Chapter 3: Consultative Positioning Strategies - How to Merit High Margins


Overview

For both consultative sellers and their customers, profit is the name of the game. While the game is the same, the role you play in it is very different from that of your customer.

Setting profit objectives is the customer's business. It cannot be abdicated, nor can the customer delegate it to anyone outside the company. No one who is external to a company can ever know enough about total corporate assets and liabilities—financial, operational, or human—to set business objectives based on them. Besides, your concern with a customer's business is rarely with all of it. Your concern is concentrated on the application or use of the product and service systems with which you yourself are involved. As a result, your role is concerned with the additive effects that the value of your product and service systems can have on the customer's profitability. You are each customer's incremental profit improver, not total profit maker.

A customer's primary management function is to develop strategic and tactical plans that can achieve profit maximization. Your role is limited to profit betterment. This means that you will propose your contribution from the point at which customers have finished developing their own profit plans. The end point of the customer's profit objectives becomes your point of departure.

Every value that a PIP adds to a customer is incremental to the customer's current values. This means that the overhead of fixed costs already being funded by the customer can be made to contribute additional values without adding to it. PIPs require no additional plants to be built, no new R&D facilities to be developed, and no new customer sales managers or representatives to be hired. PIPs make the customer's current overhead more productive and less costly, leveraging small investments into significantly higher returns.

This is why consultative sellers propose in terms of "contribution." It is not their own ability to contribute profits they are proposing. Instead, they are being consultative in helping their customers produce a greater contribution from current assets.




Consultative Selling(c) The Hanan Formula for High-Margin Sales at High Levels
Consultative Selling: The Hanan Formula for High-Margin Sales at High Levels
ISBN: 081447215X
EAN: 2147483647
Year: 2003
Pages: 105
Authors: Mack Hanan

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