How to Outsell a Competitor Who Slashes Their Price to WinWritten by Dave Stein
Back in March 2003, in my e-Zine, I featured an article entitled, Selling Against Goliath. In article I offered some coaching to smaller companies who regularly compete against big guys. The article was very well received, in fact it was reprinted in many sales publications. However a number of my subscribers and clients have come back to me with a question: I'm Goliath. How do I compete against smaller, more agile David out there who drastically discounts to win business? Red Alert. First of all, once you learn that one of your competitors in a deal has "bought" business in past at a price you could not (or would not) meet, your alert status should immediately shift to orange (if not red). Remember, early in evaluation cycles prospects may say that price is a consideration, but not first on their list. Later on, once they have ignored or devalued any unique capabilities that your product or service can provide--to point where they "can see no measurable difference between your offering and your competitor's,"--price gets elevated to number one consideration. We've all seen it happen. By that point its generally too late to remedy situation. You're trapped. So recognizing potential situations early on where a buyer will buy on price must become second nature. Here are some recommendations that will point you in right direction: ·Qualify. In any competitive sales situation you have to monitor prospect's decision criteria like a pilot checks her instruments--ever-vigilantly. During course of an evaluation decision criteria often change. In fact, aren't we often ones who attempt to effect that change to gain competitive advantage? Among most critical of all decision criteria these days is price. What are key evaluators', buyers', recommenders' and decision makers' requirements and expectations with regard to price today. If you are just getting engaged with a prospect and their number one decision criteria is price, you (or your management) will have to decide whether it's even worth competing. Clearly, knowledge of your competitor's historic actual selling price will be critical in this decision. So will an understanding of your prospect's recent buying patterns with regard to price. Buyers focused on price de-emphasize or entirely ignore factors such as: ·Supplier product or service quality ·Supplier viability ·Supplier post-sales support capabilities ·Post sales costs (contributing to total cost of ownership) ·The knowledge and experience a vendor can bring forth ·Areas of additional value that you may be able to provide above and beyond what they have specified ·Quality of vendor personnel ·References Address issue head on and early. "Is your company going to make a decision based entirely or substantially on price?" And please, make sure you are asking these questions of, and selling to, decision makers. All this matters very little to people at lower levels in organizations. ·Educate yourself. Here are just some of questions for which you need answers to outsell a competitor that dramatically discounts to win business: ·Is their discounting tactical or, in case of some very successful companies, strategic--a key component of a go to market strategy supported by their business plan? (It's hard to compete against Sam's Price Club on price...) ·When do they offer these drastic discounts and under what conditions? How do they dilute value of what you are selling in prospect's eyes? ·How well do they deliver post sales service? ·How often do they issue new products or upgrade their services? ·What is satisfaction level of their customer base? ·What is their financial position? If they are publicly held, look at their P&L, Balance Sheet and Cash Flow Statement for most recent quarter and going back in time. If they are privately held, get your CFO to create a pro forma set of financial statements that might "represent" what that competitor's financial position might look like. ·What do you know about their human assets? Look into staff and executive attrition rates, quantity and quality of SMEs (subject matter experts), levels of staffing, support hours, etc.--anything that will point toward discount-caused reduced margins impacting operating effectiveness. ·Look at their corporate culture. What do they value? Integrity? Quality? Are they doing right things for building a long, profitable future or are they highly opportunistic, with little regard to what will happen tomorrow? Can they sustain?
