Customer value and loyal customer support concept. How to create value for the client and stand out from the competition Creating value for the client

UDK 658.1 I.Ya. Barliani SGG A, Novosibirsk

FORMING THE VALUE OF THE FIRM CLIENT

The effective operation of an enterprise in a competitive market directly depends on the development of relationships with customers. Moreover, strengthening relationships with customers makes sense when they lead to the establishment of beneficial relationships for the enterprise. For a comprehensive assessment of the client, it is necessary to take into account the overall value, which is due to monetary and non-monetary factors (potentials). In this regard, it is necessary to analyze the market potential (potential for income, development, cross-selling costs).

One of the most important factors in ensuring the effective operation of the enterprise is the establishment and development of its relationships with customers.

Consider the main factors that determine the value of the client. Its overall value is determined by monetary and non-monetary factors (potentials), which should be taken into account when considering the total value of the customer's value.

In this regard, many authors distinguish between market and resource potentials. Market potential includes monetary contributions of the client to the success of the enterprise, while resource potential is characterized by non-monetary values. At the same time, the significance of potentials differs depending on the specific enterprise and market.

The client's income potential is the current contribution of a particular buyer to the company's commercial success, and this, in turn, forms the basis and most important element of the client's monetary value. The resulting sales volume, or baseline revenue level, is the primary measure of customer value.

Of decisive importance for the fulfillment of the long-term monetary goals of the enterprise is individual development buyer (development potential) within its life cycle. The client at a certain point in time can bring losses to the company, at the same time, in the future, can make a significant contribution to achieving the goals of the company.

Costs per customer (cost potential) arise not only at the transaction level in the creation and sale of individual goods and services, they are also required to establish and maintain a relationship with a customer. At the same time, the costs for each individual client are different.

There is no consensus on the issue of delimiting costs per client. Many cost considerations are guided by customer lifecycle stages, thus highlighting the costs of recruiting a customer, binding them, and maintaining relationships with customers.

The cross-selling potential forms an additional part of the monetary potential of income, which may arise as a result of the sale of certain goods or services in those areas of activity that previously did not involve exchange relations.

When buying goods and services, customers often rely on interpersonal communication with other customers. The latter express for new customers a point of view containing information about the quality and efficiency of the enterprise. From the point of view of determining the value of a client, on the one hand, the degree of influence of the potential of his reviews matters, and on the other hand, the direct consequences of the reviews themselves.

The information potential of the client is formed from various useful information for the enterprise, which comes to him from the client during certain period time and can be appropriately used by the enterprise in the process of forming the use value of the goods.

Integrating the client into the direct process of creating new value is usually seen as a determining factor in the optimal use of resource potential. In this case, the client acts as an active participant in the production of products (cooperative potential). He can also be informed about internal processes, which makes it possible to participate in the work of the enterprise as a full-fledged employee. By making a significant contribution to the transformation processes, the client contributes to the improvement of the efficiency of the enterprise.

The synergy potential covers all forms of interaction with a permanent circle of buyers, within which the client actively or passively necessitates a response. If an enterprise manages to expand or consolidate relationships with a client, then there is a certain increase in terms of synergy potential.

Business relationships with a client have separate phases. Three main phases can be distinguished: customer acquisition, retention and re-conquest. At the same time, individual authors distinguish eight stages: preparation, formation, growth, maturity, rebirth, termination, abstinence, rebirth, and several phases of danger.

Life cycle The client includes the stages of a potential, existing and former client. The initiation of the relationship between the client and the seller begins at the stage of attracting the client, which contains the phase of preparation and formation. As the duration of business relationships increases, their quality improves. When customer acquisition is complete, maintaining and deepening the relationship is important in the course of customer retention.

during the growth and maturity phases. The purpose of such an attraction is to fully exploit the potential of the client and avoid the client's transfer to competitors.

The life cycle is a model of the flow of relationships with the client, which should be taken into account by the enterprise when implementing value-based relationship marketing. Using the model allows you to develop sound relationship marketing strategies that take into account specific features individual phases.

Customer value formation tools. Most of the existing tools involve their use, taking into account the composition marketing complex. As a result of the combination of individual tools of product, pricing, communication and distribution policy, the concept of value-oriented relationship marketing is formed, the implementation of which ensures the further development of relations between the enterprise and its customers. The most important thing is that the enterprise actively uses only those tools that have the most significant impact on the formation of customer value.

When creating a range through product change activities, it is very important for a company to be able to provide pre-sales and after-sales services that bring additional value to the customer, which also prevents him from leaving for another seller.

Using Tools pricing policy, the seller also aims to strengthen the company-customer relationship in the future through individual pricing.

The communication policy as an information linking element between the client and the enterprise provides multilateral opportunities for strengthening ties with the client and is primarily designed to stabilize and expand relations. A prerequisite for developing an individual approach is the creation of a detailed structured database with detailed customer profiles.

The quality of the distribution policy is determined not only by the spatial organization of the various distribution channels, but also depends on the time frame for the delivery of the goods. Therefore, buyer satisfaction is maximized when the seller keeps his documented promise to deliver the goods at the specified time.

Thus, within the framework of value-based customer relationship marketing, the acquisition and retention of such customers are ensured, which, from the point of view of the seller, are the most “valuable”, because they have more untapped value potentials and have close ties with the enterprise. Development and

implementing value-driven marketing strategies leads to customer satisfaction and effective customer relationships. For the heads of marketing services, this means, first of all, the solution of the following tasks:

Determination of the priority of relations with the client;

Diagnostics of the state of relations;

Strategic and operational planning relationship with clients;

Organization of relations and control over their implementation.

To prioritize customer relationships, customers are structured according to their value. Establishing an appropriate buyer value rating is possible using a single-level ABC analysis, in which category A customers will have a higher value. In accordance with the results obtained, an effective system of customer relations is created, which is achieved primarily with the use of marketing mix tools.

Creating high customer value by maximizing customer potential is the main goal for the seller and the basis for strategic planning within the framework of customer value-oriented relationship marketing.

REFERENCES

1. Tewes M / Der Kundenwert im Marketing: Teoretische Hintergründe und Umsetzungsmöglichkeiten einer wert - und marktorientierten Unternehmensführung. Wiesbaden, 2003.- S. 16-305.

© I.Ya. Barliani, 2008

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Pain points of marketing

There are only two types of problems in business: lack of customers and all other problems. That is why the main marketer of any company is its CEO. He must understand that, first of all, marketing is responsible for the client. For YOUR client. If customers do not understand what value the company has created for them, then either we did not work with our customers, or we could not explain to customers what real value is. Or, indeed, they could not really create it.

What's happened good marketing? This is when the client feels good, and it makes you even better. And this happens only if customers are given something for which they will gladly give not only money, but also their loyalty and love.

It is a mistake to think that the goal of marketing is to satisfy customers. After all, nothing prevents satisfied customers from leaving for other companies, buying goods and services elsewhere. Therefore, the main task of marketing is to create the best value for customers. One they won't find elsewhere. And for this it is important to understand what exactly this value is. To do this, answer three key questions:

  1. Who is your client (target segment)?
  2. What is the value of your customer offer (product)?
  3. Why is she unique?

In marketing, it is important to follow a few golden rules: (1) know your target segment well, (2) remember well that you are not the target segment, and (3) think about the entire value chain (even, or even more so if you work for B2B market).

How to know your target segment? We cannot have the same experience with our clients. If we are not customers of our companies, we do not study customer experience, we do not know for sure their key pain points.

If customers left us, there must be a reason why they did it. The problem is usually not in the product, but in communication and service. Many companies mistakenly believe that customers will stay with them forever. And often existing customers are given less attention than new ones. In particular, new customers sometimes get better conditions than regular customers.

Become a client of a competitor company. Look for a problematic place with them and solve this problem in your business. It's not always worth improving the good. This can lead to high costs and loss of efficiency. And exploiting a competitor's weak point and relying on its improvement, on the contrary, can be a good differentiation. Good example- Samsung. While Sony was improving the resolution of the plasma screen, which the consumer did not appreciate as a result, the competitor released a TV with a more attractive design. That is, he used the weak point of a competitor. It was a more interesting design, a white body that the consumer needed. And most consumers took high screen resolution as a product attribute for granted.

How do you know what your segment needs? Ask and listen.

Create value

To create value, you need to know the answers to three questions about your customer (see book by Alexander Osterwalder et al.):

  1. What problem does your client want to solve?
  2. What benefits (results) does he want to receive?
  3. What pain points (problems) are you trying to avoid?

Value can be created when all of these questions are answered. Tasks to be solved, expected results, pain points, risk to avoid, and limitations - all this you should know about your clients.

Value is a product through which your client can solve an important problem for him with best result, getting rid of existing restrictions and pain points.

Three levels of competition

The competitive field is much wider than it is considered by most companies. As a rule, they fixate on the first level of competition: they satisfy needs in a similar way. And instead of moving away from head-on competition and creating a market together, companies spend a huge amount of resources to maintain or increase their own share. But very often, a similar customer need is covered by second-tier competitors, but in a different way. And here the competition can be much tougher. For example, the need for a quick breakfast can be met by both cereals and instant cereals of various brands, competing with each other for the consumer. But, at the same time, competitors of the second level - the usual sandwiches, scrambled eggs and just a cup of coffee - continue to hold a high proportion. The third level of competition (the satisfaction of another need) is not considered by many at all. Namely, at the third level, competition is carried out on an ecosystem scale. And here comes the real game of survival.

Therefore, the key task of a marketer is to identify the true need of the client and understand how it is being transformed and in what direction. If this is not done in time, the client, like the whole business, can be lost. The example of the company is more than eloquent. History with metal-plastic windows too.

How can you create additional customer value today? According to Anthony Ulvik, the author of the idea of ​​effective innovations, this can be done through innovations that will help the consumer solve his problem faster, cheaper and (or) in a more convenient way.

What is the difference between improvement and innovation? First, improvements are minor changes that can be costly to the business and imperceptible to the customer. For example, if instead of six seconds your customers wait for an operator's response for five seconds, no one will notice the difference, and the payment of additional staff, equipment and software costs for the company will result in a penny. Often, improvements are simply necessary to keep parity with competitive offerings. And innovation is an added value with which you can retain existing customers, attract new ones and increase margins.

There are several options for developing innovative strategies.

First: Innovation enables existing customers to perform their task in a better way. For example, the Internet and 3G: the task is not new - it is Internet access, but technology has made it possible to complete the task in a better way. That is, with the best result.

Second: Innovation helps existing customers complete additional tasks. For example, a smartphone. Earlier main task phone was to make a call. And now the list of tasks that can be performed using the phone has increased significantly: check mail, take pictures, shoot videos, make purchases, post on social networks, and so on.

Third: innovations allow "non-consumers" to perform tasks that were previously available only to a limited circle of customers (this may not be only people). How to do it? Remove restrictions. For example, space travel. To fly to the stars, a person had to undergo serious training and become an astronaut. When restrictions are lifted, absolutely unprepared people, space tourists, can fly into space.

Another limitation was removed when the portable glucometer appeared. Previously, in order to take a blood test for sugar, it was necessary to go to the clinic to the specialists. And now the consumer can do this work himself.

Fourth: Innovation helps new customers complete a new challenge. Many software products and mobile applications now work in a similar way.

New features and removed restrictions

Accordingly, value can be created using the following features:

  1. Result not received by the client.
  2. Tasks that currently cannot be performed by the consumer.
  3. Restrictions not lifted by the market.

