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Lesson#1 For Growing A Sales Team: Pricing

PricingGrowing a sales team: Moving from a concept-driven entrepreneurial company to a mature process-centric organization requires many changes.  Along the way the sales team has to change too.  Teaching process to your sales team is one of the most important things you can do.

A company’s growth, trajectory, culture and success often come from the sales and marketing teams.  As the company expands the sales team needs to change to continue that growth.  Your early-stage, evangelical salespeople are often consultants who convince prospects that they need your products or services.  Scalable sales teams, on the other hand, are typically process-driven people who build and manage relationships, map your solutions to a customer’s problems and win business through persistence.

In my years in sales I’ve learned some valuable lessons about what processes a growing company needs to focus on to avoid those growing pains.  In the following series I’ll address what I consider to be the most important lessons for maturing sales teams.

#1) Standardize your discounts and pricing:

For most U.S. businesses prices are published and handed out gladly.  There’s no attempt to cover up the cost for an “off the shelf” product or service.  You may get away with quoting these prices to your newest prospect’s budget owner.  But when procurement gets involved, they need to show their value.  So does the CFO… as well as the attorneys.  In the end, that price list is long forgotten.

Many salesmen at young start-ups will discount their prices based on who the client is, how important the business is, who they’re competing against and how aggressively the deal is negotiated.  In my first sales job revenue was hard to predict simply because every salesman negotiated differently.  Over time we standardized the pricing and allowed each salesperson to discount the prices up to 15%.  If the price for a service was usually $30,000.00 he could offer it for $25,500.  This allowed him control of the sale without continually checking with management.  Discounts beyond the standard 15% required CEO approval.

We also created standardized packages of features that reps could offer to increase their up sell.  For example, a premium package might include discounts on additional software, onsite customer service representatives, or decreased service times.  In the early days, each sales rep negotiated each of these on a case by case basis.  By reducing the negotiable elements of the pricing and packaging, we eliminated bottlenecks and hurdles to a successful sale.

 

Until next time,

Crowe Mead Sig

 

 

 

 

Crowe Mead

www.betterleadershipblog.com

Posted on by Crowe Mead in Leadership, Sales, Strategy

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