Companies spend time, effort, and money working to differentiate their offerings from their many competitors. The more special their offering, the more value it creates, the greater its chances of being chosen by their clients. This differentiation also improves the margins the company earns by selling its offering and producing results. Enter the salesperson. The deal in front of them is hot. They are competing against other firms, and they have used their company’s differentiation strategy to pull themselves out of the pack. But when all the numbers are entered into the spreadsheets, their offering isn’t the lowest price. In fact, it’s the highest of the three finalists.Because the buyer really wants to buy from our not-so-fictional salesperson here, he calls and says that he will sign the contract and give them the business if they can lower their price.
And this is the point at which the decision is made to commoditise the business.It sounds like the decision is the buyer’s. He doesn’t value the differences in results that are created by paying more to obtain them. But it isn’t the buyer’s decision to commoditise the business; it’s the seller’s.THE SLIPPERY SLOPEThe slippery slope for sales people and sales managers is allowing the business to be commoditised and, over time, they allow the margins to be destroyed. In most cases, the company’s ability to differentiate itself is predicated on having the margins necessary to produce a better result. Without the margins, the company not only loses the ability to differentiate — it often loses the ability to produce results.Only later, after the lower price has been accepted and the work begins does the lower price start to become problematic. The results promised aren’t produced, and the client isn’t satisfied. Then, based on the evidence, he says: “See? I knew I shouldn’t have paid more. You are all the same.”This is why sales teams should not commoditise.PROTECTING PRICINGTo protect pricing, margins, and your ability to differentiate yourself and your offering, you have to resist becoming a commodity. Instead of accepting the business at the lower price, you have to make the case for the client paying a higher price (in all likelihood, the price they need to pay to get the result they really want).It sounds something like this:
The salesperson has the power to make a difference for both their client and their company here. They have the ability to resist being commoditised, and thet have the ability to translate the price into value, shifting the decision from price to cost.By preventing the commoditisation, they can protect the firm’s differentiation strategy and their ability to produce the results they sell. SALES WILL LOOK VERY DIFFERENT BY 2020Companies spend time, effort, and money working to differentiate their offerings from their many competitors. The more special their offering, the more value it creates, the greater its chances of being chosen by their clients. This differentiation also improves the margins the company earns by selling its offering and producing results. The world of sales is splitting into two branches: the consultative and the transactional.There is so much pressure to perform financially that many sales organisations are themselves becoming more transactional.These companies are focused on reducing their overall costs and automating much of what they do when it comes to sales, such as allowing their customers to learn about their offering online and to place orders there.They are also moving their sales forces from the field to inside sales roles, which pay less than field sales positions do.Some of these companies may be moving the transactional sales to inside salespeople, but they are increasingly hiring more — and paying more for salespeople who can develop relationships.This creates a higher level of value and differentiates these companies and their offerings.As the gap in the world of sales widens, you’ll have to choose which side to stand on.Developing Level 4 elements (including your own business acumen and situational knowledge) provides you with the ability to leap from transactional to consultative sales.