SELLING VALUE: Presenting a Value Proposition Dr. Timothy M. Smith BP 3503 University of Minnesota...

SELLING VALUE:Presenting a Value Proposition

Dr. Timothy M. SmithBP 3503

University of MinnesotaSt. Paul, MN

| UNIVERSITY OF MINNESOTA, Department of Bio-based Products

BP 3503-5503: MARKETING BIO-BASED PRODUCTS

© T. M. Smith, 2005

What makes a high-performing Rep?

Variables Affecting Performance

% Variance in Performance

Explained

Personal History / Family Background 20.9

Marital/Family Status 11.9

Vocational Skills (Knowing the business) 9.4

General Management Skills 9.1

Sales Presentation Skills 4.8

Responsibility 4.0

Sales Aptitude 3.7

Sales Experience 2.8

Dominance 2.4

Interpersonal Skills 2.2

Self-Esteem 1.9

Non-sales Work Experience 1.4

Educational Content 0.9

Educational Attainment 0.2

Source: Ford, Walker, Churchill 1988



© T. M. Smith, 2005

What makes a high-performing Rep?

Type of Product Being Sold

Variables Affecting Performance Industrial Consumer Service

Personal History / Family Background Weak Weak Strong

Marital/Family Status Weak Moderate Strong

Sales Aptitude Strong Moderate Weak

Dominance Weak Weak Moderate

Self-Esteem Strong Moderate Moderate

Sales Presentation Skills Strong Moderate Weak

Interpersonal Skills Moderate Moderate Weak

Source: Ford, Walker, Churchill 1988



© T. M. Smith, 2005

Characteristics Related to Sales Performance• Trade Selling

– Age, Maturity vs. Youth

– Empathy (understanding/compassion) vs. Aggressiveness

– Knowledge of customer and business methods

• Technical Selling

– Education and Intelligence vs. persuasiveness

– Product and customer knowledge – usually gained through training

BIG PICTURE…It’s all about the relationship!



© T. M. Smith, 2005

Personal Relationships

Commongoals

Commitmentto mutualfulfillment

Socialsupport

Mutualtrust

Opencommunication



© T. M. Smith, 2005

Customer Relationships

Commongoals

Commitmentto mutual

Gain(Value)

Organizationalsupport

Mutualtrust

Opencommunication

(Weitz et al. 2000)



© T. M. Smith, 2005

The Evolution of Personal Selling

(Weitz et al. 2000)



© T. M. Smith, 2005

Selling Value Continuum – What kind of relationship fits?

Lost Sales

Wasted Effort

(Rackham and DeVincentis 2000)

Investmentby

Supplier

Investment by Customer

Transac

tional

Relatio

nship

Consu

ltativ

e

Relatio

nship

Enterpris

e

Relatio

nship



© T. M. Smith, 2005

Transactional Sale

Where Can the Sales Force Add Value?

Recognition of Needs

EvaluationOf Options

ResolutionOf Concerns

Purchase Implementation

Customer hasAlready

Defined needsAnd problems

completely

Customeralready

understandsAlternativesolutions

Customer has few issues or

concerns

Seller canHelp makePurchasePainless,

convenient,And

Hassle-free

Customer Generally

Knows howto use product

Little or noOpportunity to

Create salesvalue


Create salesvalue


Create salesvalue


Create salesvalue




© T. M. Smith, 2005

Consultative Sale

Recognition of Needs

EvaluationOf Options

ResolutionOf Concerns

Purchase Implementation

Seller canadvise and problem

solve Delivery,

installation,set-up,

maintenanceissues

Transaction process

is minimized


Create salesvalue

Seller can counsel

customers and help resolve concerns

Seller can design

customized solutions and

help customers

make informed choices

Seller cancreate mostvalue early

in theprocess by

helpingcustomers

define needs

Where Can the Sales Force Add Value?