An example of the lifted restrictions is the production in India of a bright battery-powered refrigerator that can be used where there is no electricity. Or the high-resolution cameras on smartphones, plus a host of programs that allow amateurs to make high-quality videos.

Another good example seizing innovative opportunities - opening of Metro Bank in 2010 (not the best time for financial institutions). Before its opening, a teaser was chosen: "The bank that you will finally love." This loud statement was justified. After all, the functional, social and emotional components of the benefits for consumers are satisfied. An important advantage: the bank operates 362 days a year, seven days a week (except for New Year, Easter and Christmas) from 8:00 to 20:00, on Saturday and Sunday according to a different schedule. While competitors worked on a less convenient schedule for customers. In addition, this bank used an emotional chip and removed unjustified "restrictions". For example, one of the messages read: “Our pens are not tied. If a pen goes missing, we won't think you've stolen it. We'll think they forgot to leave it." Another creative message of the bank and the removed "restriction": "Dogs are people too." This means that you can bring your pets to the bank branch. Why is it important? Metro Bank is located in London, where dogs are especially loved. In addition, other important tasks were solved and improved results were offered: excellent online banking, drive-thru branches and more.

Where else can you find opportunities? For example, to play on the oversaturation of the market, i.e. remove features that certain types of customers do not need and provide them with new opportunities at an affordable price.

When the markets are saturated, you need to simplify the task. In the US, there was a huge store with films and games for rent. Video cassettes could be borrowed for at least 7 days with a complex loyalty system. Most wanted used, of course, novelties. Accordingly, it was necessary to have a sufficient supply of new films. At the same time, the payback period was high (6-8 views). At this point, Blockbuster had a small competitor to Redbox - movies and games in box-like terminals. The company did not need to rent thousands of square meters, keep a huge assortment, run complex loyalty programs, hire staff, and so on. They just set up little red boxes of video news outside the big supermarkets. The price is $ 1 for the daily rental of the film. What does Blockbuster do? Tries to install the same terminals as the competitor, only blue. But the copy was not successful. In addition, Netflix has gone even further in simplifying "oversaturated" markets and removing restrictions.

Develop design thinking

You can create value with a breakthrough product. Its sale gives a high margin in long term and creates the greatest customer value. According to Jonathan Cagan, professor at Carnegie Mellon University, a breakthrough product is a combination of high design and high technology.

Design thinking helps create a breakthrough product. It is a way of finding new ideas, developing new products, new business models by finding something new and creative in the mass of known things.

It is important to learn to put yourself in the place of the consumer, develop empathy, look at the world through the eyes of other people, understand their needs, desires, tasks in order to offer your customers exactly what will be value for them, which they will appreciate and for which they will be willing to pay. In this case, we can say that you have good marketing, because your customers are good, and you are even better.

    Alena Maltseva, PhD in Economics, Professor of Marketing at Kyiv-Mohyla Business School (kmbs). Ex-general director of the Companion Group (magazines Companion, &. Strategies, &. Financier, Professor Kreid). He has 20 years of experience in teaching marketing courses. Author of the first School of Total Marketing kmbs in Ukraine.

According to statistics, in the United States, on average, there are 417 sales professionals for every manager. Most of them, when communicating with customers, operate only with the concept of price. In this book, based on research, we will describe how the few salespeople who know how to avoid situations in which price becomes a decisive factor do business.

Admiral Hyman Rickover, the founding father of the American nuclear submarine fleet, was an eccentric genius. When selecting candidates for participation in the program for the creation of nuclear submarines he resorted to methods different from those generally accepted, moreover, inquisitorial. The old sea dog liked to say: “The more sweats you get off in peacetime, the less strength you will spend in battle” - and ruthlessly applied his wisdom during stressful interviews. His insane method has become legendary: he wanted to assess the behavior of candidates in a situation aggravated to the limit. Only the best of those who passed this test could apply for participation in the program. Sometimes he jumped out of the wardrobe to catch the candidate by surprise, and it happened that he nailed a chair to the floor, and when a visitor entered the dimly lit room, he greeted him with the words: "Pull up the chair, captain." Sometimes Hyman sawed off the front legs of the chair a few inches and watched the candidate squirm and squirm, trying to keep his composure under the debilitating barrage of questions. What is there, the admiral was not averse to driving the test subject into a closet so that he would consider the answer there.

Often, Rickover would begin interviews by asking, “What topic do you know best?” The topic could be anything from growing lettuce to the structure of the universe. “Be careful with your answer,” he warned. “Whatever you call it, I know the area better than you.” And it turned out that he was right. Rickover was truly unique. He studied applicants' dossiers, intending to learn more about their area of ​​expertise than they themselves knew. Sometimes the interview stretched over three days.

Today, customers can afford to behave like a great admiral and, if they wish, short-circuit an unlucky salesman: “I know more about your product than you! Do you have anything worth spending my time on you for? Customers have a choice: either they do not communicate with the seller and buy what they want, or the process of communicating with the seller brings them something. Ideally, they get a new vision and expert assessment which cannot be obtained from other sources. It is experience that is valuable to them - and, again, they are not just looking for information about a product or service. They are looking for the expertise that no one but the salesperson can offer them. That's what the client cares about.

What makes communication with the seller so significant? What will the client not get in any other way than by interacting with the seller? This is knowledge of the market, this is an understanding of the peculiarities of the competitive situation in the client's market, this is such an understanding and vision of the client's business that no one else has.

Can a customer know the market as deeply as a good salesperson? No, he can not. The seller monitors the situation on the market day by day and looks at the world where he is fighting for a place in the sun through the prism of his offer. He has a vision of the future that cannot be found on the Internet or learned through thorough consulting. This knowledge is unique, and properly applied, it guarantees long-term and profitable relationships.

Availability of information

Ultimately, the customer wants one of two things: either the lowest price, or the product that represents the greatest value for him. On the one hand, it is very simple, on the other hand, it is very difficult. After the Internet entered our lives, the attitude of customers to the buying process and to sellers has changed dramatically. In many situations, sellers were simply not needed. Let's take a simple example.

Let's say you're bringing a new bank to market. Let's type "banking for businesses" into Google. After 0.28 seconds, the system offers us 1,190,000 results. Today, it is easier than ever for a buyer to find information about what he is interested in, including banking services, from the description of offers to the best rates. All information at your fingertips. A few moments and you're done. Although if you spend an average of 40 seconds studying one page, then a careful study of the sites, links to which are given on the first pages of the search results for the query “banking services for organizations”, will take a year and a half. Let's experiment a little more.

- "Data Processing" - 28,000 results in 0.28 seconds.

- "Accounting" - 198,000,000 results in 0.29 seconds.

- "Management Consulting" - 2,150,000 results in 0.27 seconds.

- "Packaging" - 110,000,000 results in 0.27 seconds.

- "Health" - 102,000,000 results in 0.33 seconds.

Difficult to determine how much useful information carry sites, links to which were issued by Google, but it is quite obvious that it is not possible for one person to study them all. Fortunately, the algorithms built into Google display the most relevant information at the very beginning. Modern search engines are so advanced that they bring to the surface exactly what we need in a split second. And the buyer can get a clear idea of ​​the existing alternatives in the area of ​​interest to him in a very short period of time.

So, if the buyer is simply looking for the lowest price, he does not need to contact the seller at all. It is enough just to make a search query on the Internet. But imagine that the buyer is guided not only by low prices. Let's say he wants to find a proposal that is fully consistent with the tasks facing him, which means that he needs help and support. He wants to explore alternatives, and the buying process for him is more than participation in the so-called tender, when several suppliers compete for the right to fulfill the order of one client. This is where the 21st century salesman comes into play.

If there is no difference, why pay more?

Almost everyone, even first-year students of economic universities, will agree with a simple formula: Value = Benefits - Costs

The formula is actually called “the indisputable equation of value”. Of course, it is unlikely that there will be at least two people who will come to full agreement on exactly how to decipher the components of the equation. But we will not argue with anyone and will apply this formula in an unusual way. We will consider the equation in relation to the buying process, not to the product or service being sold. So, from our point of view, costs do not mean price per se. The word "price" is usually associated with the amount that a buyer pays for a product or service. But in a buying situation, “price” means something else. In the equation, "cost" is the time and effort that the buyer spends on the purchase, it is the energy that he invests in the process itself. “Benefits” are those opportunities and prospects that the buyer receives as a result of the acquisition.

The task of the seller in such conditions is to offer the buyer the benefits of the purchase, which can more than cover everything that he has invested in the process. In the graph below (Figure 1.1), point A corresponds to a situation in which, through the acquisition, the buyer receives many significant opportunities for him, and the costs of effort and time are estimated by him as relatively low, that is, the transaction promises a benefit. Point B describes a purchase with acceptable value for money. At point C, the client's efforts are not rewarded, he receives less than he invested. It is important to make sure that it is beneficial for the buyer to interact with the seller. Otherwise, why do you need a seller at all?

If the seller does not offer interesting opportunities and prospects (we will look at them in more detail below), justifying in the eyes of the client the waste of time and effort, then the buyer will simply choose a more profitable solution to the problem, and the most economical one completely excludes the participation of the seller. This explains the growing popularity of tenders, online bidding, etc. Buyers say: “Communicating with sellers does not give me anything new, so I don’t want to waste my time on them anymore.”

In the pre-Internet era, the salesperson was the main bearer of knowledge about products and services. Of course, you could bit by bit collect information from magazine articles and advertisements or study ways to solve a problem, sitting in the library, but the first way gives incomplete information, and the second requires a lot of effort and time.

Thus, the power of the seller was akin to Mephistopheles: you were forced to go to him. If you wanted to get acquainted with the capabilities of the product or service you needed, you simply had no choice - you had to contact the person who had the goods. Today you don't need to date anyone.

Back to the equation of value: a buyer will not interact with a seller who does not give him anything more than what can be obtained from other sources and in other ways. Indeed, why? Sellers are ready to provide detailed and valuable information, they are learning to better and better talk about their product or service. But the buyer doesn't care. He has even more information at his disposal - billions of bits. Much more than any salesperson knows.

The bar has been raised: preparation is now mandatory

The world of buyers has changed drastically and irrevocably, and the world of sellers will never be the same again. The buyer no longer needs salespeople to get information about a product or service. He devotes very little time to those who turn to him with commercial proposals, not armed with knowledge of his business: you will not have enough patience for everyone. The seller's need to anticipate and predict the situation has increased twenty-fold. You can no longer come in and start asking simple questions to find out the current situation of the client. Today, questions are designed to reveal to the client the benefits of the offer. If a salesperson walks into a company and says, “So, tell me about your business,” then the other person will probably retort, “You had hundreds of opportunities to find out before visiting me! Why didn't you use them? We don't have time for you." Here lies a subtle, but important nuance that so far only a few sellers feel.

Our time is more valuable today than ever. And in the literal sense. We spend more and more time at work, rush to have a quick lunch or even have a snack at the computer, answer emails during telephone conferences and to the point of insanity we hone the ability to do several things at the same time. If time is money, then every minute has a dollar equivalent. Really, today the seller really should practice at home before knocking on the door of a potential client.

The bar is raised high. The questions that salespeople used to ask in the past to better understand the customer's business are no longer enough. Today they are suitable only to create a suitable environment for the sale, so that the client understands his needs. Questions about the fact described in other sources show the incompetence of the seller asking them. He will immediately be relieved of the need to communicate further. As customers, we want something more in exchange for our time. We are very busy. As Michael Mandel, chief economist at Business Week, noted, “We are running as hard as we can to keep up with the technology-driven business.” Sellers need to realize that a new era has arrived. As they take their first steps in working with a client, they must be prepared to learn more about their business than ever before. The modern client does not tolerate unpreparedness and inappropriate actions.

