The Sales Training Dilemna

Excellent article in the October issue of ManageSmarter, and referenced in today’s NAWSmartbrief. The article, entitled “Price Cutting is for Sissies” hits on two of the key reasons why salespeople discount pricing, and amplify where companies should commit training, marketing and sales management resources.

The two areas are:

1. “Self-assurance is critical …” – Having a competitive price is importnat, but there is no reason to always be low, unless that is your business strategy. To minimize profit reduction it is important to consider if your salespeople are confident when they try to close a piece of business. Do they understand the customers’ needs, the value of the services that your company provides and the features and benefits of the products you are selling? What justifies your price? Do they know the customer well enough to understand whom the customer prefers to do business with? If they are unsure, they will devolve to discounting as they are not confident about the “product” (your company) that they are selling. This requires sales skills training as well as development of sales processes and effective sales management. Additionally, you may have a need to reinforce to your sales organization the value/services that your company (through various departments) can offer to your customers (i.e. value engineering, project management, on-time delivery, high fill-rates, accurate invoicing, product training, installation training, etc…).
2. “Don’t lose profits” – Discounting leads to the law of unintended consequences. First your customer now knows that they can always ask for a discount, and that the most recent discount now becomes their expectation. Secondly, lost profit on “this” order is inevitably never made up. Consider providing your sales organization training on how to negotiate. This will add profit to your bottom line.

Contractors will always ask for a lower price because they know they can get one by playing off one distributor vs. another (and someone will blink), but do they really want to do business with the other distributor? To take control, distributor sales personnel need training on how to sell and how to negotiate. Sales management needs to manage a sales process and insure that sales understands their customer, the opportunity and the value-added of their organization. Without quality information, unprofitable decisions are frequently made.

Product training is important, but skills training is more so. What resources are you providing to your sales organization to prepare them to become more profitable? Should this be an industry initiative?