In a recent National Price Competition Study, The Sales Board found that 80% of companies are seeing sales volume increase while 51% say margins are eroding.  Fully 40% of companies admit they are increasing volume at the expense of margins.  

Is this a winning formula?  

Almost 90% of companies say price competition is a growing issue, and 60% of field salespeople and managers admit it is shrinking their own personal wallets.  The vast majority of C-level executives think their sales teams are good at handling price objections; 81% of salespeople and sales managers admit they are not.  That’s a problem!

Unless you’re the price leader in your industry, you clearly need a way to differentiate your solution to consistently get your price.  Based on the survey, only 1% of C-level executives admit they are their industry’s price leader.  This leaves 99% of companies trying to compete on the basis of value.  Yet more than half of salespeople say they give discounts to match a competitor’s price on 70% of their deals.  So, either the value-added message isn’t getting through, the tactics don’t work, or salespeople aren’t equipped to carry out those tactics.  

Are salespeople following a consistent selling procedure?  C-level executives think so.  But sales managers admit that’s not what they actually observe.  Unless you’re comfortable with a never-ending effort to undercut somebody else’s bargain-basement prices, it’s time to take action.  

Some salespeople appear to have a way to avoid the price trap and to take customers away from the competition without sacrificing margins.  According to 86% of survey respondents, top-performing salespeople consistently generate higher margins.  If they can do it, why can’t we teach others to do it?

Our research suggests that it’s largely because most sales-training programs are teaching the wrong things. The Number 1 reason customers say they buy from one rep over the other is not product features, not company reputation, and not price.  What customers value above all is the quality of the sales relationship.  If your sales training focuses on product knowledge, company capabilities, and skills like price negotiation, you are enabling salespeople to do the wrong things.  

Since meaningful differentiation is all about the quality of the sales relationship, differentiation becomes the solution for both the price problem and the market-share problem.  What do top performers do to develop quality relationships?  That is what we need to teach our entire customer-contact work force.  That’s how we can opt out of the race to the bargain basement and end the failing struggle to increase market share.  

Because we’ve approached the problem incorrectly for so long, what we’ve accomplished is to educate the customer to focus on price and always negotiate for a better deal.  That’s ridiculous when we know for sure that some top performing salespeople in every industry are able to maintain margins and grow market share while others are not.  It should be obvious that the answer doesn’t lie in What You Sell but How You Sell.  

If salespeople can show their customers how they are a clearly differentiated solution, they will win more often at higher prices.  In reality, the battleground for differentiation has little to do with product features, company capability, or low prices.  The battleground is inside the mind of the buyer (or buyers, in a complex selling situation).  If you don’t know what’s going on in the mind of the buyer, you can only take random shots in the dark at serving their needs.  

Furthermore, if you present your capabilities randomly or in a manner unconnected to the unique needs of the customer, you’ll look exactly like every other vendor.  As a better alternative, let me introduce you to the concept of DIFFERENTIATED NEEDS.  I’m sure you’ve heard of differentiated solutions.  What salespeople must learn, once and for all, is that you can’t truly present a differentiated solution until you’ve first uncovered a differentiated need.  

To learn more about differentiated needs, click the link below!