Be humble

Today's buyers, as you can see, are becoming more and more sophisticated and knowledgeable. The seller must find an approach to them or shrug. Today, customers will not allow themselves to be talked down to, they no longer perceive the salesperson as an expert. Having knowledge of something, the seller intends to present it to a potential buyer as something new, often in a didactic manner. And he tends to ask questions that many clients find cheeky: “I reviewed your annual report and noticed that your company's profit margins are lower than those of your competitors. Is that so? Let me tell you how we can help you." I would answer something like this: “You don't know anything. You don't understand the complexity of the situation we're in. You don’t know the plans of our owners, our shareholders… There are a million things that you just don’t see, don’t know and don’t understand!”

It is much more modest and, most importantly, more professional to formulate questions as follows: “You know, I looked through your financial reports and tried to study the information available in open sources about your company and your market. May I ask you a couple of questions on a topic that I believe is relevant to you, especially given what we are seeing in markets similar to yours?

In addition, it is important to understand that today the responsibility for making purchasing decisions is shifting from management to middle managers. Top-level managers focus on solving issues that affect the enterprise as a whole, and on finding ways to make the firm more competitive. And most top managers will not tolerate the arrogance and haughty behavior of salespeople. Increasingly, seniors are taking over enterprise-level relationship management.

Back in 1995, Alston Gardner and Jay Klompmaker of the Kenan-Flagler School of Business at the University of North Carolina conducted a wide-ranging study of top executives and their involvement in the buying process and published a report titled Selling Product to Top Executives. Some of the conclusions made by scientists are presented in the graph below (Fig. 1.2).




As can be seen from the graph, top managers are actively involved in the buying process at the first stages, when current problems and tasks are identified, goals are set, and a strategy is formed. They are included again in the process at the stage of implementation of the plan and evaluation of results. Purchases for the needs of the enterprise are transferred to the responsibility of middle-level managers.

In other words, salespeople seeking to move away from purely transactional, price-based selling must be prepared to negotiate with the top management of the client company in the new world. And in subsequent communication, sellers should make sure that the customer has completed their tasks. Today, good salespeople must be able to communicate with top managers of the client company in the same language, if, of course, they want to get away from sales, in which everything is determined by the price.

How to avoid price competition

In summary, to move beyond price-based selling and succeed in the early 21st century, salespeople must develop skills that enable them to capture exceptional product value and communicate it effectively to the customer.

Huthwaite (www.huthwaite.com) was created to conduct the study. This research continues to this day. It boils down to collecting sales data, we didn't make up case studies. Our heroes are real people, and the events with their participation, described by us, really took place. In this book, we share insights that we have learned from years of studying the behavior of buyers and sellers in a wide variety of markets. We have developed an original method for determining purchasing value based on information from several thousand transactions that share interesting common characteristics. More precisely, we studied transactions (be it the sale of a product or a service) that met two requirements:

- the customer, when purchasing a product, service or feature set, encountered several competing suppliers whose offers looked the same, that is, despite the best intentions of the sellers and their attempts to sell value, the buyer could see only one clear difference between the offers, namely the price;

- despite the obvious similarity of the proposals, the customer did not stop at the lowest price.

We assumed that if such seemingly odd customer behavior was legitimate, then these transactions would provide us with an excellent opportunity to explore what the customer meant by value. Why do customers do such illogical things? Why do they pay more for a product or service when another supplier offers the same thing at a lower price? We believe that most will find our results compelling and agree that they can change the idea of ​​salesmanship. Moreover, we will see that the results of the study serve the seller well for developing strategies and tactics to avoid price competition and sell products and services at a higher price. We believe these skills are learnable, reusable and measurable.

How does the client come to understand the value

The surveyed customers indicated that they were willing to accept the price after being in at least one of four situations that made them understand how the offer creates value for their business. We have called these situations insight-driven. So, customers could pay more, redefine the relationship between seller and buyer, erect barriers to the supplier's competitors, and treat the seller as a trusted advisor if the seller:

- Helps the customer to discover hidden problem in his company;

- offers a solution to the problem of the buyer, which was not previously taken into account, i.e. non-obvious solution;

– creates or opens for the buyer new or unnoticed before possibilities and perspectives;

– not only acts as a supplier of products and services, but also is intermediary in creating benefits more precisely, offers him the full range of opportunities of his organization in such a way that they can contribute to the expansion of the business or the reorientation of the client, which in the particular case is realized through cross-selling.

On fig. 1.3 you can see how we arranged the results of the study of these situations. In Part I, we look at the hidden problems and non-obvious solutions that are the hallmark of today's consultative selling. The definition of consultative selling has changed fundamentally, and the tactics you used to use are no longer valid. You will learn why this happens and how to deal with it. We have classified these two types of situations in the category of consultative selling, as they are used mainly in work with lower-level and middle managers. They are important, but they are predominantly tactical in nature.




In Part II, we'll explore new opportunities and mediation to create value. To create such an environment, you need all the skills of consultative selling, but applied at a higher level - at the level of strategic selling. To be clear, we define advisory selling as deals with lower and middle level executives, and strategic selling as deals with senior managers. Success can be achieved at both advisory and strategic levels.

An analysis of successful sales has unequivocally shown that these four forces are at work. And while mastering them requires a combination of art and science, there are methods that can be learned, applied in practice, and more effective the longer you hone their use.

Let's leave price selling behind and start our journey into a new era by exploring the hidden problems.

Chapter 1 Highlights

1. With the invention of the Internet, the attitude of customers to the buying process and to sellers has changed dramatically. In many situations, sellers were simply not needed. The main reason is the increasing availability of information.

2. Today, customers don't need salespeople to get information about a product or service. They can find answers to any questions they have on websites using search engines.

3. Modern customers have become more experienced and are willing to pay a higher price for new vision, analysis and knowledge that cannot be obtained in any other way than through the purchase process.

4. The equation of value that most economics students will subscribe to is: value = benefits - costs.

5. The world of buyers has changed drastically and irrevocably, and the world of sellers will never be the same. Buyers no longer need salespeople to learn more about a product or service. All necessary information available on the internet.

6. Customers no longer allow themselves to be taken down because they no longer perceive the salesperson as an expert.

7. At the beginning of the 21st century, a salesperson will not be successful if he only talks about price or about value in general. Salespeople must create value by helping the customer deal with their own needs. There are skills that motivate the buyer to insight, which in practice have proven effective in detuning from competitors.

Chapter 2 Finding Hidden Problems

Understanding means recognizing patterns of behavior.

(Isaiah Berlin, "Historical Necessity")

stereotypes

Creation of value is based on the identification of typical behavioral patterns. The ability to help the client (as we will call and potential clients, and current customers) to look at the situation from such an angle that stereotypes become obvious and problems, solutions and opportunities appear - opens the way to concluding a profitable deal and further building relationships. Remember that your future partner does not always need new information. Maybe you just need to show him something from a different point of view.

Take a look at fig. 2.1. What do you see? Okay, let's clarify: do you see a cowboy in the picture? Can you see the contours? And if I ask you, do you see a cowboy riding a pinto? Did the image make sense? The stereotyped perception of problems, solutions and opportunities also prevents us. There are many objects in our field of vision, but until we are asked the right question, we do not recognize them. As if we have before us the reverse side of an intricate tapestry - an interweaving of threads and knots. Perhaps we will get a vague idea of ​​the picture, but until someone shows us the front side, it will remain something elusive and mysterious for us.



New coordinate system

The advent of the era of customer-controlled sales has changed the frame of reference for salespeople. Indeed, “coordinate system” is a very apt metaphor. As Einstein noted, the sense of time is determined by the coordinate system. The same is true in our situation: for the buyer, five minutes spent with a poorly prepared salesperson is comparable to two hours of wasted time. Sales old school who touts his offer is a different point of reference. And for the buyer, time with him will stretch endlessly. But every minute is precious to the client. We are under pressure, we have a lot to do. And if our attention is not instantly or at least very quickly attracted to something that makes us think: “But the guy knows what I need to understand my market, my company, my own efficiency,” time will crawl.

It is the same with business problems that are hidden from us. Someone needs to shed some light on them. We want to get an authoritative opinion from a knowledgeable specialist. After all, problems will remain outside our field of attention until an experienced salesperson who knows how to masterfully involve the interlocutor in the process carefully questions us and helps us find all those obstacles that nullify our efforts. Time to drop the patterns and take a look at the front side of the tapestry.

Finding hidden problems

The first thing a salesperson should ask themselves is, “What are the industry’s problems that I know from experience? Which ones can I solve with my product, service or knowledge?”

By a latent problem, we mean any difficulties and interference in the work that should be eliminated, but have not yet been identified. At all times best sellers intuitively understood that value for the client can be created through showing his own weaknesses - with the help of questions. It is very important to find a whirlpool hidden under the calm surface of the river.

We use the term "hidden problem" to describe a condition or situation that we need to get out of, but the true causes of their occurrence are often unknown to us. Problems vary in type and scale. It happens that the assembly line is faulty, and sometimes, troubles pour in one after another and slow down the task. Well, the problem, external or internal, must be solved. The need to solve the problem is of fundamental importance. Left unattended, the problem gets worse and sooner or later hits the profits of the enterprise.

Sellers are looking for problems that are not obvious to the client - those that are wholly or partially beyond his competence or lie outside his coordinate system. The bottom line is that he just doesn't notice them. But there are problems, and they affect the profit of the enterprise. Finding and resolving them is very important, but the client needs help because the difficulties slip from his field of vision. It happens that a person is aware of the problem, but does not understand its scale, impact on other areas and possible consequences at all. The distance is too short: for example, a child who first came to the zoo, pressing his nose against the leg of an elephant, will describe the animal as a large, gray, scaled pillar. Or, for example, you and your prospective partner think and act in different systems coordinates. Imagine an engineer with an excellent understanding of Newtonian physics trying to understand the questions of quantum mechanics. However, the fact remains that if the client does not see the problem, he cannot cope with it.

Seller of the 21st century

Perhaps the following statement will seem to you an exaggeration, but the market has made a qualitative leap and moved to a different coordinate system. Meet the seller of the new time. He entered the 21st century and is ready to support the client in adjusting to new realities. He has a staggering set of tools, and most importantly, what he has is the ability to help clients identify hidden problems in their business. How does he do it? We will definitely get acquainted with his practices. But first, let's look at the picture. What makes him able to help clients? What makes him stand out among his colleagues and allows him to meet the needs of customers? The inherent ability of a good salesperson to create value lies at the intersection of knowledge of the industry and understanding of the essence of another's business. The seller knows how specific problems specific to the market affect the profitability of the business. Here is the value creation zone (Figure 2.2).




Add in the skills of asking questions, and you will understand how to uncover the ins and outs of a client. At the intersection of the three professional qualities there is a customer knowledge zone shown in Fig. 2.3. This is an area where industry knowledge and understanding of the essence of the business, combined with the use of questions, becomes a powerful tool. In the future, it is used to look into the depths of a hidden problem.




It is necessary to explain the turnover we use “skills in using questions”. It is not enough just to ask questions: there is a great risk of causing irritation. Most salespeople today recognize the desirability of asking questions, and many consider themselves masters of advisory sales. Common misconception! In Huthwaite's recent large-scale survey, when asked about customer attitudes towards salespeople, executives noted that only 4% of their employees conduct business in a way that puts the customer in a new light. In other words, according to managers, 96% of salespeople do not create value and / or do not know how to do it by identifying hidden problems.

