Selecting Consultative Choices

Selling offers practitioners three choices. If they make the right ones, they can maximize the earning power of their products and services. Before that can happen, they must first realize that the choices are available to them and, second, that the answers that lead to nontraditional profits and revenues are, themselves, nontraditional answers.

  1. What do you want to be compared with? All selling provokes comparison. The traditional comparison positions one supplier's product as better. If you choose to make your customers compare your product features and benefits with those of a competitor, the customer will cancel out the similarities and devalue the differences by asking you to discount their worth. If the only difference is price, you will suffer fierce margin pressure.

    On the other hand, you can choose another comparison. Instead of competing against the price of a rival supplier, you can compete against the current value that customers are receiving from one of their businesses or business functions that you can affect. If it is a cost center, what is its current contribution to cost? If it is a profit center, what is its current contribution to profits? In either case, the customer's current performance is your competition. Can you give them a competitive advantage by helping them differentiate themselves from their own competitors? This is what they try to do in their own business. If you can help them, you can sell them.

    When you choose to make customers more competitive, you compete against their own rivals: their own costs that are unnecessarily high or their own revenues that are unnecessarily low.

  2. Where do you want to attach price? Price is always "of something." The traditional object of price is a product or service. If you choose to attach your price to your product, the customer will compare it to the prices of competitive products. If your product is more similar than superior to them, or not sufficiently superior to make a difference, or is equal or inferior to its competitors, your price will be downgraded.

    On the other hand, you can choose another attachment for price. Instead of inviting comparison with competitive prices, you can position your price as an investment and attach it to the customer's return. When the customer compares the return against the investment required to achieve it, the rate of return compares the productivity of investing with you against the rate of return from other incremental investments he or she is making all the time. The customer's investment performance is your competition. As long as you equal the hurdle rate for incremental investments, you represent an acceptable deal.

    When you choose to make a customer more money, you become a supplier of funds. Your price, now no longer a cost but a returnable investment, can be directly compared against the return and is therefore freed from comparison with competitive product prices. Instead of having your price reduced, the customer may increase the investment if it will disproportionately increase the return.

  3. Whom do you want to make the decision? There are two kinds of customer decision makers—purchasing managers who buy a product's price-performance, and business managers who operate a cost center or profit center and who do not buy at all. Instead, they sell proposals to add value to the business line or function they manage, requesting funds from top managers to improve their contribution to profits.

    The traditional buyers are cost-controllers. If you choose to confront them as your decision makers, they will faithfully negotiate away your margins in order to lower "the cost of goods bought." That is their job. Your relationship will be win-lose, and you will lose more than you win.

    On the other hand, you can choose to partner with managers who act as your "economic sellers" inside their businesses, promoting your proposals to improve their contributions to profits. They compete for access to funds against all other managers; if they do not get funds, their operations cannot grow, nor can they grow along with them. They sell for you—actually, they sell for themselves, with your help—if you can add to the value of their proposals by allowing them to promise a greater return, a faster return, or a surer return.

If you make the three right choices, you are in position to compare your value against a customer's current value, attach your price in the form of an investment to your value, and partner with a business manager who sells your value. You are selling like a consultant.

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 © 2008-2017.
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