Wednesday, December 15, 2010

Does Volume Make Up For A LOW Price?

     A phone rings in the sales tower. The phone rockets to an ear. A smile turns to a frown. Shoulders sag. Yes, it is — once again! — a sales consultant pleading with the sales manager to let him give the customer a discount. 

     “But it makes so much sense to offer the guest, client or prospect a discount,” the sales manager hears. “We’ll finally get these folks as a high-profit customer.” OR “Let’s just make them happy and don’t forget the CSI…”

     The sales manager has heard the same plea hundreds of times. He knows it isn’t the best way to do business. Yet for some reason, offering a discount now makes sense. Maybe it is the consultant’s particularly plain and sincere plea. (“It’s the only way this deal will happen!”) Maybe it is that sales have been very slow and unfulfilled month-end sales goals are looming. (“Ten more units to go. Make this sale and it is 9 more units to go.”) Who knows?

     Still, it’s as if we’re watching the unveiling of a very slow accident, one that could be completely avoided and yet we are powerless to stop the final crash. But are we powerless when it is we who are in the midst of the negotiations? No

     Lesson number one: When discounting becomes an option, a major shift happens with how the sales consultant does their job. No longer are they selling to the customer; now they’re selling to the sales manager. The problem with this is simple – a sales consultant must sell to the customer for both the top-line and the bottom-line numbers to be made.

     Lesson number to: Contrary to what you believe will happen, you will never make up in long-term profit what you’re about to give up with your immediate discount. Sure, there are always exceptions to this, but such exceptions are similar to me winning the biggest lottery. Is it possible? Sure. Is it probable? No!

     "You just don’t seem to understand. If I didn’t offer a discount, I would never have had the opportunity to move the price up, because they would never have become a customer.”

     So what? It doesn’t matter. In your quest to get the customer, not only did you cut the price, you cut the dealer’s profit dollar for dollar. Everybody has to make a certain level of profit to keep the doors open. There are bills that must be paid like electricity, phone, water, marketing. One of those bills is also your commission. Guess which ones will get paid first? That’s right. It won’t be your commission. So who suffers most when discounts are offered in the beginning? The only place left to cut is your profit.

     Here’s the deal: Your ability as a sales consultant is not in how much you sell, but in how much you earn for your company. It’s the bottom-line profit that counts, and anytime you reduce your price, your profits are slashed.

     There is not a sales manager out there of any quality who will allow any sales consultant to spend their valuable time selling internally. The focus must be on external selling. Focus first on creating value by determining the needs of the customer. Then position your product or service as the solution, and do so at full price.

     This is the only strategy that ensures you are not only protecting profit, but also ultimately in a place to increase it!

     Lesson number three: Value selling is the only professional way to reach your goals and dreams for any long term career in sales. Flashes in pans, one-hit wonders, skating guests, and other ways to survive at a dealership may work for a time, but the reality is that you will soon be at another dealership doing the same tricks. 

     Lesson number four: Practice makes profit! Tricks are for kids. Get back to the basics of the sales profession just like any other profession – do the blocking, tackling, and bunting, run the suicide drills, do the extra 100 free throws after practice. Look back at the steps to the road to the sale and start Role Playing or using Talk Tracks that work.

     Remember that in a customer’s mind, value selling starts with you. The more they like, trust, and respect you as a professional the more they will listen. Sell yourself, sell your dealership, and the vehicle will do the rest at the presentation of the numbers.

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