Questions alone do not make a salesperson an advisory salesperson. You have to learn to ask the right questions at the right time. Questions should serve two purposes:

- to help enlighten the client;

- make sure that the client shows readiness for further conversation.

The subject of our conversation has to do with the understanding of the client in the tasks before him and is closely related to what we call restrictions. We will talk about them. But first, let's take a closer look at the qualities of a good advisory salesperson. We won't waste time on detailed description the following requirements, as we take them for granted. The first condition for simply interacting is that the products or services that the seller provides must be excellent or even outstanding. The second condition: the seller must deeply understand the products, services and capabilities of the partner company.

Industry knowledge. The seller has expert knowledge of the industry and understands the competitive situation in the market. It is a source of knowledge and ideas that a high degree probabilities are of interest to the client, and he perfectly understands where and how exactly his product can be applied. According to a recent Huthwaite survey of 500 top executives (CEOs) and senior vice presidents (SVPs) of top companies (according to Fortune magazine), industry competencies carry the most weight when choosing a partner. In fact, 95% of respondents noted this factor as the first or second factor influencing selection.

Business understanding. The seller must understand not only the specifics of the industry, but also the finer details of doing business. For him, the income statement makes sense. He understands the essence of the activities of a commercial enterprise (see Chapter 8). It causes insights - insights, which we will discuss in more detail in Chapter 6. For now, we note that the seller must be able to tell not only how his proposal differs from the competitive, but also what benefits it promises to the customer.

The ability to ask the right questions. As we mentioned earlier, a good salesperson is good at asking questions, which skillfully leads the client to a new perspective on the situation and pushes him to formulate conclusions for himself. The truth is, most salespeople don't know how to ask questions. Moreover, research has shown that it is the ability to identify customer needs that is especially often lacking for those who are included in the top 100 sales according to Fortune magazine! Question skills will be discussed in detail in Chapter 5.

So, these three skills make the seller extremely valuable to the client, and he prudently turns to him for advice.

Skills in action: showing the front side of the tapestry

Our friend Bob Colvin, who sells chemicals, was in South Africa a few years ago. As a process chemist, he was particularly interested in the gold mining processes used by Anglovaal (now Metorex) at the New Consort mines in Barberton at the time. Opened in 1885, these mines are among the oldest in the world.

The low-grade gold ore found in those places is still processed in a way that was patented back in 1887 by the English metallurgist and chemist John Stuart MacArthur. The ore is crushed, then washed with a solution of sodium cyanide (gold dissolves in it), the resulting suspension is drained. Nickel acetate is added to accelerate the leaching of the precious metal and preserve its quantity. Paddle wheel bowls, each the size of a normal coffee cup, scoop the acetate from the vat and pour it into a reservoir where the slurry enters. And finally, zinc dust is introduced into the mixture, due to which the gold settles to the bottom.

Our inquisitive friend looked into the wheel bowls and realized that they had never been cleaned. Meanwhile, nickel acetate caused corrosion and, when the process was stopped, formed a crust on the walls of the vessels, as a result of which only half of the required amount of the chemical was scooped up.

After touring the lab, Bob had lunch with the facility manager, who inquired about the guest's experience. Our friend answered the question with a question: “Do you think that dissolved gold remains in suspension after cyanidation?” “I don’t know, why are you asking?” “I doubt there is enough nickel acetate in the slurry… If so, what would happen?” - "I think that the process would slow down ..." - "And if zinc dust was added, less gold would settle?" - "Yes indeed". The manager was upset.

As you can see, it was worth thinking about regular cleaning of the cups - and we managed to find a solution.

It turned out that this little problem cost the company five million dollars in a year! Such was the price of lost gold. And it was only necessary for someone to notice: uncleaned cups hold half the amount of liquid due. That's it - creating value by identifying hidden problems.

It would seem elementary. But imagine the complexity of the problems you face in your industry and realize that you don't know everything. What is the price of unknown and potentially unpleasant consequences of hidden problems?

The NHRI Model: Revisiting the Equation of Value

From a salesperson's point of view, helping customers identify a hidden problem is a process built around rules that can be learned and used. What did our friend Bob do? Let's go back to the equation of value we discussed in Chapter 1: value = benefits - costs.

Let's take a closer look at the sources of benefits. Let's use the following equation:



Thus, an abbreviation for Skills, Process, Knowledge and Effort is obtained, which reflects the structure of benefit creation. Consider this equation as applied to Bob's situation.


Skills

Bob understood that if you tell the client about the problem, there will be little sense. He knew that the client must realize it himself. Talking to a person about his difficulties is a thankless task, fraught with a negative reaction: indignation, protest, resentment. As we will see in the study of communication limitations, people prefer to draw their own conclusions. Our friend knew how to ask the right questions: either bringing the interlocutor to the understanding of the subject, or encouraging him to continue the discussion (or achieving both). Bob did not blame the manager for the poor management of the mine, but skillfully asked questions so that he would delve into the problem himself. In Chapter 5, we will explore how awkward questions become the key to success.


Process

To understand the client's business, Bob went through several stages in succession. The process began with the clarification of industry specifics. Gather a focus group of your successful peers, or better yet, a few key executives, and discuss the customer's market situation together. Recall how your customers suddenly realized they had a problem. What exactly was the problem? What was the reason for the realization? Does this scheme apply to other clients? Based on the collective experience, make a list of the main problems of the industry.

The next step is to understand what resources your company has. What problems can you solve? What capabilities does the company have to deal with the industry challenges you identified? Make a list of problems that only you can solve or, in any case, solve better than your competitors. The list should be short. If it has more than three or four points, you may be misunderstanding strengths your company or overestimate your capabilities. Remember that globalization has put business people on an equal footing. Competition can double your strength, no matter what industry you're in.

After compiling the list and carefully checking it for accuracy and relevance, you need to study the impact of the identified problems on the business. How do they affect the company's profits? What happens if the problem remains undetected? How will the problem affect the business if control is relaxed?


Knowledge

Bob Colvin has proven himself by demonstrating knowledge of the industry and building awareness from the interlocutor, thus building a trusting relationship with the client. As an industrial chemist, he has learned to understand the systems and processes used in most of the industries he deals with as a salesperson. But Bob also uses every contact with a client as an opportunity for exchange: by uncovering a problem, he adds knowledge to his piggy bank (see Chapter 9). Our enterprising friend is constantly delving into the companies and markets that make up his client base. So, knowing the cyanidation process, he created value for the partner.


Efforts

Finally, Bob understands the importance of putting in the effort to create value. For good seller skills, knowledge, understanding of production are vital. However, it is the effort that drives them. Bob could wander through the mine with blinkered eyes, not paying attention to anything, just waiting for the moment to start talking about his goods. But he looked around, studied production, tried to apply his knowledge, and diligence bore fruit. He noticed something that no one had noticed before him. No doubt, people were constantly walking around the mine, but no one bothered to pay such attention to the cyanidation process. Diligence helped Colvin establish a serious relationship of trust with the manager and influence him. And when it came time to discuss the products, there was no bargaining. Bob could sell the product for a higher price than usual because he created a huge amount of value for the client. By the way, our hero worked in a company that paid a lot of attention to staff motivation. He received excellent training and, if successful, received a generous reward. This allowed him to sell confidently and professionally.

Communication restrictions

Bob's story is somewhat uncharacteristic. It seems that uncovering a hidden problem directly leads to sales success. But do not rush to conclusions. The first mistake salespeople make is jumping into a solution conversation before the customer clearly understands that something needs to be done at all. We recently surveyed over 600 sales executives from Fortune 500 companies, and 72% of respondents said their teams jump to a solution before the customer sees a need for it.

Questions are the easiest way to help reveal how the firm is doing, and thus uncover hidden problems. Behaviorism gives us an explanation for this. We use the term "limitations of communication" and they are derived from a principle known as propensity to confirm:

1. People value their statements and conclusions more than what they are told.

2. People value what they asked for more than what was offered to them.

In other words, as a client, I will always trust conclusions that I come to on my own (using leading questions) more than ready-made answers that I have been strongly convinced to be correct. Telling a customer what they need and how you as a salesperson can help them is a failure today. As a customer, I would prefer to choose on my own what I need and how you can help me, but perhaps for this I will need the unobtrusive help of a seller who will ask the right questions. So, ask questions anyway, but make sure they are helpful to the client and help them understand the problem. As we showed in Chapter 1, the client doesn't need a teacher to fill in the gaps in his knowledge: he wants the salesperson to help him understand the situation in a complex way and see business patterns that were previously hidden. He wants the seller's questions to only push him to discoveries.

At the beginning of a relationship, the questions the seller asks are extremely important. They serve to identify stereotypes by the buyer. The salesperson asks questions and occasionally creates value (when the salesperson gets an idea through them) to engage the customer in the process. Insights correspond to the peaks of the graph in Fig. 2.5. Low points are the necessary questions that the seller must ask in order to fully understand the situation. They are under the dotted line, which means value creation, as they are mostly boring and of little interest to the client.




Let's look at how confirmation bias works in sales. The vertical axis is "Value". The values ​​at the bottom of the graph describe communications that create value. That is, the value that the seller offers in the course of the interaction (for example, in retail) is of low importance for the sales process. The values ​​at the top of the graph represent value creation. That is, creating value (for example, identifying hidden problems, non-obvious solutions, new opportunities within the limits of communication) is much more important for the sales process. The horizontal dotted line shows where value creation begins. Above this line is a frank and productive conversation. Below is a discussion in which price is the decisive factor.

The period of interaction between the seller and the client is counted along the horizontal axis. The vertical dotted line shows the moment when a previously hidden problem is revealed. This is the moment of truth when the client suddenly discovers a hidden problem, or a better solution, or a potential opportunity. On the right side of the line lies that part of the dialogue, during which the client not only answers questions, but asks them himself. The upper left quadrant describes situations of discovery, the upper right quadrant describes situations of awareness.

It's easy to see that Confirmation Tendency #1 (people value their statements and conclusions more than what they're told) is in the upper left quadrant. This is a quadrant with a high value, obtained before the client discovers the problem, until the moment of awareness. This is the start of the selling process, and the ability to ask questions and listen is critical. In this quadrant, questions are more important to the client as they lead them to identify the problem. The client finds out his needs, learns about things that he had no idea about before. The client comes to his own conclusions.

Confirmation bias #2 (people value what they asked for more than what they were offered) plays a role in the upper right quadrant. This is where value is created after the customer is aware of their problem. This is the period during which the client asks questions. As value is created, the salesperson becomes an advisor to the client. In this part of the conversation, the answers are very important for the client, because he needs the knowledge of the seller, his advice. The client invites the seller to exchange knowledge.

Above the horizontal dotted line is a space of interaction that creates value. Let's see what happens below. In the lower left quadrant, the salesperson is trapped in an outdated sales approach. By talking until he's blue in the face about a product, service or company, he bores the client, and he thinks: “I don’t care about all this” or “Damn it, how expensive!”. Obviously this is not best situation for both participants in the process.

In the lower right quadrant, the seller is juggling price. He gives discounts. Once the client understands the problem and decides that something needs to be done about it, their only concern is cost. He gets no added value from the buying process: no new insights, no new discoveries, nothing. Why should he pay more? The salesperson in the lower right quadrant allows the negotiation to flow into a price negotiation because he has nothing more to offer. This is just a nightmare for the seller.

Below the dotted line of value creation, only price matters are discussed. In the lower left quadrant, the seller is actually creating an objection, and in the lower right, he is fighting a price war that he himself started because he created the objection ground and did not offer the client new understanding. Therefore, the only thing left for him is to try to stand out from the rest and outplay them by reducing the price or even offering the product for free.