© T. M. Smith, 2005

PRESENTATION STRATEGY ADDS VALUE

• Pre-approach preparation adds value

• Presentation plan adds value

• Outstanding service adds value with;

– friendly approach

– customer centered presentation

– effective demonstrations

– win win negotiations

– timely close

– after sale service



© T. M. Smith, 2005

The Six-Step Presentation PlanStep OneAPPROACH

Step TwoPRESENTATION

Step Three DEMONSTRATION

Review Strategic/Consultative Selling Model Initiate customer contact

Determine prospect needs Select product or service Initiate sales presentation

Decide what to demonstrate Select selling tools Initiate demonstration

Anticipate sales resistance Plan negotiating methods Initiate double-win negotiations

Plan appropriate closing methods Recognize closing clues Initiate closing methods

Suggestion selling Follow through Follow up calls

Step SixSERVICING THE SALE

Step FiveCLOSE

Step FourNEGOTIATION

SIX STEP PLAN



© T. M. Smith, 2005



SIX STEP PLAN



© T. M. Smith, 2005

BUILDING RELATIONSHIPS

• Become genuinely interested in others

• Smile

• Remember names

• Be a good listener

– encourage other to talk about themselves

• Talk in terms of other’s interest

• Make others feel important



© T. M. Smith, 2005

SPIN SELLING (Situation, Problem, Implication, Need-Payoff)



© T. M. Smith, 2005





SIX STEP PLAN



© T. M. Smith, 2005

TYPE OF QUESTION DEFINITION WHEN USED EXAMPLES

Information-gatheringquestions

General questions designed to get the prospect to disclose certain types of basic information

Usually at the beginning of a sale “How many miles per year doyou drive your company car?”(auto leasing)

TYPES OF QUESTIONS



© T. M. Smith, 2005



Probing questions


More specific questions designed to uncover and clarify the prospect’sperceptions and opinions

Usually at the beginning of a sale

When you feel the need to obtainmore specific information that is needed to fully understand theproblem and prescribe a solution

“How many miles per year doyou drive your company car?”(auto leasing)

“What type of image do you want your advertising to projectto current and potentialcustomers?” (newspaper advertising)

TYPES OF QUESTIONS



© T. M. Smith, 2005



Probing questions

Confirmationquestions



Designed to find whether or notyour message is understood by the prospect



After each important item ofinformation is presented



“Do you see the merits ofpurchasing a copy machine withthe document enlargementfeature?” (office copy machine)

TYPES OF QUESTIONS



© T. M. Smith, 2005



Probing questions

Confirmationquestions

Summaryconfirmationquestions



Designed to find whether or notyour message is understood by the prospect

Designed to clarify your understanding of the prospect’sneeds and buying condition



After each important item ofinformation is presented

Usually used after several items of information have been presented



“Do you see the merits ofpurchasing a copy machine withthe document enlargementfeature?” (office copy machine)

“I would like to summarize what you have told me thus far. You want a four-bedroom home witha basement and a two-car garage.(real estate)

TYPES OF QUESTIONS



© T. M. Smith, 2005







SIX STEP PLAN



© T. M. Smith, 2005

WHY

• improves communication• improves retention speed• proves buyer benefits• feeling of ownership• confidence• saves time

WHAT

• product, models, samples• product, models, samples• photos, illustrations, reprints• portfolio, graphs, charts, tests• testimonial, guarantees• computer printouts, audio,

visuals

WHEN

• as a product approach• to prove benefits• to overcome objection• to strengthen close• to service the sale

USING DEMONSTRATIONS PRODUCTIVELY



© T. M. Smith, 2005

Demonstration Worksheet

Feature to BeDemonstrated

Special computer circuit board to accelerate drawing graphics on a color monitor screen

Meeting room setup at ahotel and conference center

What I Will Say(Include Benefit)

“This monitor is largeenough to display multiplewindows. You can easilycompare several graphics.”

“This setup will providethree feet of elbow space foreach participant. For longmeetings the added space provides more comfort.”

What I or the Customer Will Do

Have the customer bringup several windows usingcomputer keyboard.

Give the customer a tour ofthe room and invite her tosit in a chair at one of the conference tables.



