In most companies the sales organization’s mission is to generate more sales. Unfortunately, there’s an assumption implicit in that goal that often gets companies into trouble.  That assumption is that all customers are equally valuable.  You know that’s not true.  You have customers that are an absolute delight and some that leave you asking “What was I thinking?”

The ideal customer

On the Branding page, we identified your brand promise – the result customers can expect from using your products/service.  It’s the people who value that brand promise enough to pay premium prices to get it that you want your sales force to target.  Anyone who doesn’t fit that profile will require a discounted price or they won’t buy.  Of course, when you discount to get these less-than-ideal customers you’ll have to offer similar discounts to your ideal customers or they’ll leave.  Now you’re trying to support higher volumes on smaller margins.

These profit drains can be avoided by making sure that your salespeople:

• Have a clear picture of who your ideal customer is.
• Know what value (brand promise) those buyers are seeking.
• Are able to quantify and communicate that value effectively.
• Are value buyers themselves.
• Have quotas and compensation programs that reward higher prices.
• Know how to say ‘No” gracefully to those who don’t fit your profile.

Time savings

When your sales force’s efforts are as focused as they would be under the guidelines mentioned above.  It saves them a great deal of time and energy.  Time and energy that could be devoted to strengthening their rapport with your ideal customers.  Indeed, the real purpose of an effective sales force is to build rapport with your ideal customers that’s so strong that it’s difficult for your competitors to get in the door.

How to use that time

What should your sales people be doing with the time they save by not chasing ‘buyers’ who don’t fit your profile?  Here are some of the ways they can make your offerings more valuable to your ideal customers:

• Spend time discovering how customers are actually using your offerings.
• Discovering what these customers wish your offerings would do.
• Discovering what they like about competitors’ offerings.
• Discovering competitors’ weaknesses so that you can capitalize on them.
• Helping your customers address their customers’ ever-changing needs.

Quantifying value

One of the reasons why business owners and sales people default to industry pricing is that they haven’t been taught to quantify value.  They look at all of the benefits they provide and wonder “How do I calculate value on integrity, friendliness, quality and timeliness, much less the synergies of these benefits combined.  The good news is that there are only three things that any business sells – image, innovation and time savings.  And there is readily available buyer data to show how much buyers are willing to pay for each.

Buyer data

Here are the multiples available:

Image – For large ticket items like a car, 7 times as much as the lowest priced alternative. For smaller ticket items like a sweater, 10 to 12 times as much.

Innovation – Early adopters pay 12 to 14 times as much as late adopters and 3 to 4 times as much as the mass market.

Time savings – Consumers readily pay at least 3 to 4 times their hourly rate of compensation for the recreation the time savings will afford them.  Businesses will pay a percentage of the gross margins they’ll gain from increased revenues generated by the alternative use of their employees’ time.  That’s a much higher price than could be generated on the cost savings alone.

For you

Here’s a confidential self-assessment to determine how well you’re directing your sales force to higher prices, higher margins and greater financial success for you and them.

Testimonial on Pricing for Profit strategies

I am responsible for the training of several hundred sales associates and have found this book extremely useful. With the change in the economy we have found that our customers insist on us bringing more value to their operations, however, price is becoming more of an issue. By using information contained in Pricing for Profit we are able to garner more business than our competitors. Thanks go to Dale for helping us all be more profitable. - Neil Kreeck

If you’d like to learn more about how you can use this buyer data to SIGNIFICANTLY increase your prices and retain your best salespeople as well, give Dale a call at 314-707-3771.