We're not saying that once the line is down, the salesperson doesn't have to haggle or face objections, far from it. But if you take confirmation bias as the basis on which value will be built, then the client himself will reveal the value, and for this he is willing to pay more. The value-creating salesperson moves from a world of objections and discounts to a world of agreements and profits.

Confirmation propensity in action

Let's look at a few examples of situations that are typical for quadrants. Take a look at fig. 2.6. The dot in the upper left quadrant is Jill, a value-creating salesperson who works in a consultative selling style. It is in the early stages of a sale. The dot in the upper right quadrant is Jack, the end-stage value-creator. The dot in the lower left quadrant is Harold, a salesperson trapped in an outdated sales approach. Finally, the dot in the lower right quadrant is Maud, who is fighting a price war that she has unleashed.




Jill, lawyer

Jill is a lawyer. She has been in business for a long time, she communicated with many customers, so she understands well what problems her clients are at risk of facing. One such problem is inheritance. Jill found that clients rarely understood such a sensitive issue. In America, the property of a deceased person is taxed at a rate of 45-49%. That is, almost half of the inheritance goes to the state. If a person has children, grandchildren and other relatives, the tax is actually paid out of their pocket.

Fortunately, this tax is not levied on the spouse of the deceased, since there are so-called unlimited marital deductions in the US Internal Revenue Code. Spouses are allowed to transfer assets to each other free of charge, and even after one of them dies, the remaining widow will retain this right. In addition, each U.S. citizen is entitled to a personal tax credit that allows you to deduct a certain amount from inheritance tax. According to the law adopted by US President George W. Bush in June 2001, the amount of the benefit varies from year to year, but is in the range of 1–3.5 million dollars. In other words, when properly used, this personal benefit becomes a good shelter from property tax.

However, few people use convenient advantage, as many do not even know about such a problem as inheritance taxation. For example, most couples prefer joint ownership, which means that both spouses must be present at transactions regarding the house, joint bank account, brokerage account, etc. Since the assets are jointly owned, after the death of the wife, the property passes to the husband and vice versa. Due to the family benefit, there is no inheritance tax, but since there is no inheritable property left after the death of a spouse, these assets are not subject to estate tax. Upon the death of the other spouse, any assets whose value exceeds the then-existing personal tax credit will be subject to high taxation, and the heirs will receive less money. With the help of competent tax planning, these assets can be hidden from taxation, and the heirs will receive twice as much.

Jill faces this problem regularly, but few people know about it. With just a few carefully asked questions, the client is eager to hire Jill as their lawyer.


Jack, industrial crane specialist

Jack is a salesman at Barnhart Crane & Rigging Company. It offers innovative solutions challenging tasks for lifting and moving loads typical of various heavy industries, from energy production and petrochemicals to the renewable energy sector. In this situation, Jack is in one of the final stages of the sale. He began by asking a lot of questions about the consequences of using the tool that 95% of companies in the industry use, the long boom crane. The realization of the hidden problem came at the moment when the client realized that using the traditional method they would have to dismantle the wall of the plant and shut it down for an unacceptably long time.

Jack came up with a solution by recommending Barnhart's unique modular tower elevator, which is different from the usual giant design. With a small footprint, it has an amazing load capacity and flexible layout. Such unique opportunities allow the client to solve the identified problems. The client then began asking questions about other issues his company was facing. Jack became the customer's advisor and consultant because he was able to lead him through the analysis of the situation to the conclusion that the problems associated with the use of the traditional crane model exist and must be solved.


Harold, accountant

Harold, who is in the lower left quadrant, is not very successful in sales. Harold is a Certified Public Accountant specializing in Taxation non-profit organizations. And he knows his stuff very well. But he is not very good at selling services. He'll tell you that he's an accountant, not some salesman (he associates sales with used car sales and doesn't like salespeople). Unfortunately, prejudice gets in the way of his work.

In conversation, he teaches the client. “You have a problem,” Harold declares imprudently and even somewhat pompously. You don't understand the complexity of tax laws. You give a lot of money to Uncle Sam every year because you don't know the loopholes that nonprofits have. I can help you. I have years of work behind me and great knowledge, and, moreover, I follow the letter of the tax code.” So the client thinks: “This person must be terribly expensive. Doesn't he understand that we have limited resources? Poor Harold is not moving forward. His actions provoke a storm of objections.


Maud, industrial belt drive vendor

And finally, Mod. She sells industrial belt drives large companies producing conveyors, flexible pipes and hydraulic systems. I must say that this is a very difficult job, since industrial belt drives are not perceived by companies as a competitive advantage: for them it is just an element of the system. Its polyurethane belt drives are durable, functional and easy to maintain, with an exceptionally low total cost of ownership. But instead of drawing the customer's attention to the low cost of ownership and the fact that up to 60% of the machine depends on the operation of a belt drive, the cost of which is only 1% of the total cost of the mechanism (an often overlooked problem), Maud drives himself into price negotiation trap. Its products are neither cheaper nor more expensive than competitors, but giving discounts would hurt both profits and reputation. If she had asked customers questions early in the sale that would have helped them discover their problems, she wouldn't have to fight her way through a price war right now.


Information versus insight

What did Jill and Jack do to achieve the status of a trusted adviser and at the same time make a profit? They created value by leading customers to uncover hidden problems through careful questions. The key to success is understanding the difference between information and awareness. IN modern world, we repeat, customers can get information easily and quickly without intermediaries. Jack and Jill brought their own knowledge to the process and led the client to insight, as every salesperson should do. After all, the seller communicates with a wide range of customers and is able to anticipate the difficulties that his interlocutors face. He regularly monitors the situation on the market and is able to highlight the most typical errors and problems that the client, as a rule, has no idea about (Fig. 2.7).



Preparing for the moment of insight

The client can be quite confident that everything is going as it should, and rest on their laurels. And it is insight that can push him out of a state of rest. If a salesperson comes to a customer with a message of impending danger, the customer is likely to wake up and start listening. He will probably be grateful to the seller, will consider him his adviser and creator of value. By being able to discover a hidden problem, the seller will create significant value for him. Price is no longer a key factor in sales: the knowledge of the seller matters much more. The sale of the product becomes profitable and the customer gains a sense of value that deserves to be translated into monetary value.

Let's take a look at how to move from strategy to tactics by deliberately incorporating hidden issues into a salesperson's toolkit. Take a look at the industry your customers are in. What obvious and known problems do market players have? A few examples.

1. Most policyholders know that clients are at risk, and they have a basic understanding of some types of damage. Perhaps it is precisely because of the consequences - the disruption to business, the cost of a fire - that people understand that there are risks.

2. Most doctors who use this or that drug know that there is a risk of infection. And they know that disinfection is a very important step in the operation, especially if it involves internal prosthetics.

3. Most people who buy implementation services software, understand that there may be problems of its integration with existing systems and the development of technology.

In every industry there are problems that the client knows for sure. First of all, ask yourself: “What tasks should be known to my customer?” List them and then switch to something else. You should be aware of them, but you don't need to discuss them with the customer - this is what most of your competitors do. Will discussing these issues with the client help you stand out? What happens if all competitors address obvious issues? Here is the path to sameness, to the world of the product. So just because you're dealing with problems (and that's the trend for the last 15 years), it doesn't mean you're doing consultative selling.

The first thing you should think about is the problems that the client called you to solve. These are problems that are well known to them and that everyone knows about. Of course, they are also well known to the marketing department of your company, and colleagues will explain to you in learned language how to achieve the goal. That is why most sellers talk about the difficulties that buyers are dealing with in a rather pompous manner. That's why the bulk of sales force is spent on price wars. The usual questions about problems don't stand out, it's just a more elaborate commodification of the offer.

Considering the obvious challenges, identify what are the biggest problems that customers may encounter without noticing them - hidden problems. Finally, you probably have customers who pay in full for the value you offer. These are yours best clients. They don't talk about price. But why? Consider if you have drawn their attention to a hidden problem. What other problems have you helped your clients discover in the past? Explore issues that regularly crop up in the industry, but for some reason are not widely known. To prepare visits to discuss hidden issues you have identified based on own experience, you will need a convenient tool - a table that compares hidden problems and your proposed solutions. It will serve you well if you make it a habit to update it regularly and keep your finger on the pulse of the industry. In Part III, we will take a detailed look at how to bring the client to awareness through questions that arise when exploring problems.

Chapter 2 Key Points

1. Value creation is based on identifying customer action patterns. The one who helps the client to look at the existing situation from such an angle that stereotypes become obvious and problems, solutions and opportunities appear is highly likely to be able to conclude a profitable deal and build further relationships with him.

2. The era of customer-controlled sales has changed the frame of reference in which salespeople are forced to operate.

3. It is necessary to reveal hidden problems. By them we mean any difficulties and obstacles in the work that should be eliminated, but have not yet been identified.

4. The seller's ability to create value lies at the intersection of industry knowledge and understanding of the customer's business, and relies on the ability to ask questions.

5. The NHRI model is an extended value equation: value = customer benefits – costs, where customer benefits = (skill + process + knowledge) x effort.

6. Communication limitations (confirmation bias) are an important component of sales success because:

- people value their statements and conclusions more than what they are told;

People value what they ask for more than what is offered to them.

7. To help a client discover a hidden problem, one must understand the difference between information and insight.

Chapter 3

If you find a good solution and use it, it could be your next problem.

(Dr. Robert Anthony)

Your goal is to help the client pave the best path to a result or achieve a better result.

But again we are faced with a formidable force - patterns of perception. This is an example of the operation of induction, by which we deduce the general from particulars. By honing your stereotyping skills, you'll help your client find new, better, non-obvious approaches to problem solving that will best meet or exceed their expectations.

Take a look at fig. 3.1. At first glance, there is nothing like the picture. A mix of black and white spots. Okay, do you see a man and a woman? Are they dressed in evening wear and dancing the tango? And indeed, as if from nothing there was a picture, since you learned what you should see. A few carefully chosen questions trigger our inductive thinking, and voila! - a picture in front of your eyes.


Definition of a non-obvious solution

It is the same with non-obvious solutions. The client has a clear need, and he figured out how to implement it. But not the fact that his solution is optimal. The task of the seller is to help the client choose a better path or get a better result. When talking about a hidden problem, we are trying to get the client to study the issue more carefully or reconsider its attitude towards it, and when talking about a non-obvious solution, we convince the client to reconsider the relationship between the problem and the result or set a different goal.

To explain more clearly what we mean by a non-obvious solution, we set the following initial conditions:

- the client knows about his need, and it gives him inconvenience;

- client in in general terms imagines a way to solve the problem;

- the client understands what result he wants to achieve.

So, the client has an urgent need, and he is aware of it. I even realized that something had to be done with it, and took measures to find a way to solve it. He knows exactly what is being done wrong, what and how he wants to achieve. Someone carefully thinks through the plan, someone not so much. In practice, there are a variety of options, but the approach is essentially the same, and the above conditions make it possible the best way reveal the nature of the non-obvious solution.

The seller, who has the opportunity to present a non-obvious solution, is the only one who is able to evaluate the requirements put forward by the client and suggest a way to achieve a more profitable or, for example, more reliable result. The modern salesperson, for whom the income statement makes sense and who understands business principles, is able to study requirements with results in mind. He can determine when the requirements are optimal and when they are not (the latter is more common). He uses his professional knowledge to pave the best path, and, to his own satisfaction, understands that the client will pay handsomely for this help.

So, the client has a problem and has a vision of the result, he has found a solution or outlined the path to it. He chooses a supplier that will meet his requirements and help him achieve what he wants.



