As salespeople, we are competitive by nature. We relish pitch-offs with our fiercest competitors, and take pride in our ability to come out on top. Finding a way to add value to our prospects’ lives and convincing them to sign on the dotted line is a rush.
That’s why there’s nothing more disheartening and degrading than when a sale simply turns into a pricing war. We’ve all been there: the competitor offers a 10% discount, so you have to offer 15%. Now they’re throwing in 2 free seats a month, so you need to make sure that you can give them 3. Yuck.
The biggest problem is that this type of pricing war has a snowball effect. Once it starts, your discounts will just keep getting bigger until you’re the last, cheapest vendor standing. Where’s the fun in that? Here are three tips to help you avoid this nightmare before it has a chance to begin.
Know the types of leads generating value for your business.
When leads are just a name in a list of hundreds or even thousands of other businesses, it’s hard to know what you’re going to get. Because of this, reps will often just start at the top of a list and work their way down. So how do you know what makes one lead better than another? And how do you help your team prioritize and focus on the leads that will drive the most value for your business?
Lead yield is just one example of a Yield Measure – measures that are used to understand how much value you get in return for your investments at each stage of the sales pipeline. The equation for lead yield is as follows: Sales Revenue / # of Leads Generated.
To help you understand what sets one lead apart from another and identify the types of leads generating the most value for your business, you want to segment your deals by lead profile dimensions like those listed below, and measure their lead yield:
– Lead source (paid search, partners, social advertising, organic search, etc.)
– Company industry (media, travel, financial services, eCommerce, etc.)
– Solutions already in use (HubSpot, Datanyze, Yesware, etc.)
Completing this exercise should hopefully start to uncover qualities that high-yielding leads have in common, so that your reps can prioritize these in their efforts and lower their risk of getting caught in discount battles. You can see an example of a yield comparison for leads from two different sources below. For a more detailed breakdown of how to use lead yield, check out this blog post.
Leverage the right content at the right moments.
The idea behind this tip is that it will help you engage in value-based selling. Value-based selling is a sales tactic that requires reps to fully understand their prospects’ problems and clearly establish the value of solving them.
When done well, content can help facilitate this entire process by highlighting and helping buyers relate to key issues solved by your product. It should shine a light on the risk of doing nothing to solve these problems or going with lesser alternative solutions. Good content also makes the value of solving these problems (with your product, of course) clear and concise.
The benefit here is two-fold:
1) When done early and effectively, this approach enables reps to establish the benefits that their solution brings as the key decision-making criteria for their prospects. When something is perceived as extremely high value, price becomes a non-issue.
2) If you really can’t identify a key problem where your solution can provide solid value, it’s best to qualify out and avoid the impending pricing war. Because that’s where this type of sale will go.
Don’t let deals linger in your sales pipeline.
While sales cycle length can vary based on customer and deal size, every business should have a general idea of the average time a deal should sit in the sales pipeline, or better yet, in each individual pipeline stage. This should be enough time to identify problems, adequately present your solution, do some negotiating, etc.
But when deals start to linger in your pipeline and show little to no movement, this is a warning sign. Either they don’t see enough value in your solution to consider it an urgent need, or they’re evaluating other options – both of which are bad news.
To help combat this, it’s important to have a clearly defined sales process in place that outlines the exact steps reps need to take to move a deal from one pipeline stage to the next. For more information on how to make this happen, download the free eBook 3 Keys to Unlocking a Scientific Sales Pipeline. This process should be measured optimized over time as you and your team figure out the information and activities needed to most effectively close deals.
To help spot potential problem areas and keep you in the know about any lingering deals, leverage a report like the one below. This stage duration analysis not only shows how much time, on average, deals are spending in each pipeline stage, but it also calculates the probability of winning a deal based on how much time it has been in a particular stage.
Step Away from the Discounts
When you take part in the pricing war, nobody wins. Avoid your mortal enemy with these three tips to ensure that your solution is top of mind and top value for your prospects. And for more sales strategies and insights like these, subscribe to the Base Blog!