Initial situation
Despite its technically superior product portfolio, an internationally positioned manufacturer from the automation industry had problems asserting its prices on the market. The sales department, with its strong technical focus, was only partially able to highlight the direct benefits of the technically complex product features and establish itself with customers as a premium supplier. The competitive position was exacerbated by competition from Asia, which further lowered the market price level with low-cost products.
Solution approach
Step 1: Analysis of price-performance positioning
First, a detailed analysis of the price-performance positioning per product group was carried out by means of a customer survey. This involved identifying the product and service criteria relevant to purchasing from the customer’s point of view and measuring the performance of the company’s own products in these criteria.
Step 2: Determination of the price premium and development of a Sales Excellence Toolbox
In a second step, the actual price premium was determined. Based on this information, a sales excellence toolbox was then developed together with the sales department in various workshops. The focus was on detailed strength and weakness profiles as well as value argumentation guidelines that enabled sales to translate the technical product advantages into clearly measurable benefit arguments such as cost reduction or time savings.
Step 3: Intensive sales training
The measures were supplemented by intensive sales training. Different sales situations were simulated and sales and pricing tactics were trained. The company’s purchasing department was integrated into the individual training sessions so that a realistic sales situation could be simulated.
Step 4: Pricing cockpit
Finally, a pricing cockpit – consisting of key figures that measure and control the actual discounting behavior of sales staff at product group level – was defined.
Result
The measures adopted resulted in a significant improvement in price quality. On average, two and a half percent fewer discounts were granted across all product groups, with sales remaining virtually unchanged. This enormous improvement in earnings is essentially attributable to two points.
- The intensive training not only strengthened the sales staff’s self-confidence, but also their ability to negotiate better and thus in a more benefit-oriented manner. Knowledge of their own price premium combined with a battery of benefit arguments led to significantly more profitable order conclusions.
- By creating transparency with regard to discounting behavior, ingrained patterns of behavior could be uncovered and broken up. In the past, for example, discounts were largely awarded in five-percent increments, without differentiating in individual percentage increments or arguing with absolute euro and cent amounts. Furthermore, in many cases the rebate authority was completely exhausted. By disclosing its own discounting behavior, the company was demonstrably much more restrictive in its use of the maximum discount.
Learn more about negotiation, price enforcement and value selling.
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