Take a look at fig. 3.2. As you can see, the client has formulated not only his needs, but also how he is going to satisfy them. The picture is typical. Managers, especially in large organizations, put the problem into words, describe the solution, and then pass the requirements on to the purchasing department. They sweep aside all differences between suppliers and then choose the cheapest offer. Most sellers interact with a buyer who has already decided what they want to buy to solve a problem or need, and so tell the seller what they need. The situation is acceptable if purely “money-commodity” relations are of interest. But there is a much better way (Figure 3.3).




A value-conscious salesperson is willing to show a better path or lead to a profitable outcome. Although the problem is the same. For example, in the late 1980s and early 1990s, when Coca-Cola was looking for ways to increase sales, McDonald's thought about how to offer customers more value. The problem was to reduce the profit that burgers brought. French fries and Coca-Cola In 1991, at the suggestion of a cola supplier, McDonald's introduced the Extra Value Meal menu, encouraging customers to take a burger along with fries and Coca-Cola at a special price. That summer, sales of Coca-Cola and McDonald's rose to incredible heights. Take a look at Figure 3.3 and see how the result on the right is greater than the result on the left.

Knowing the nature of the business relationship and knowing how to use questions will help the client rethink their current value proposition. In the case of a non-obvious solution, questions are asked so that the client asks you to describe a better path or solution. Understanding the business is important for finding non-obvious solutions for one simple reason: any commercial enterprise works in a general way. On fig. Figure 3.4 shows how a combination of knowledge of the customer's industry and a common business vision is used to drive a dialogue in which the customer can be challenged to discuss an alternative and have the customer offer to continue the discussion.



Development of non-obvious solution (strategic sales)

Business Understanding

As we have said, every business enterprise operates on the basis of a series of financial indicators. They are described below.




The General Motors business is quite complex, the dry cleaning business is simple, but they are based on general principles. Management is concerned about the following five indicators: revenue, cost, margin, cost and profit. In theory, every person in an organization cares about one or more of them. Shareholders think mainly about profit. For the CEO, all five indicators are important, they are constantly in his field of vision. The VP of Sales focuses on three: revenue, cost, and margin. Cost is probably the chief concern of the director of operational activities(COO). And the seller is primarily interested in the margin, as he receives a certain percentage of the margin that he provides. In other words, everyone cares about a certain part of the income statement.

It is enough for us to understand that all the consequences of business decisions affect one or more indicators.

And so a salesperson who seeks to offer a non-obvious solution must understand them and find out how they can change because of his product or service. The essence of a non-obvious decision is to achieve such a result that will improve one or more financial indicators of the organization.

Take, for example, a company whose management believes that, due to a steadily rising share of travel expenses, they need to do something to bring the cost of travel under control. What would a normal good manager do? He would organize the collection of proposals for solving the problem, describe in detail the goal and conditions. Everything would be considered only from the point of view of how to reduce travel costs. Suppliers will be asked for information about the size of the company, contractors, success stories. The scheme is predictable.

The salesman who tries to save on the little things gets an additional 0.5% discount from a chain of hotels, small concessions on air travel and car rentals, and then makes an estimate for per diem - playing by the rules of the world of transactions. Why do you need him at all? A computer that calculates quotas is enough. Take a look at the left side of Fig. 3.5: Such a proposal only affects costs and does not affect the business as a whole.




In fact, the majority react to the collection of proposals exactly as described. People whose opinion the client is interested in take for granted that the solution described by him is optimal for achieving the desired result.

An experienced salesperson, on the contrary, will enter into a dialogue with the manager who was the first to notice that too much money is being spent on business trips. Gradually, the seller will bring the interlocutor to the understanding that control of travel costs can be achieved not only by knocking out discounts and total savings. What if the solution is to reengineer the process, which will lead to increased revenue and even profit? An option is to arrange payment for hotel rooms and air miles in advance or at wholesale prices. These measures are sure to boost revenue, and besides, they promise additional profit, despite the costs. The right side of Fig. 3.5 is the result of awareness, an alternative to the obvious cost reduction strategies presented on the left.


Industry knowledge

When looking for a non-obvious solution, knowledge of the market clarifies the situation. Why is value creation where business understanding and industry knowledge intersect? The fact is that the industry must necessarily be viewed through the prism of five financial indicators, and their application in different industries varies greatly.

In fact, knowledge of the industry is, firstly, a comparison, and secondly, an understanding of the relationship. For example, if, while studying the consulting business (or other market based on intellectual property), you find that a certain firm has much lower profits than its competitors, then it is likely that it is suffering from cost problems that require intervention.

So, for the most part, knowledge of the industry is the possession of information about the standards and about the performance of the company in question in comparison with competitors. We are talking about relative efficiency. How are things going with the company we are interested in? Are its indicators – for example, the gross profit ratio – up to the industry average? What conclusions would you draw from looking at data from a popular business information database?




Will the companies whose performance is presented in the table benefit from the current state of affairs? As you can see, you don't need to be an expert in tax and payroll calculations to predict what will happen. Even without knowing what industry in question, we can draw some general conclusions. Or take, for example, the production of auto parts. Which of the following numbers pique your interest?




As you can see, to get some information about the company, it is enough to carefully compare it with competitors.

Question usage skills

Let's go back to the limitations of communication and remember the second part of the confirmation bias principle: people value what they ask for more than what they are offered. Based on the above postulate, you should ask questions about a non-obvious solution. The goal is to frame the questions in such a way that the client asks you for expert opinion, advice, and invites you to move on to a discussion about your decision. The client would not have guessed about the methods of influencing his business without your tactful leadership. Thanks to you, he will rethink his goals.

Practice confirms: the most scarce skill is the ability to find out the true needs of a partner.

In 63.5% of cases, solutions are offered before the client has communicated his needs.

87% of salespeople start by asking about the solution the customer wants.

As a result, sellers receive a list of customer desires, but do not know the immediate needs of the business.

The result: a huge amount of salespeople's time is wasted. If there are 500 salespeople in the state and each one speaks an hour in a day, then as many as 7,000 hours will be wasted in a year.

Skills in action

A few years ago, a friend of ours was in sales at Moore North America (now RR Donnelly) and dealt with Budget Rent A Car. The customer had a problem: he was spending too much on printing. The task was obvious - to reduce the cost of the process. Budget Rent A Car hoped to get a lot of offers and choose the most economical one. The approach is logical, and many companies would follow the same path in order to reduce costs. But our friend's sales team found a better and, of course, non-obvious solution. It brought the goal closer and brought more benefits.

The plan did not at all imply a reduction in the cost of each print operation and consisted of three points:

– staff reduction due to outsourcing;

– combining ideas for making a profit;

- achieving economies of scale.

Let's look at each one in turn. It should be noted that a non-obvious decision often ruins someone's plans. No one wants to lose their place due to the involvement of outsourcers. If our friend tried to do business with the wrong people, his voice would simply drown in the noise of indignation. In the course of his research, he found that several employees from different departments are coordinating and managing the printing process at Budget Rent A Car. It was proposed to shift their responsibilities to one expert. This gave the company the opportunity to redistribute precious human resources. As a result, operational information on printing was available at any time, and it was no longer necessary to wait for employees to respond to a request, and then walk around the printer. The idea not only saved a lot of money, but also saved the company's management from a headache.

Further, one of the main objectives of the company was to increase revenues. Therefore, our friend immediately dismissed the minimization of printing costs. But he studied several customer marketing campaigns and found a way to attract customers through creative marketing campaigns, using other mailing lists, etc. He was able to prepare an original business solution solely due to his market experience and, curiously, had never collaborated with companies before. in car rental, that is, he was not deeply familiar with the industry. But his knowledge of business and some additional research paved the way for him. At one time he rented several cars, talked to the owners of such firms and had general idea about how they work. Our friend quickly figured out the problems with production and distribution that arose at the branches of the company. And Budget Rent A Car didn't anticipate the revenue-generating ideas from its print service provider at all.

Finally, if our friend were to limit himself to one area of ​​Budget Rent A Car's printing business, he would make very little profit. However, he showed a willingness to meet all of the company's printing needs, including marketing. As such, it offered great economies of scale and the customer actually reduced printing costs.

Another non-obvious solution was value summaries. On a monthly basis, he provided Budget Rent A Car with a detailed report on what he achieved, including reduced printing costs, economies of scale, realized ideas to increase revenue and results achieved. Previously, the company's management had an extremely superficial idea of ​​where and in what quantities they were losing money, as well as how much and on what they could save. Our friend provided top managers of the customer firm with a step-by-step scheme for calculating the savings and losses achieved (he minimized them thanks to the introduction of a new process). And since he was very familiar with SPIN selling, he started the conversation about his offer with two questions. The first dealt with inefficient or simply complex processes. The second was something like this: “Do you imagine all the costs of producing a printed document?” Of course he knew the answers, but he pretended not to. Employees had to account for everything from a return phone call to printers and reporting.

He chose one of the most inefficient processes. A little earlier, during the research, a representative of one of the branches of the company pulled out a card and said: “Look, it looks terrible. It takes forever to make it, and it costs a fortune." It turned out that these maps (more precisely, route maps from the agency to some local attractions) were printed individually, were expensive, were one-color and looked like ordinary leaflets issued by a photocopier. So our friend created a print-on-demand wrapper (because warehousing was one of the hardest problems) with which he stamped his signature blue and orange logo on the form and then printed black and white images over it. So the document turned out to be four-color and looked pretty. Our friend set up a weekly delivery of exactly those cards that were required in a particular area. The efficiency was incredible and provided significant savings.

Another process that was not all right was procurement, and especially the procurement of four-page rental agreement forms. Budget Rent A Car spent millions of dollars on these paperwork, which the car hirer has to fill out. The company's operators ordered them on a case-by-case basis, and there was no way to combine requests (and the larger the order, the cheaper the print and the greater the savings). Therefore, our friend decided to organize the collection of orders so that they are automatically sent twice a month. This measure has reduced costs and increased profitability.

The transition to such a system was not cheap, but it changed the whole scheme. It was possible to save much more than if the company simply ordered printing from the supplier with the lowest prices. The attractiveness of the solution was not in the beauty of the layout, but in how much the financial performance of the company with a billion-dollar turnover improved.

From concept to reality: non-obvious solutions - in life (tactical sales)

Just like identifying hidden problems, finding a non-obvious solution is a process that proceeds according to rules that are learnable and applicable in practice. Consider this deal (or rather, partnership) in the light of the NHRI value equation, which, as you remember, looks like this: (skill + process + knowledge) x effort = benefits.


Skills

The key skill is the same ability to ask useful questions. They are used for the client to offer to discuss obtaining more profitable result in terms of business indicators, which we wrote about. The managers of Budget Rent A Car had a clear vision of the goal - to reduce printing costs. Management's requirements were simple: a) low price; b) high performance; c) national coverage; d) timely delivery - in that order. Good conditions, and a worthy goal.

When we began to study them, the first thing we asked was: “Who pays the salaries of the employees of the unit?” We tried to find out if staff costs are included in the budget from which funds are allocated for printing. This simple question (in the terminology of SPIN - "situational") was of exceptional importance for understanding the case. We knew that there were several full-time people involved in coordinating the process and producing printed materials, and we knew that such a staff was unnecessarily large. We asked value questions (SPIN is “guides” in concept) and, as a result, we were invited to discuss our decision: “If you take the total cost of printing and staff and find a way to reduce both, who benefits and why? »

Remember that questions are asked so that the client asks to tell him how to achieve results that are more significant than what he expects.

