Making the Three Conversions

Vendor sales representatives become consultative sellers by making three conversions in their mindsets:

  1. They must convert price into investment. Price is a cost. As such, it has a negative value for which customers will pay as little as possible to obtain. On the other hand, investment connotes a return. Return on investment is a positive value. Customers put out money in order to receive a commensurate value in return.

  2. They must convert a product or service into the dollar value that comes from being applied to a customer operation. Consultative sellers sell the value added by application (VABA), not the product that is applied or the service that applies it. They are monetizers of their technology's performance, translating benefits like faster time to market or reduced downtime or speeded up cycle time into their dollar contributions to customer operating profits.

  3. They must convert their focus on making individual standalone sales into making a portfolio of continuing sales, each one of which is a logical migration from its preceding sale. A customer's profit improvement cannot be a sporadic, periodic event. Instead, it must be an ongoing process whose continuous inflow of new streams of cash is predictable. Reliability of profit improvement is every consultative partnership's middle name.

The conversion of price into investment prepares a consultative seller to propose giving money to a customer rather than taking it away—to change what has traditionally been the cash outflow of a purchase decision into the cash inflow of an investment's payout.

The conversion of technical performance into financial performance defines the subject matter of sales consultation: improving customers' profitability so that their competitive advantage is enhanced.

The conversion of product-line sales management into profit-project portfolio management enables consultative sellers to integrate their mission with the customer operating managers who must become their partners. They plan long term; so must consultative sellers. They must grow their asset bases; so must the sellers. They are paid for their performance in maximizing the rate of return on the assets they employ; so must the sellers.

Whereas vendor sales representatives are exhorted to "move the iron," consultative sellers move money. They move customers' capital funds into investments. They move investments into returns. They move the return from each investment into a following investment. Like their customers, consultative sellers make money only when they keep it circulating in ways that add to its value. The three conversions they must undergo are required to maintain money in motion. Idle money represents downtime. Profitless investments are the equivalents of scrap. Both take customer funds out of circulation, whereas investments in rapidly turning-over profitmaking proposals replenish funds, instill motivation to gainfully employ them, and assure consultative sellers of a perpetually prospective customer base.

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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