From Transactional to Consultative Selling
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by Michael J. Galante The Sales Coach
- First, for the selling organization to position themselves as problem solvers and not as product peddlers.
- Second, to secure larger and more frequent sales opportunities.
- And third, to offer high margin products and/or services along with the ones that may be currently viewed as commodities.
- The first is to establish a clear understanding of the customer’s priorities and overall goals. This usually takes place at multiple levels within the customer’s organization and may require several meetings.
- The second step is to identify areas you can improve in their current process. This may be specific problems you can solve, performance gaps to close or areas in which they want to grow. These opportunities are usually present because of deficiencies with the current vendor, the advent of new technologies or the customer’s lack of knowledge in a particular area.
- The third step is where you match the customer’s priorities with the areas to improve and your offering or capabilities. This is called creating the value.
As the sales environment becomes more complex, companies of all types are turning to consultative selling to create significant competitive advantages. Firms that once enjoyed a stronghold on particular markets are now faced with added competition due in part to consolidations, globalization and the Internet. To distance themselves from the variety of choices customers have, many sales organizations are raising the bar and providing additional value to each customer. They are becoming more sophisticated in their sales approach and are able to handle larger projects with relative ease. The financial services industry is a prime example of how companies are shifting from the transactional selling model to the consultative sales approach. For years, banks, stock brokerage firms and insurance companies dealt with investors on a "transaction by transaction" basis. Lately, they have positioned themselves as "financial advisors." The executives of these firms understand the need to create value beyond the initial sale. They want to manage our portfolios and financial futures as opposed to executing financial transactions. They are now taking a strategic approach to retaining customers by offering important value-added services such as retirement planning and research via computer-based tools. The changing perception of customers
Customers today are more educated and less tolerant of sales jargon. They want suppliers who offer complete product/service packages and ones that develop new ideas year after year. They look to these vendors for help when solving secondary problems directly related to the product or service being purchased. An example would be the computer manufacturer that buys plastic parts from a supplier. In the past, the customer would shop the price to death. Today, it is quite common for the buyer to require the vending company to provide comprehensive design, engineering, prototyping, and inventory control support services along with the manufacturing of the part itself. This consolidated buying effort increases efficiencies and creates cost savings for the customer. The computer-company still wants a high quality product at a competitive price; however, the real value comes from the additional services. The bottom line is, when you want to create a competitive advantage, you have to offer a complete package. As a "total solutions provider," you separate yourself from your competition and position yourself to close larger sales. Definitions and Distinctions
To make the transition from transactional to consultative selling, one must understand a few key concepts and terms. Are you a supplier or a problem solver? Salespeople that act as a supplier typically provide a commodity. They focus on one need at a time and are less aware of the customer’s overall situation. Sales are made on a quantitative or volume basis. A problem solver provides solutions and adds value. They have a different skill set and are aware of the global needs of the customer. They have a greater level of customer knowledge and satisfy several needs at once. Sales are made on a qualitative basis. The difference between transactional and consultative selling? Transactional sales solve immediate customer needs and are typically short-term in nature. They require a shorter sales cycle with a specific means to an end. Consultative sales are often broader in scope and may be trend driven. They address both the immediate and long-term needs of the client. The time frame for the "sale" is not finite and usually employs an on-going sales cycle. This type of sale often requires the collaboration of a number of people on both sides of the equation. There is a greater level of customer knowledge and an atmosphere of long-term relationship building. What is the definition of price and value? Our purpose here is not to replace Webster’s, but rather to clarify two critical terms as they relate to the consultative sales process. The price is what you pay for a product or service. It is the number attached to that product or service. It is very defined. The value is what you believe you receive for the price. It is a perception and is very subjective. It is not always quantifiable. Price invites competition. Value locks out the competition. The Consultative Sales Approach
A well-defined consultative sales strategy will help you align your offer with the customer’s perception of value. It moves the sale away from price.
- This process should be designed to accomplish three things.
- Typically, the consultative sales process will have three steps.
Customers will continue to focus on price until a supplier demonstrates to them how their "total solution" is much less expensive. By offering a complete package, you increase buying efficiencies and decrease costs. All of which adds up to a higher value perception. When taking the consultative approach, think of ways to provide the customer with a greater return on their investment. Quantify for them, the savings or gains in time, money and/or additional resources. This way you position yourself as a problem solver or consultant and not just another vendor. By doing so, you will create tremendous competitive advantages. © by Michael J. Galante. All rights reserved. Michael J. Galante is president of GALANTE & COMPANY, a sales training and consulting firm. He is an award winning salesperson and a recognized expert on sales and sales management. Mr. Galante is a published author; international speaker and results oriented sales trainer. He can be reached at:
One Penn Plaza
36th Floor, #36034
New York, NY 10119 Phone 1-800-766-0462
Fax 1-800-766-0463
[email protected]
www.thesalescoach.com