Process

The process of finding a non-obvious solution consists of four steps.

1. Identify areas of impact and prioritize.

2. Plan.

3. Get an invitation.

4. Suggest a solution.


Identify areas of impact and prioritize

To identify areas of business impact, it is important to examine the industry in terms of the top five business metrics. Compare your client with other market players. Highlight inconsistencies, deviations and anomalies. Find areas where the client does not meet industry standards or the comparison is not in his favor. Target these areas and try to determine what solutions you have to influence them.

We've come up with a little exercise to help you prioritize your decision list. On the left side of the table (Fig. 3.6) are your opportunities. They fall into three categories.




1. Opportunities of the company. What can your organization offer?

2. Opportunities provided by products or services. What benefits does your product or service provide?

3. Opportunities of people. Does your company have employees who have something that can affect the client?

At the preparation stage, take the time to compare your potential with the client's business, or rather, with its financial performance.

1. Revenue. Can you help the sales team make more money?

2. Cost. Can you lower costs to create more profit?

3. Margin. Can you increase the difference between revenue and cost?

4. Costs. Can you reduce the client's cost of doing business?

5. Profit. Can you influence net income?

Perhaps you can identify two or three areas where you can make an impact on the client's business. Great! Don't be discouraged if you only find one or two. This is enough to establish a productive, value-creating relationship with a customer.

In the Budget Rent A Car example, we found three such areas: one was revenue, the other two were cost reductions.

We recommend that you start by filling in those sections of the table that describe the client's expectations, and mark them as expectations. Next - sections corresponding to areas where you have influence. Each cell in the table represents an opportunity associated with an expected impact. Here is what our decision plan looks like.

As you can see, the table describes some of the possible solutions that the client did not take into account. We have prioritized the following: a) lay off four of the client's employees, the most cost-cutting measure; b) to achieve economies of scale, which will provide the next largest reduction in costs; c) implement original marketing ideas to increase revenue. We were able to use all three offers to help Budget Rent.

A Car to reveal a completely non-obvious solution to the problem. It must be said that although all our ideas worked, it could have been different. You won't know what solution to offer until you meet with the client and ask questions that you formulate after prioritizing.


plan

Unlike a hidden problem, a non-obvious solution can rarely be formulated in advance, before meeting with the client. You have too little information about a potential partner. It is better to start from a premeditated primary hypothesis. The non-obvious solution you will invent after the fact, after a long conversation with the client, long enough to reveal the client's real business problems. Therefore, your planning should focus on preparing questions that will lead the client to seek more detailed information, to the request to tell about your decision. As the decision plan shows, you need to be able to stick to the indicators of the client's business.

When preparing for the meeting, try to develop a working hypothesis, but remember that it is only a starting point, not a final proposal. During communication with the client, you will reach the end and offer the best solution. When we were preparing for the meeting with representatives of Budget Rent A Car, we had three starting hypotheses. And it took a fair amount of effort for us to come up with questions that led to us being asked to talk about the solution. We have managed to consider issues related to our priority proposal - the reduction of staff and the appointment of one employee at our enterprise. On fig. 3.7 describes questions that reveal two other hypotheses.




Finally, you must identify an achievement—an event or action that, during or after the meeting, will bring you closer to a solution. In this case, the achievement will be an offer to talk about our decision. Make sure you're ready to recognize when the prompt comes up.


Get an invitation

The next step is to execute the plan. When calculating your actions, you must proceed from the information received from the buyer, as opposed to most sellers with their craving for blatant self-promotion. Once you've had that important first meeting, start leading the client toward insight. It is not so important how many meetings with him you will have in the future. Until the client has the brainwave and approved the idea, keep asking questions that draw their attention to relationships they never thought they had. Remember, these questions come to mind spontaneously in the course of the dialogue, and they are more than questions.

Once the client has come to a conclusion, start getting them to ask you to talk about your decision. Ask questions as you intended, but listen carefully to the answers. Be proactive, but keep an eye on where the buyer is at all times. Don't jump to solutions before you receive an invitation.

Keep the dialogue in such a way that the client perceives you as an expert whose opinion deserves consideration. Make full use of your business, industry, and questioning skills. At the intersection of the above three abilities, there is a zone of influence on the business, or a zone of value. This is where you are able to increase your margin and at the same time offer great value to the client. Ask carefully and pay close attention to the answers. Once you receive an invitation, you will be ready to move on to the next stage - the stage of proposing a solution (even if you get your way at the tenth meeting).


Suggest a solution

Once you receive an invitation, describe to the client the impact of your solution. Recall the lesson from Chapter 1: The client values ​​modesty. Avoid arrogance, do not boast of your victory: clients do not tolerate arrogance. They need your advice, your help, your solutions. Show them a shorter path to a goal, or a more enticing one, and they will appreciate you as a trusted advisor. Be prepared to describe the solution not in terms of individual features but in terms of return, that is, through the prism of impact on business.

When you've finished talking about your solution, ask the buyer to summarize: "So tell me how this solution could benefit your company?" It's done: the client came to conclusions, asked you to talk about the solution, you told, and the client finally made up full view about him, seeing his advantageous features.

Make it official. At the request of the client, approve the proposal, and if he did not take the initiative, ask him for permission. Ideally, the proposal brings together all records of agreements with the customer. Most sellers make the terrible mistake of expecting to close a deal on their own offer alone. Even the best of them, spending a lot of energy trying to figure out the needs of the client and lead him to understanding, when asked for a written proposal, they give out a template description of the wonderful properties of the product, compiled by the marketing department. When you offer a solution, be prepared to catch the moment when your interlocutor had an idea and understand what exactly seemed to be beneficial to him. Remember: what the client says is more valuable than what is said to him. Start from what he himself said.

A sentence is rarely read other than diagonally: as a rule, it only touches on the reader's preferences in passing. But there is a page that everyone will see, and that is the pricing page. When it comes time to describe the solution on paper, it is important to formulate it in terms that the client can understand. Don't rely on common patterns.

If necessary, create a new template for a non-obvious solution that can be adjusted. Because, as we mentioned earlier, the proposal only consolidates the agreements reached. Celebrate after your measures have been successful!


Knowledge

Industry knowledge is less important when creating non-obvious solutions, but if you don’t have enough knowledge, prepare better - understand the situation. Compare the client with its competitors. Find out its position in the market. In the case of Budget Rent A Car, we have been looking into car rental for a long time. We learned a lot about it before we sat down and thought about the steps needed to come up with a non-obvious solution. We even visited several sites and asked every question imaginable in order to act as correctly and as quickly as possible.

Most importantly, you understand the capabilities of your company, product, service, and the capabilities of the people you lead. You need the ability to achieve financial success, unlocking the potential. You will need a solid understanding of commercial fundamentals and an understanding of how a product or service is applied in a business environment.


Efforts

Take skills, process, and knowledge and multiply them by the effort you put in, and you will get the value you offer to the client. Effort, or hard work, is a multi-valued concept. This includes working with questions and detailed planning, carefully preparing a decision, organizing meetings, thinking about a strategy, etc. To make an effort is to prepare. There is no alternative to hard work, but you will see that it is worth it.

Skills in action: selling a non-obvious solution

As you read the following case study, try to identify how salespeople use the NHRI model to deliver exceptional value to customers in a non-obvious solution.

Oakite Products

The sale of a non-obvious solution is perfectly illustrated by the story of how Chemetall Oakite (Surface Treatment for Any Industry), now Oakite Products, struck a deal with Carrier, the world's leading manufacturer of heating, air conditioning and refrigeration systems. Carrier decided it needed to cut down on painting costs. This work was carried out by Parker Rustproof Corporation, and she risked losing the contract. The American Chemical Paint Company and Oakite were invited to bid, which was seen as purely price-based. Phosphating - pre-paint preparation - seemed like an ordinary service to everyone except representatives of one company.

As usual, the confrontation began with price competition. Parker Rustproof Co., not wanting to appear stingy, agreed to cut its markup and save Carrier about $2,000 a year in phosphating, which was a significant amount back then in the 1940s. Rustproof representatives laid out all their documentation on the table and explained that they were ready to cut their profits in order to keep the contract. American Chemical Paint Co. did the same: provided its documentation, described the processes and substances needed for phosphating, noted that the chemicals have a fixed cost, but for the sake of long-term cooperation, the company is ready to give up part of the profits and provide Carrier with an annual savings of $ 2,000.

Oakite was represented by an experienced salesperson who was always on the lookout for the non-obvious solution. He read the documents submitted by competitors from cover to cover, studied the technical process in detail and found the best way out. As was clear from the papers he studied, phosphating was divided into five stages. The first step, cleaning the tank with alkali to remove oil and dirt, was done at 71°C. Subsequent flushing (with obligatory liquid overflow) was also carried out at 71 °C. The operating temperature of the tank at the third stage - the actual phosphating - did not change. In the fourth and fifth stages, with rinsing and treatment with chromic acid, the temperature was the same. An Oakite representative noticed something that others missed: room temperature is enough for rinsing (the result will not improve with additional heating). Therefore, in his documents, he excluded the temperature from the calculation. Of course, heating a 10,000-liter tank to 71 ° C, which is constantly supplied with liquid from a two-inch hose, is an expensive pleasure. Competitors talked about chemicals and fought a price war. The Oakite representative showed the customer that cutting out the heat in the two flushing stages could save thousands of dollars and won the contract without losing any profit (Figure 3.8).




When you have a final meeting with a client, remember that the goal is to get him to come to a decision on his own. Knowing the essence of the solution is very important, but to impose it on the client is to fail. You need to ask the right questions.

moment of insight

When a client weighs the pros and cons in evaluating the solutions offered to him, he desperately needs insight that will dispel the clouds above his head and make his choice easier. It happens that the darkness of possibilities, but suddenly everything clears up. When it dawned on Archimedes, he jubilantly jumped out of the tub, shouting "Eureka!" We do not insist on this approach, but we know what we are talking about.

Using non-obvious solutions requires experience. Practice is important, but market research gives you leverage. A green salesman who has just graduated from the institute will not lead the client to insight, because he has no experience. To study the situation in the industry (for more details - in Chapter 9), he will need a titanic effort. And in combining disparate facts, one should rely not only on systematic analysis, but also on intuition.

The ability to single out grains of benefit from the experience and organize them comes with experience, but it is vital. Realize that every interaction with a non-money-commodity client, regardless of the outcome of the case and whether you prepared an insight, carries perhaps only one bit of new useful information and is added to your internal database. data. More often than not, you will owe your experience to the means of preparing awareness. So systematize your experience constantly, comprehend it. Don't let yourself get stuck.

And remember that both information and experience become outdated. The market has an age. Pretty quickly, the market catches up with us and adapts to the changes that are taking place in our world. Therefore, you must stay on top: reflect on your experience whenever you are preparing an insight, and ask yourself what you have learned. Do this every time you interact with a client. What have you added to your knowledge base this time? Perhaps you made the customer aware of something that the market has not yet learned? Be constantly ready, constantly rethink old knowledge and systematize fresh ones. This is one of the keys to avoid selling based on price.

Chapter 3 Highlights

1. Definition of a non-obvious solution. Help the client find a better solution or achieve a better outcome. It is necessary if:

- the client knows about his needs, they bother him;

- the client has a general idea of ​​the solution to his problem;

The client knows what he wants to achieve.

2. The seller's decision is intended to have an impact on the business. Otherwise, it does not bring any value to the client. The business impact zone (the value zone) lies at the intersection of business understanding, industry knowledge, and skill in using questions.

