Why do they buy?

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Read our article about the keys to effectively communicating the value of your products and associated services and pricing them accordingly. Excerpts of the article authored by Frank E. Hurtte Jr. who has 28 years of distribution industry experience and a lifetime in sales follow.

“Yesterday, I received a marketing intelligence survey phone call. And, while I generally just hang up when I get this type of call, this one came at the perfect time.”

I was in the car alone, facing a lengthy drive and just decided to go with the flow and take part.  Convenience stores were the topic.  And, I am an expert.  Over the past couple of decades, I have a hard time remembering a single day that I haven’t stopped by one of these little spots.

“Then the discussion turned to price.”

It drug on and on.  The price of my favorite QuickSpot’s candy bars, fountain drinks, coffee, hot dogs, salads, bread, milk and beer were all rated on a one to ten scale.  And, I recognize QuickSpot as the high price store in every category.  It was a magic moment when the lady doing the survey asked, “If you recognize their price as higher in every category, why do you shop there?”

In my mind, they forgot to ask the most important question; “Why do I buy?” What is it that keeps me coming back to this same place every morning around 7:00 AM?  For me it’s about convenience and speed.  I can hit this place grab my coffee and other sundry items hop back in my car and be seated at my desk in less than 5 minutes.  Price has nothing to do with the equation.  Strangely, the survey forgot to ask.

As strange as it may seem, very few distributors ever ask the single most important question in the selling business. Why do people buy from us?

“Most of your top customers will tell you, “As long as your price is competitive, we’re good to go.” But salespeople struggle.  Why?”

Let’s face it, nobody has ever sat down with your sales guy and said, “Hey Joe, your price is too low.” Conversely, someone, (a purchasing guy or an account justifying their position with a competitor) has definitely stated, “Your price is too high.”  This leaves a lasting impression.

Because most of our customers are nice people, most wimp out when the salesperson doesn’t perform. Instead of saying, “You really dropped the ball on this order and I decided to give it to your competitor.”  They say, “You were just a little bit high.”  And, this message gets pumped back into your organization under the heading of the competitor down the street is bombing price.  Other salespeople take the message to heart.  And, your margin goes circling down the drain.

So what’s a distributor to do?”

Gather your team.  Ask them for real examples of why customers make the decision to steer their dollars to your organization.  Let the team ramble.  They can probably come up with a long list.  After the list has been created, ask where they got the information.  Discuss each example.  Who said, local inventory is key?  What were the circumstances?  Who were the competitors? Why did the customer select us versus them?

As strange as it seems, very few companies reinforce these thoughts with their sellers. Instead they leave them to fall victim to random negative thoughts on pricing.

“Old habits die slow agonizing deaths.”

The habit of discount pricing in a value rich environment is no exception.  Sales teams need help and guidance.  Strategic Pricing Associates (SPA) analytics are a powerful tool in measuring progress.  Let’s dive into the topic.

SPA analytics allow you to segment both customers and product offerings. Different customer types are more price sensitive than others on a product by product basis.  Going back to my convenience store thoughts outlined above.  The c-store survey team didn’t even touch on gasoline prices.  Why?  Because at three or four bucks a gallon most people are very much aware of the cost.  Across my city, the price gap is just a few cents; something like a one percent spread.  If the price is close, the c-store is good to go.  But, step inside the c-store.  The same folks who are price sensitive on gasoline pay almost no attention to the cost of their double diet mocha cappuccino and prehistoric hunk of beef jerky.  Same customer different product, totally different pricing sensitivity.

“Determine the discounters in your organization?”

SPA’s unique process allows you to measure salespeople for conformance to pricing strategy.   This is key.  Some folks need coaching, management and subtle nudges along the way to break away from a career of poor pricing practices.   The ability to individualize the message, gauge improvement and set incremental improvement goals does wonders to push whole teams ahead.


Click here to read the complete article.

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