle Charlie story that Hal told. Hal's story is bound to put an end to that problem!

Click here to listen to the show.  Click here to contact Hal.

(c) Copyright 2009 Dave Kurlan

Topics: Dave Kurlan, sales management, Salesforce, Sales Force, pricing, key account sales, hal thorsvig, price objections

Differentiating a Pricing Strategy from a Sales Strategy

Posted by Dave Kurlan on Fri, May 01, 2009 @ 13:05 PM

Do you subscribe to Verne's Insights - 10 Minutes with the Growth Guy - Verne Harnish?  You should.  It's the best newsletter I get - one I actually read each week!  In today's issue Verne wrote that his favorite quote from last week's Sales & Marketing Summit was Mark Burton's, "Discounting is the crack cocaine for business today".  He also shared that "instead, Burton says companies can use a 'good, better, best' strategy to provide various pricing levels without simply giving away margin."

Wait a minute!!!

Let's differentiate between this very sound pricing strategy yet unsound selling strategy.  From a pricing perspective, this strategy allows you to effectively position your company, brand, products and services wherever you need them to be, based on markets, competition, reputation, quality and business strategy.

However, from a selling perspective, never provide your prospect with even two, let alone three options.  It's difficult enough to close business in a timely manner today and you certainly don't want to be the cause of a decision making delay.  

Let's assume that your salespeople have identified the compelling reasons why their prospect would buy, and buy from you, rather than your competition.  Let's assume they have also positioned themselves as experts, established value, and learned how much their prospect will spend to solve their problem.  It is only then that your salespeople will present both a needs and cost appropriate solution.  If they have effectively met each of the above criteria, then in their expert opinion, there can only be a single ideal solution that is both needs and cost appropriate.  More than one and they didn't listen effectively.  More than one and they may appear uncertain.  More than one and they have provided their prospect a reason to think it over.  Less isn't more, one is more.

Price with options, sell with certainty.

(c) Copyright 2009 Dave Kurlan

Topics: Dave Kurlan, Salesforce, verne harnish, mark burton, pricing, sales strategy, salespeople

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Best-Selling Author, Keynote Speaker and Sales Thought Leader.  Dave Kurlan's Understanding the Sales Force Blog earned a medal for the Top Sales & Marketing Blog award for six consecutive years. This article earned a Bronze Medal for Top Sales Blog post in 2016, this one earned a Silver medal for 2017, and this article earned Silver for 2018. Read more about Dave.

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