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Discounting Does Not Buy Loyalty

Reflecting on the past is a common occurrence.  Did results meet expectations, what improvements can be targeted for the future, what learning took place in the past?  These are all common questions that managers and leaders should be asking themselves.

More precise metrics are also available to judge past performance.  Were margins and profits sacrificed to meet sales quotas?  Quarter end and year end discounting are not uncommon but they do tend to diminish the margins that had been targeted in the profit plan.  We believe that this is an avoidable trap that can be addressed with advance planning, discipline and training.

The time to protect your margins is now.  By reviewing the opportunities in your pipeline you can determine the following:

  1. Do you have enough opportunities to provide you the revenue that you will be targeting at quarter end or year end?
  2. What is the confidence that those opportunities will close on the targeted timetable without needing to offer a steep discount?
  3. Do you have enough bandwidth to focus on all the potential opportunities or are you better served by grading them and focusing on the highest margin opportunities?  Let your competitors dissipate their resources chasing the low margin deals.
  4. Do you need to dial up business development to get more opportunities in the pipeline?

During a phone conversation with a VP of Sales, he told me that his team was busy “cutting deals” to hit their annual revenue plan. This is not selling, and the words chosen made my skin crawl. If your team seems to rely on discounting to get orders, maybe you need to focus more attention on your sales process and developing your team to sell value.  The value the customer will receive by using your product or service, not the discount they will get from price list.   Building the discipline to ask the customers the right questions to qualify them as a high or low margin opportunity is a learned skill.  It takes restraint for sales people who have been conditioned to close, close, close.  We know that margins can be improved with well trained sales teams and we’ve seen that happen hundreds of times.

Maximizing your profit margin doesn’t happen by accident.  It won’t happen by sending out a memo targeting desired margins for the coming reporting period either.  It is a result of leadership identifying the development plans needed for the sales team, providing the training, giving feedback on performance and ongoing coaching to reinforce the process that has been identified to close deals without needing to resort to deep discounts.

Revenue is important and sales quotas are an important part of a business plan.  Discounting adds risk as it increases the amount of products to manufacture or services that need to be delivered to achieve a given profit goal.  Start today to protect your margins in future quarters.  Having regular deal reviews will open your eyes to the reliability and quality of the opportunities in your pipeline.  Want to buy some margin insurance?  The time is now.

Flannery Sales Systems helps organizations develop and implement a repeatable sales process.  Improving the effectiveness of your sales organization is the key outcome we provide to clients.  We would welcome an opportunity to explore your needs and understand where your team could benefit from improved skills and sales processes.  Flannery Sales Systems works with a broad cross section of industries and we are confident we can enhance your results.

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Turning Your Go-To-Market Strategy into Tactical Sales Execution

map1When you open up your smartphone to access a map, you’ve got a particular destination in mind; where you want to go for dinner, a meeting, a certain address, or a landmark you wish to visit. There is a focus on the journey’s end, and you want to get there in the most efficient way possible. The map you access usually starts out with a 40,000 foot view of the landscape.

 

map2With the destination logged in, the smartphone then prompts you to input some more detailed information:  Where you are starting from; how you will be traveling- on foot, bus, or by car; and what mode of directions you would prefer, audible or inscribed? Once you have keyed in the basic information, the map application will zero in on your exact location and guide you, step-by-step, until you arrive at your destination.

1. Formulate Your Go-To-Market Strategy, and Align WHERE Sales Will Compete

A Sales Strategy is the 40,000 foot view of the vision or mission of an organization’s long and short term objectives. The strategy is carefully formulated by upper management to move an organization toward their specific destination. If, for example, an organization has the desire to increase revenue, a Sales Strategy for increased revenue may be formulated with the careful consideration of many different factors: assets, competition, the marketplace, margins, operational costs, the number of product lines, distribution, channels, value propositions, and plans for growth, to state a few.

We recently worked with an organization who wanted us to help them build a Sales Process to “get more sales now”! Their short-sightedness of only looking at the “close up” of the map gave them the misguided idea that their destination was nothing more than to get the reps out there selling better!  We were able to guide them through a Sales Strategy exercise, and THEN helped them build a Sales Process on what to do to execute their strategy.

2. Turning Strategy into Tactical Execution: Sales Process Illustrates the HOW

The principal component of a Sales Strategy is execution. Sales Process outlines the step-by-step, most efficient, customized directions to get to the final destination.  It provides information on how to get to the destinations in specific detail, based on selling skills.  This specificity enables the implementation of strategy by providing the following advantages to the entire team:

  • A common objective
  • A common path and language
  • Practical messaging tools based on the strategy
  • Skill sets that are tied to Process steps
  • Process Steps that are tied Pipeline Milestones

3.  WHAT To Do at Each Step Along the Way: A Clear Path

If you ensure that all sales reps and managers follow the Sales Process, you can outline expectations and more easily benchmark your sales team against common criteria, providing an excellent evaluation of the strategy at the rep level.  A Sales Process provides:

  • The specific instructions on what to do with respect to customer interactions
  • A measure of the skill of individual sales reps
  • An opportunity for focused skill coaching of reps by managers
  • A powerful reporting tool for leading KPIs (Key Performance Indicators) on benchmark performance against key outcomes of the Sales Strategy.

When determining your organization’s Sales Strategy, take the time to ensure your understanding of the entire landscape.  Then, implement a Sales Process that allows you to execute toward your objectives, with the ability to gauge your success along the route, and soon, you’ll arrive at your destination:  Success!

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