Political Selling 101Written by Dave Stein
Note: To see charts in this article, view it on www.HowWinnersSell.com Most people who have been selling for even a short period of time understand that some level of corporate politics is present in every organization into which they sell. As sales professionals’ experience and political savvy increases, so does what they observe in their accounts. If you aren't aware of political activity in your accounts, it doesn't mean that it isn’t there. It just means you can't see it and certainly can't leverage it. If your competitor is politically savvy, you are at a distinct disadvantage. What is politics? According to Merriam-Webster one definition is, "competition between competing interest groups or individuals for power and leadership." Winners have developed a set of skills that enables them to consistently succeed because of, or in spite of, politics. They've learned to select right competing interest groups and then ride power and leadership wave to success by devising and executing political strategies for each key influencer and decision maker. Being adept politically will rarely lead to a win by itself. There are many other components to winning. But to not understand and take advantage of interpersonal forces within an account is to leave assets unleveraged. Here are some of key skills required to elevate yourself into realm of political selling: Skill: A basic understanding of how corporate politics works. For our purposes, politics and influence are synonymous. People need help of other people to achieve certain business goals (i.e. my department's project gets funded) as well as business-driven personal goals (i.e. if it is successful, I get a raise--I can afford that new house). Within a company, it works something like this: “If you report to me I can just tell you to do something and you will do it.” That's SAY-SO influence. You'll do it because I say so. But if you don't work for me--let's say you work in another department--it becomes more difficult. I then have to influence you to help me. I'll use POLITICAL influence. That requires a combination of skills and artistry and it takes time and strategy. Here is an example: Let's say that we both work for same company, but for different departments. If I need your help for my department to achieve its quarterly objectives, I might look for ways in which I can help you achieve your objectives (ideally, business and personal objectives) and subtly advertise those to you as benefits of helping me. In that way we are aligned with a set of common interdependent purposes. Win-win. When you are selling into a company, you have absolutely no SAY-SO over buyer. You can't tell anyone in your customer's company what to do. You can only influence them to give you information, insights, coaching and preference so that they influence others to look at you and your offering favorably. The best way to influence someone is to clearly communicate how and by how much you will contribute to advancement of their business and (business-related) personal goals. In diagram below, you'll see that when you can help a buyer or influencer meet their personal and business goals (Quadrant 1), you're much more likely to gain commitment from them in helping you win. In Quadrant 2, there is no personal win, so their commitment, although altruistic so far as a contribution to their company, will not be supported as strongly. Stay away from people in Quadrant 3. In those cases, person you are selling to is "in it for themselves," acting counter to what is in best interests of their company. You run risk of not only losing deal, but being associated with "dirty politics," which could affect your personal and your company's reputation. Quadrant 4 reminds you that if you find you can't contribute to person achieving their business or personal goals, your likelihood of gaining their support is minimal. Don't turn these people into enemies, but focus your efforts on finding and selling to influencers in first quadrant. Skill: The ability to see what's invisible As I suggested earlier, not everyone is skilled enough to observe sophisticated corporate politicians being influential. Savvy politicians do their thing privately. It's not unlike backroom deals done by government politicians. How do you know that there is influence being wielded? First, assume it is. Then begin to look at results and work backward. We can extract a good example from everyday government politics: If there is "pork"--say $650.3 million in corporate tax benefits for igloo manufacturers in Alaska--embedded in a House of Representatives education bill, you can quickly figure out who lent a hand getting it through committee. Ask your contacts within your customer's company or government department about prior purchases, projects and initiatives. Find out who sponsored them, whose budgets paid for them, who were ultimate decision makers and who benefited in some more personal ways. The names you come up with will likely be people of influence, either through their command of an organization, or through astute politicking. They are ones for whose influence you will be positioning during your sales campaign. Skill: Connecting dots You've done some discovery and have begun to make associations. When you asked about recent projects, several people referenced Carrie Miehome, who works in IT organization. She deftly led steering committee with CRM project last year. Funny thing though, that project was put ahead of others that already had funding. Why would that be, you might ask? Who benefits from a CRM implementation? The VP of Sales? The VP of Customer Service? Perhaps CFO who wants more visibility into revenue stream... It's perfectly reasonable to expect that she was influenced by a higher power. The challenge will be finding out whom, what was in it for them and what was in it for her if you are selling IT solutions to that company. Skill: Knowing how to map out organization You'll need to start with an organization chart. If they won't give you one, you can build one by getting answers to pointed questions about reporting structure, by reading information on web and, if your customer is a public company, from corporate SEC filings.