In today’s business landscape, the number of calls it takes a salesperson to close a sale has more than doubled from what it was ten years ago.
In 2007 it took an average of 3.68 cold call attempts to reach a prospect. Today it takes 8, and as more and more selling tools are automated or move online, sales executives are becoming less and less a part of a customer’s buying journey.
Meanwhile, companies and sellers are struggling to resist the pressure to issue price cuts in order to close a sale. In a market like this, maintaining profitable margins when selling against lower-priced competitors can be intimidating if you don’t know the right tactics. Let's look at a few things you can do to ensure your sales team sells at full price and beats the competition.
Why Profit Margins Matter
Most salespeople are good in persuasive speaking, but in order to make the case for higher prices, they first need to know what makes their product or service worth a higher cost, and why it’s in the best interests of the company to decline requests for price discounts. The best way to do this is to understand the profit margin calculations.
We calculate the gross profit margin using this formula:
Gross Profit Margin = (Total Sales $ - Cost of Goods Sold)/Total Sales $
>Subtract the total amount of sales from the cost of goods or services sold, then divide by the amount of sales number. This will give you the percentage of your gross profit margin. It’s important to know the average gross profit margin in your industry as this number will tell you how profitable your business is compared to your competitors. Margin analysis will help you and your team to understand the reasons why the company’s future depends on not giving in to price pressures.
Here’s a list of strategies to support your sales price:
1. Believe in your Price
Sellers have got to make their prospects believe in your price. Coach your team to get rid of any language that makes the price sound too high. To successfully garner higher prices, also known as skim pricing, it often requires the customer to place a high value on your product or services.
2. Know Your Competition
Your sales team needs to know your competitor’s products and prices. Whenever possible, buy from the competition to experience their product and service. Service quality is also a critical factor in accomplishing closed sales deals at higher rates. Your team has to be 100% confident that your company not only offers superior products, but is also faster, and friendlier than the competition.
3. Deliver the Best Value
What do your customers want? Understanding the needs of your prospects makes a big difference in getting a higher price. There are two sets of needs for every prospect: explicit and implicit needs. Explicit needs are the basic fundamentals of your deal like quantity, duration of contract, delivery, and features. Implicit needs involve less tangible things like reputation, credibility, and brand value. The latter is going to play the biggest part in winning at higher prices.
4. Realign Your Sales Department
Now that you have a strategy for successfully selling at higher margins against lower-value, lower-cost competitors, it’s time to get your sales team on board with your new process.
Here are a few tips to ensure your sales team is fully aligned with your new strategy:
- Train your sales team with the right objection handling lingo
- Motivate your team by explaining the benefits of the new strategy for them and the company
- Measure how well the new procedures are working as compared to the old strategy
- Reward your team when they hit certain milestone goals
5. Now Put the Right Tools in Place!
So you’ve got a new pricing strategy and best practices in place for making your prices stick.
Here are some things you can do right now to help your team:
- Provide continuous training and easy access to process automation tools
- Make sure you are able to train your sellers personally on all sales software
- Collect data on adoption of tools within your sales team
- Put a sales enablement initiative in place to help your team find the information they need faster
- Install an automated system to help sellers find and tabulate correct pricing
6. Speedy responses are mission critical for closing deals at higher prices.
Research shows that 35-50% of sales go to the vendor that responds first. To sell at higher amounts, your company needs to be faster and friendlier than your competition, and also demonstrate that you aren't afraid to discuss price. Make sure your team has quick access to info sheets, product listings, benefit statements, and any other sales collateral they need.
A CPQ (Configure Price Quote) tool is incredibly effective in speeding up price discussions. Verenia CEO, Victor Pellicano says, “We’ve seen companies have dramatic results across their entire sales teams when they first get access to a CPQ tool.” Solutions like this and other process automation tools should be part of your sales enablement initiative.
Selling at higher prices without offering discounts can be difficult without tactics that support successful deal flow. To avoid cracking or wavering in their sales efforts, sellers need full confidence in the value of their product.
Remember, it’s always in your power to stop issuing discounts and price breaks. It’s up to you, not anyone else or their prices.
An expanded version of this article is available. Click here to download this as a Verenia White Paper.
To learn more about Verenia and how our CPQ tools can help you achieve amazing results for your business, visit www.verenia.com.