Sales Flashcards
Sales
converts prospects into customers
Pricing Uncertainty Principle:
- “All prices are arbitrary and malleable.” It’s an executive decision. You can price something anywhere you want.
→ However, prices have to be justified to a prospect or potential buyer before a transaction can take place.
4 pricing methods (1):
- Replacement cost - typically a “cost-plus” value meaning the total cost of making/replacing something plus the margin you want.
Market Comparison - what are other products of similar nature priced at?
4 pricing methods (2):
- Discounted cash flow/net present value - “How much is it worth if it can bring in money over time?”. Used for items that will make other people money to justify a larger upfront cost. DCF/NPV is only used to price things that can produce ongoing cash flow - this makes it a common way to price businesses when they are bought or sold.
Value comparison - (usually the best way) what is the value of your product to the customer? Price accordingly.
Discounts
Attract customers when the offer is a commodity” or items which are price-elastic.
Price Transition Shock
- When testing different pricing strategies, there are certain thresholds where you stop appealing to certain segments and start appealing to segments with different characteristics
2 major considerations while keeping transition shock in mind:
- Potential profitability
- Ideal customer characteristics
Pricing strategy
- The best strategy is to set prices to appeal to prospects that will ensure you work with your most desirable customers in a way that results in higher profits.
→ This is dependent on the industry and target market’s expectations.
Value-Based Selling
- The process of understanding and reinforcing the reasons why your offer is valuable to the purchaser. This is how you support the set price.
- This is about listening, not talking. It’s all about value to the customer
SPIN Selling: 4 phases of successful selling:
- Understanding the situation
- Defining the problem
- Clarifying the short-term and long-term implications of that problem
- Quantifying the need- payoff or the financial and emotional benefits the customer would experience after the resolution of the problem
Education Based Selling
- The process of making your prospects more informed and better customers. It requires an upfront investment of time into prospects, but is usually worth it. You simultaneously build trust in your ability to deliver value and your expertise while making them better customers
NBA: Next Best Alternative - or BATNA - Best Alternative to The Negotiated Agreement
When there’s no common ground, what is the next best alternative? → Knowledge of a prospects BATNAs can be used as leverage.
Most power belongs to the party that is able and willing to walk away from a bad deal.
Exclusivity:
Creating a unique offer or quality that other firms can’t match. iPhones → Apple {for now}. Exclusive offers maintain high perceived value. Exclusivity makes the most sense for products and services. Sole source is the ultimate winner! aka monopolies
3 Universal Currencies
- Resources - tangible items
- Time
- Flexibility - giving up freedoms or liberties
In every negotiation, one currency can be traded for more or less of the others.
3 Dimensions of Negotiation- Setup
- The environment, mostly. Prep work (setting the stage for a satisfying outcome to the negotiation).
— Who are the involved parties? Are they open to dealing with you?
— Do people know who you are how you can help them?
— What are you proposing and how does it benefit them?
— What’s the setting for presenting an offer?
— What are the environmental factors? Are any outside circumstances affecting the outcome?
3 Dimensions of Negotiation-Structure
- Structure - of the deal you are proposing. Structuring the terms of a proposal that make the prospects likely to accept.
— What will you propose and how will you frame it?
— What are primary benefits of proposal to other party?
— What is their BATNA? How is your proposal better?
— How will you overcome the other party’s barriers to purchase/ objections?
— Are there trade-offs or concessions you’re willing to make to reach an agreement?
3 Dimensions of Negotiation- Discussion
Discussion - talk about the proposal with the other party.
End results consist of:
— Yes, we have a deal on these terms
— We don’t have a deal quite yet— counteroffer or another option to consider
— No, we don’t have a deal or common ground and we should suspend negotiations.
Buffers
3rd parties empowered to negotiate on behalf of someone can be used to improve odds of a favorable outcome and save time.
→examples include: agents, attorneys, brokers, accountants.
Persuasion Resistance
When a prospect senses that they are being convinced or compelled to do something they are unsure about and reactively resists the attempt + tries to leave the convo.
Reciprocation:
A desire people feel to pay back or return perceived favors or gifts. It is not necessarily in proportion to the original benefit provided.
Damaging Admissions
can make sellers seem more honest and trustworthy and increase the likelihood of sales.
Barriers to purchase
Risks, unknowns, and concerns that prevent prospects from becoming buyers. The primary job of a salesperson is to identify and eliminate these barriers.
5 Standard Objections
- It costs too much→ Tackle with value based selling
- It won’t work→ best addressed using social proof
- It won’t work for ME→ same as above
- I can wait→ use education based selling. Especially if prospect is unaware of their problem.
- It’s too difficult→ same as above
With a Prospect’s attention and Permission
You have to either (1) convince them that the objection isn’t true (2) convince them the objection is irrelevant
