The Third Step Of Selling Is Developing The Proposal
By Paul Collyer, Panelmet LLC
In the previous two columns we’ve learned that selling is an easy job performed by overpaid salespeople playing golf during the weekdays and feasting on lavish company paid dinners. Oh wait – wrong perspective…selling is an incredibly difficult job performed by people with extraordinary skill and talents – much better!
Funny how different perspectives can yield entirely different opinions – kind of like politics! However today we’re going to learn how salespeople can learn to develop successful proposals based on the client’s needs, and to learn how to deal with the most common difference in perspective that exists in the world of sales – “your price is too high”.
Developing the Proposal is step three of the six steps of selling, (after step one, Prospecting, and step two, Qualifying).
Developing a proposal should be based on the answers you received while qualifying, and must include the following:
Components of a proposal
• Scope (complete and understandable), including all products and services included
• Specification compliance, exceptions
• Estimated schedule for all deliverables
• Price (with alternates as needed)
• Delivery charges
• Taxes, Fees (if applicable)
• Payment terms
• Offer expiration date
The heart of any proposal is the scope. This is where you have the opportunity to present what it is you are offering as a solution to the customer’s needs and wants learned during qualifying. For negotiated design/build work, it should be mostly based on the customer interviews you have conducted. For hard bid/plans/spec work it should be based on your interpretation of the bid documents as well as any pre-bid clarifications you have received.
The information gathered from customer interviews should help you develop the proper price for your proposal (using these principles):
1. Interpretation – what you think the customer is saying
2. Conscience – your “feelings” about how this information can and should be used or shared to gain a competitive advantage
3. Mechanics – pricebooks, discounts, take-offs, drawings and specs, fees, taxes etc.
Okay, that sums up the basics, but we all know the biggest question is “how do we establish the price”? There are three items that establish price:
1. Competition – their costs, also known as “the market”
2. Costs (ours = material, labor, fees, taxes, overhead and profit)
a. your ability to convince someone that your price is equal to the value you are providing
b. your ability to differentiate yourself and your products from your competition
• You cannot control the Competition
• You have some control over your Costs
• You have ALL the control over your Salesmanship
Q: Why do prospects question price?
A: To confirm the best possible price is on the table. When buyers say “the price is too high” what they really mean is “the value of your proposal is less than the price you are asking”.
• Increase the value to increase the price
• When perception of worth (value) goes up, the cost goes down and closing the sale is possible
Q: How do you build value?
A: Build value by differentiating your products and services from your competition, AND by relating these differences as BENEFITS to your customer. These unique differences should solve your customer’s needs and desires more effectively than those offered by your competition.
Hint: Learn your competitor’s products and services as well as you know your own.
“People buy on price” is the biggest assumption and biggest mistake salespeople make. Pure “price” buyers are few. Most people don’t buy on price, but they think they do, and almost always tell you they do. Nobody brags about paying more for something, but the reality is people do it every day for lots of different reasons.
Hint: If price was the only factor, one company would sell at the lowest price until everyone else went bankrupt.
Q: Can a higher price be an advantage?
A: Yes, when…
• Price makes a statement as to worth
• Uniqueness is valued
• You have better quality, service or delivery
• The customer cannot properly evaluate your competitor’s offer
• Your competition is financially shaky
• Exclusiveness is important (feeding customer’s ego)
Q: When will customers pay you a higher price?
A: Customers will gladly pay you a higher price when you offer…
• A successful track record on earlier projects
• Better quality product
• Better service, more care and attention
• Better terms
• Faster order turn-around
• Less hassle and paperwork
• Convenience (location, ease of transaction)
• Similar business philosophy
• Friendly staff
Need more convincing? How about these examples of customers gladly paying a higher price?….
• Buying gas with a credit card instead of cash
• Shopping at a convenience store vs. grocery store
• Buying cold beer instead of warm beer
• Buying anything at a resort, hotel or airport
• Big houses in upscale neighborhoods
• Box seats vs. general admission at the ballpark
• Country clubs vs. public golf courses
• Made in USA
• Extra legroom/first class airplane seats vs. coach
• Fancy restaurants
• Daily purchase of newspapers rather than subscription
• Buying from vendors/merchants that deliver on time and on demand
• Buying from vendors that offer more favorable terms
Eight Price Lessons for the Professional Salesperson:
1. If price were the only reason anybody bought anything, we wouldn’t need salespeople.
2. If price were the only reason anybody bought anything, one vendor would have all the sales.
3. If your competitors truly set your price, don’t you think they would try to raise it?
4. Your selling price is a function of your ability to sell, not your competitor’s price.
5. Many customers buy because the price is high.
6. If you cut your price, your customer will only urge you on.
7. There is no “magic” to selling at a higher price, just more work.
8. You won’t get a higher price if you don’t ask for it.
Panelmet was founded and is directed by Paul Collyer. He has had exposure to the construction industry since childhood, as his family owned a second-generation General Contracting business. He has over 23 years experience working for construction product manufacturers in the insulated metal panel, single element metal cladding and pre-engineered metal building industry. He has held various positions during his career, including: District Manager, General Sales Manager, V.P. of Sales, Technical Consultant and Director of Technical Services. Collyer holds an Industrial and Systems engineering degree from the Georgia Institute of Technology (Georgia Tech). His professional affiliations/certifications include Construction Specifications Institute (member), Certified Construction Product Representative (CCPR), and LEED Green Associate (USGBC). To contact him, call 970-593-8347, email firstname.lastname@example.org, or visit www.panelmetconsulting.com.
To read other installments in Paul's six-part Selling series, click here.
For more columns by Paul and a host of other contributors, click here.