A number of my small business customers have often ignored the importance of having an established sales process. These companies concentrate on quoting as much as possible, as often as possible. However, the problem with this approach is that it’s predicated on sales pumping out one written quotation after another and hoping something, somewhere, catches on. Written quotations are confirmations of the prices your company is willing to offer. More importantly, they provide your prospect with a confirmation of market pricing. In essence, they allow your vendor to use that price against your company. How? Well, once these prices are down on paper, so to speak, they allow your prospects to shop that price and use it to lower other competitive bids.
The Market Plays an Important Role in Pricing
First, there’s no foolproof way to protect your company’s price. Your small business sells to customers within a market and the market itself will ultimately share this pricing. While your sales team can use the “trial-close” or “pre-sell” techniques to protect your product’s pricing, these approaches are really suited for those instances where a customer has continually used your company for pricing and had never awarded an order. Instead, when it comes to providing a quotation to an established account, or even to a potential customer, it’s essential to have a sales process that your sales team can follow to ensure they’re quoting at the right time and in the right circumstances.
A number of companies use the well-established sales funnel approach to determine their company’s overall sales process. However, if there was ever a small business sales process that could be summarized in just two steps, this would have to be it. Consider this the most simplified sales process your small business sales team should follow.
Learn how to handle price demands, customer scare tactics and concessions in negotiation.
1. Negotiation & Verbal Contracts First!
Before providing a written quotation, sales must always discuss the criteria under which a customer would place an order. A number of salespeople go through this process far too quickly. They call up the customer, find out what quantity they want and then tell the customer they’ll provide the written quotation. From the customer’s point of view, they get exactly what they asked for – pricing! Unfortunately, from the sales point of view, they often miss a sale. That is of course unless they fall ass-backwards into an order. Proper negotiation involves an up-front verbal contract with the customer before any written quotation is submitted. What exactly are “verbal contracts” you ask?
Simply put, verbal contracts are the first and most important stage of negotiating your company’s product offering. Consider the verbal contract as the proverbial “gentlemen’s agreement”. However, in this case the verbal contract is not about establishing a guarantee your customer will purchase from you. Instead, the verbal contract is about fully comprehending the customer’s motivation behind requiring your company’s pricing.
It’s about ensuring your salespeople understand the customer’s requirements and ultimately, that sales secures a promise of an answer from the customer – good or bad. Why is the verbal contract such a vital aspect of a solid sales process? Consider the following: If the customer was merely asking for budgetary pricing to fill in the gaps of his, or her own personal analysis, would it make sense to follow through with a written quotation or just verbally provide pricing? In this case, verbal quotations are the way to go.
There’s no need to follow suit with a written quotation in this case and not doing so guarantees that your company’s pricing isn’t on paper, ready for your customers to shop it. Use the up-front verbal contract to establish the conditions of the written quotation.
2. Submitting Written Quotations
The ultimate benefit from this simple two-step process is to get your salespeople talking more about what your customers want and why they want it. This essentially stops them from simply firing off one written quotation after another without fully understanding the criteria under which the customer would award them the business. If all your salespeople learn from this two-step sales process is to mitigate the number of written quotations they provide, then your small business will benefit.
By insisting your sales team do a proper up-front verbal contract, they’ll be more inclined to fully understand the customer’s purchase criteria. Now the question becomes, when should your salespeople submit the written quotation?
Written quotations should only be submitted after the salesperson has performed a thorough up-front verbal agreement. The conditions of that up-front verbal agreement must be established by your company and must take into considerations the criteria specific to your market and industry.
Your small business must essentially create a checklist of criteria the salesperson must be able to answer, before providing the written quotation. Does your small business provide commodity products where most customer decisions are predicated on matching price for volume? Does your small business deal in a market where the customer's credit worthiness is an issue? Does your small business service an industry where custom-made parts are required and your company must know the unique specifications required by your customers? Both of these approaches require a different set of criteria within your up-front verbal contract.
Make sure you come up with that checklist and that your sales team checks off each and every one of them before ultimately submitting a written quotation. When it comes to establishing sales processes, it’s a guarantee that as your company grows, so to does those processes. However, the best companies keep their sales processes simple. They don’t complicate their processes. Ultimately, they provide their sales team with a checklist of criteria to perform when doing their up-front verbal contract and only allow them to provide a written quotation once that checklist is complete.
Don't lose business to overseas competitors. Help your customer understand their true purchasing costs when going with a vendor from overseas.
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