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01.25.07


Stop Margin Erosion At The Point Of Sale

By Jeff Thull

What do you do when faced with a potential customer who is relentlessly insisting on a discount?

Even though there's no doubt in your mind that your product or service is worth every cent you're asking, you also know that there is an army of competitors ready to cut their price and do whatever it takes to make the sale.

Being forced to cave in on price is frustrating, but you must admit, when faced with a customer determined to go with the lowest bidder, it's winning the sale "at whatever cost" that's most tempting. If you play the price game, you will ultimately cut into your profits, allow commoditization of your valuable solutions and watch margins erode away. The hard truth is, if your salespeople are already cutting a few percentage points off the price to make the sale, they are already failing their company and their responsibility.

To remedy discounting, an integrated, cross-functional approach to develop and deliver compelling whole solutions is required for thriving and winning in today's complex business-to-business environment. If you transition to becoming this kind of solution provider, successful value achievement will be your future, and the desperate game of low bidding becomes history. So how can you ensure that your salespeople won't cave in on price and compromise margins and profitability? What can you do to prevent margin erosion at the point of sale? Here are four key tips:

1.Make sure your salespeople know the value of your products and services and how it links to the customer's business situation. This is the key to creating value and is at the heart of selling with integrity and credibility. A salesperson must understand the departments that are most affected by the solution, and the financial impact of his solution on various entities within the entire company . . .

If this sounds like a lot of work, well, it is. But I like to tell my clients that spectacular success is always preceded by unspectacular preparation. Understanding the customer's critical issues, dissatisfactions, and frustrations, plus recognizing the business opportunities that arise from them, takes research, time, commitment, and dedicated work.

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2.Make sure your people can help the customer calculate the cost of the absence of your solution. Before your salesperson can offer a remedy, he must be able to firmly establish the absence of your value. He must help the customer identify physical symptoms of his problem and show him that multiple departments are suffering. Remember, if there is no perceived lack of value-no "measurable discomfort"-there will be no sale.

Pain is the most basic human motivator for change. It is the natural defense mechanism that tells people that if they don't change and deal with a problem, they will face consequences. And of course, change itself is painful. Therefore, change will not occur until an individual or company recognizes that the pain of change is less than the pain of staying the same.

Continue reading this article.

About the Author:
Jeff Thull, CEO of Prime Resource Group, is a leading edge sales and marketing strategist. He has designed programs for companies like Shell Global Solutions, Seimens, Microsoft, and Georgia-Pacific. Jeff is author of best selling books Mastering the Complex Sale and The Prime Solution, and his latest book Exceptional Selling: How the Best Connect and Win in High Stakes Sales. To download Chapter One visit http://www.primeresource.com, 1.800.876.0378.

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