3. Understanding the business is critical to finding out if your solution can improve the customer's business, and if so, how. The seller must influence one or more financial indicators (see below).

Efficiency is relative. Study the position of the client in the industry and compare it with competitors on the above financial indicators.




4. Skills in using questions are essential to succeed in positioning a solution. The goal is to structure the questions in such a way that the client asks for your expert opinion, advice, and offers to move on to discussing your solution.

Last week we completed in a company dealing wholesale sales plumbing. In a survey of sales staff, it turned out that the only argument that they use in working with customers is the price. That is, in order to sell their product, they in most cases offer a price lower than that of competitors. Of course, the management of the company is not satisfied with this approach of managers: it leads to a decrease in profits. Sales managers reported that they did not know of other ways to add value to their offer. But during the audit process, it also turned out that this company has a number of competitive advantage that really make her stand out from the rest.

We decided to figure out what is hidden under the statement "". And in parallel, recall proven ways to increase value, which many people know about, but for some reason not everyone uses. First, let's understand the terms.

What is value?

Value is the benefit that the customer pays for by purchasing our product. The more benefits and benefits the client sees, the higher the price he is willing to pay, and the more difficult it is for competitors to offer an alternative.

We love the value formula proposed by Neil Rackham, author of the famous SPIN™ selling model:

Value = Benefits - Costs

Thus, value can be increased in two ways: by increasing profitability and by reducing costs or costs. Our heroes, plumbing equipment dealers, took the second path - they reduced the cost.

When the buyer understands what benefit he will receive now or in the future from our product, it is easier for him to part with the money. An important point: in the eyes of the buyer, the benefits from cooperation with us or the purchase of our products should be higher than the amount that he pays. Therefore, the main task of all sellers is to show the product to the client so that the value in his eyes has increased to the maximum.

When the price of a product is less significant than the benefits that the customer receives, the sales manager can only ship the product. There is no work on his part here. There is no benefit for which the company pays him. After all, a sales manager is hired not to sell cheaper, but just to increase the cost!

Strategies to add value in the eyes of the customer

Strategy #1: Increasing Profitability

Profitability, expressed in monetary terms, fundamentally affects the purchase decision. You can increase profitability during the presentation of the product. From the words of the manager it should be clear how much money cooperation with us will bring to the client. On the other hand, a benefit is not always a benefit in terms of money. It can also consist in increasing the level of comfort, status, security. It can also save time and effort. It can also be just a solution to the problem in a short time.

It happens that the benefits of purchasing a product become so attractive to a person or company that they are willing to pay for it even more than they have. Bank lending is based on this principle - if a company receives an income higher than the cost of servicing a loan, then this is a good deal.

Strategy #2: Cost reduction

We refer to the cost of production for the client. A decrease in cost leads to a decrease in the seller's profit. We are not interested in this approach. But costs are not always just cost. It can also be labor costs, time, lost profits.

When there is an opportunity to reduce the cost of the client without lowering the cost of your offer, this must be used, it is. For example, you can deliver the pipes required by the client not in 2 days, like your competitors, but the next day after payment. This means that his plumber team will not be idle for a whole working day, and the client will not pay them a salary for a day of downtime. None of the buyers who in such a situation chooses an offer that is 5,000 rubles cheaper than yours will proudly declare: “But I received additional discount on the pipes!

It is also possible to reduce the costs of the client by payment options that are more beneficial to the client. For example, our price includes VAT or our working conditions imply an advance payment of only 50%. Each element of the service that reduces the cost of the client, whether it is the delivery, installation of products, their repair, maintenance, or training in use, round-the-clock technical support, the client should learn from your proposal.

Why do customers ask for discounts?

When a customer asks for a discount on a product, there can be several reasons for this.

  1. The client wants to save money without having other better offers. The client wants to purchase a product or service from the company and get more favorable price for the product he wants. This is certainly a reasonable approach on the part of the client. Even very rich people like Warren Buffett don't neglect the opportunity to take advantage of a discount. In such cases, sales managers believe that by lowering the price they will remove the remaining doubts of the client and sell to him here and now. However, it is possible that in this case they miss important factors, influencing the purchase - the presence of need, urgency, money and authority for independent decision-making on the purchase by the client.
  2. The client is reasonably bargaining, having offers from several suppliers in his hands. This situation allows the client to choose the best option. Who is more like, who will give the best price, with whom it is more interesting, more convenient, more promising and more prestigious to work with. In this case, the sales manager should not rely only on a low price in his offer - tomorrow the competitor will lower it by one more ruble and the deal will be his. against a competitor and win over the client by the presence of other advantages, except for the price. An example is the situation when he demanded a price reduction, and all managers went for it, thus causing harm to each other. But they wanted to get this client so much that in the competitive struggle they got to the point that selling to this client itself became unprofitable. And the one who failed to sell to this client was in a better position than the manager who made the deal. In such cases, the sales manager must always control management so that his pursuit of a competitor does not damage the company.
  3. The client does not have enough money, but there is a need for the product. Here the task of the sales manager is to determine the real financial situation of the client and sell him a suitable product.

10 Ways to Add Value to Your Offer During the Sale

In the case when the increase in the value of the product depends on the sales manager, several standard proven methods can be distinguished.

  1. Clearly understand the main pain of the client. If you understand the challenges, risks, and limitations of the customer, then you can influence value by offering a good solution to those problems. Customers are willing to pay more for a quick solution to problems than for a simple increase in comfort. Behind every need is a customer problem. Think about it and make a list of the 10 most common problems that you can solve with your product.
  2. During negotiations, present a product or service in the language of the client's benefit. This means that it is necessary to talk not only about the characteristics and benefits of the product itself, but also about the benefits that the client will receive from using it.
  3. Example: CRM-system stores the entire history of working with clients. It is possible to listen to calls and read letters sent and received from this client. This means that even if the sales manager who worked with this client is fired or simply no longer responsible for this client, you can continue working with the company without missing important details. This, in turn, means that the new steps to work with the client will turn out to be correct, no mistakes will be made and it will be possible to avoid repeated unsuccessful actions that the manager has already taken. On the face of saving time at the beginning of work with the client, and most importantly - the ability to correctly build further work. The result is correct operation is the sale - and the sale is the money that the company will receive through such a convenient tool in the CRM system.

    A very effective addition to this method is the voicing in the manager’s own thoughts of just one question: “so what?”. The answer to this question allows you to understand whether you have identified a real benefit for the client or not. What will this characteristic of the product give him? Financial benefits, saving time, effort, increasing the overall level of comfort, security, status, adding positive emotions. By reasoning to specific benefits in one of these categories, you add value. This is what you need to talk about, listing the characteristics or properties of the product.

  4. Limit demand. In this method, you need to create a shortage of goods in a specified period of time with a specified price.
  5. For example, indicate that it will be available only until the end of December. For this, promotions, sales, special offers, black Fridays and cyber Mondays are invented. The idea is not to give a discount, but to inform the client that in the future there may not be such a product at this price.

  6. Use friends' recommendations and other people reputable for the client - what a person has heard about, what he has already been told and recommended many times, he will buy more willingly than some unknown thing from an unknown company.
  7. Of course, not only the sales manager should take care of this, but also all the company's services, especially. The product must have a certain halo, it must be recognizable, famous for its quality, be approved by society.

    Enlist the support of your regular customers, most likely your new client is familiar with one of them. By calling one of them, he will receive a recommendation that will increase the value of your offer. The influence of the environment always plays a role in making a purchase decision. If buying these products is considered good form, the chances increase. If it's dangerous to work with "these guys," it's unlikely that the deal will go through, no matter how hard the sales manager tries to increase the value of his offer.

  8. Make high-quality promotional and marketing materials, website and generally look good. Value is enhanced by how your offer looks. Everything affects. Photos, text, design, polygraphy. The better and more expensive your printed or electronic presentation the better the customer's opinion of you.
  9. This includes the appearance of the sales manager, and where your office is located and what it looks like, what kind of car the director drives. So take care of your appearance and about the appearance of your proposal.

    Successful sales managers deliberately bring the client to their office to show that everything is in order, the office is in the center, there is money, you can work with us. And at the same time, they involve the client in the work process, show the product by its face. “This designer will work with you, and we will stamp your cornices on this machine.”

  10. Make gifts instead of discounts. The value of the offer can be increased by adding more gifts to it. As a gift, use your own products or an additional service that the company provides. When a client asks for a discount, give him more, but for the same money. Thus, you remain in the same price range, and the client receives a gift. It can be free training, round-the-clock technical support, premium service, loyalty card, free shipping, free two weeks of using something.
  11. Unexpected gifts. Separate technique is generally to give small but nice gifts to customers. Pens, coffee, sweets, souvenirs and other things useful for the client. This sign of attention is very important for the sale, because it gives the client a sense of duty. In the book The Psychology of Influence by Robert Cialdini, it is noted that the second party, after receiving a gift, in most cases wants to give a return gift. This is called the exchange rule. And sellers take advantage of the fact that the exchange can be unequal. The value of the transaction is much higher than a package of coffee beans or a box of chocolates, but the client, having received such a gift, already feels obligated and wants to thank him with a service for a service or a gift for a gift.
  12. Expertise. When a sales manager proves himself to be an expert in a certain area, knows the details and can recommend based on his experience, it is always captivating. When the client sees that the manager is on his side, taking care of his interests, the value increases. An example is the situation in the market, when the saleswoman says: “the potatoes are not very good today, don’t take them, but the tomatoes are excellent.” It seems that she is not just trying to sell her product at any cost, but stands on the side of the client, takes care of him, shows respect for his choice. We trust such a seller, and next time we will come to buy from him again, knowing that he understands the product, has a complete set of information on it and is on our side.
  13. Good job and good product. Best of all, the value of a product is increased not by the work of a sales manager, but by the quality of the product or service provided by the company. When a product is really good, useful, convenient, they will definitely find out about it. And they will come for him again. Word of mouth will begin to work, which is stronger than any manager's presentation. Therefore, it is always necessary to start with a real improvement in product quality. A job you are not ashamed of always sells better and brings in new customers.
  14. Faith in the brand. Use what you sell. Believe in your product, be brand loyal. It is very strange to hear from a sales manager that he has plumbing fixtures from another brand at home, and not from the one he has been selling for 10 years now. The higher the trust in the manager, the more opportunities he has to influence the course of the transaction. And when a manager undermines trust by his actions, for example, he does not use what he sells, the value goes down.

Adding value is technology

To add value to your offer, you need to do it right. Bad work is when, by the end of the negotiations, it turns out that the sales manager has only one argument - a low price! It means he didn't do his job properly.

Adding value to the offer, like all other elements of the sale, needs a clear technology. In order to control the quality of work, sales standards should be introduced in the company, which would describe how to increase the value of your particular product. In working with clients, you can use all the obvious and non-obvious ways to add value that I described in this article.

If you are a sales manager, then this will be useful for you. Your sellers should be able to answer 3 questions in detail:

  1. Why should a customer buy this particular product or service?
  2. Why should a customer buy a product or service from you?
  3. Why should a customer buy it now?

It's important to remember Jack Trout's quote: "If your company doesn't have a point of difference, all you have to do is offer a low price." Be different. The choice is always between "be cheaper" or "better". And the client is always on the scales "what I will give" and "what I will receive." A clear vision and position of the manager, who he is and what he works for, together with effective techniques sales increase the value of the offer.

Therefore, when your employees say that they can only sell at a discount, it means that it is time to start improving the quality of sales: develop arguments, put into work, conduct, and implement control over the application of standards.

Yefim Markovetsky, Mikhail Grafsky
Clientbridge