© T. M. Smith, 2005

NEGOTIATING PRICE

• Add value by explaining the cluster of satisfactions

• Discuss price confidently

• Discuss value rather than price

• Discuss the relationship of price and quality

• Discuss difference between price and cost

Salesperson Tactics Customer Tactics• Budget limitation

• Take it or leave it

• Split the difference



© T. M. Smith, 2005

Negotiations Worksheet

Customer’s objection

“Fifteen cases of olives willtake up valuable space in myreceiving room. It is alreadycrowded.”

“This is a poor time of theyear to buy a large order ofolives. People are not buyingat this time.”

“I would rather not tie up mymoney in a large order.”

Type of objection

Product

Time

Price

Possible response

Direct denial:“You will not have to face that problem. With the aid of our merchandising plan you can display ten cases immediately on the sales floor.”

Indirect denial:“I agree that it has been a problem in the past, but consumer attitudes seem to be changing.. ... We will supply you with point-of-purchase material that suggests new ways to use this high-profit item.”

Superior benefit:“As you know, olives represent a high-profit item. The average margin is 26 percent. With the addition of our $1.00 per case allowance the margin will rise to about 30 percent. This order will give you a good return on your investment.”



© T. M. Smith, 2005

GUIDELINES FOR CLOSING THE SALE

• Focus on dominant buying motives

• Negotiate tough points before closing

• Avoid surprises at the close

• Do not isolate prospect during the sale

• Display self-confidence during the close

• Ask for the order more than once

• Recognize closing clues



© T. M. Smith, 2005

METHODS OF CLOSING THE SALE

• Trial

• Summary-of-benefits

• Assumption

• Special Concession

• Negotiating the single-problem

• Limited choice

• Direct appeal



© T. M. Smith, 2005

Closing Worksheet

Closing clue (prospect)

“Our staff will need to be trained in the use of this equipment.”

“That sounds fine.”

“What kind of financing do you offer?”

“Well, we don’t have large amounts of cash available at this time.”

Closing method

Negotiating-the-single problem

Direct appeal

Limited choice

Assumption

Closing statement (salesperson)

“We will send our technical staff to your company as soon as the product arrives. They will spend two days with your staff showing them the entire operational program. In addition, they will be on call for any questions or service during the following six weeks.”

“Good, may I get your signature on this order form?”

“We have two financing methods available: ninety-day credit or two-year-long term financing. Which of these do you prefer?”

“Based on your cash position, I would recommend you consider our lease-purchase plan. This plan allows you to pay a very small initial amount at this time and keep the cash you now have for everyday business. I will be happy to write up your order on the lease-purchase plan.”



© T. M. Smith, 2005









Suggestion selling Follow through Follow up calls

Step SixSERVICING THE SALE

Step FiveCLOSE


SIX STEP PLAN



© T. M. Smith, 2005

Parts of the Sales Presentation

Questioningskills

Presentingbenefits

Demonstratingskills

Negotiatingskills

Closing skills

• As a question approach• To find needs and buying motives• To probe for buying motives• To confirm needs and buying motives

• As a benefit approach• To discover potentialbenefits

• As a product approach• To clarify need

• To overcome initialresistance to salesinterview• To overcome need objection

• When customer has madebuying decision

• To confirm selection

• To match up withbuying motives

• To clarify selection

• To overcome productobjection

• When buyer immediatelyrecognizes solutions

• To confirm benefits• To confirm mutualunderstanding

• To present and summarize featureseffectively

• To strengthen product claims

• To overcome source, price, and time objection

• Whenever buyer presents closing signals

• To make suggestions• To confirm delivery and installations• To handle complaints• To build goodwill• To secure creditarrangements

• To make suggestions• To use credit as a close

• When making effectivesuggestions

• In handling complaints• To overcome financingobjection

• After suggestion• To secure repeatsand referrals

Consultativeselling skills

Selectingsolution

Need satisfactionpresentation

Need discovery

Servicingthe sale

SELLING DYNAMICS MATRIX

SELLING VALUE: Presenting a Value Proposition Dr. Timothy M. Smith BP 3503 University of Minnesota...

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