Think there’s no money to be made selling to a price-sensitive customer, such as those in the public sector? Don’t be too hasty. And stop making assumptions without facts.
Understand what you actually need to make a profit, what your buyer needs to do their jobs well, and ensure you have both the right products and sales structure to meet your sales goals.
Here’s a great example of how you can do this. My good friend Tim Welch, Managing Director at Grand & Toy, recently shared with me how he started with what was thought to be a shrinking market share—selling office supplies to the federal government—and turned it into a powerhouse performer.
What kind of turnaround are we talking about? He’s reporting a 27% jump in sales and an 11% increase in margins. Next, he said something that floored me: “I have 100% of my sales reps over 100% on revenue and margins. I don’t have any rep underperforming.” And that’s with some very challenging sales targets. This is almost unheard of in sales, let alone as a sustainable trend.
So what’s Tim doing right?
It started with him checking assumptions about what was thought to be true versus what he knew to be true about his market. The outcome: better decisions and better sales.
“We changed the game,” Tim explains. Rather than selling the way they used to, he and his team rethought how they were selling, how the buyer was buying, what they were selling and what was necessary to get the results they needed.
As Tim explains: "If you start from the assumption ‘my customer cannot possibly afford that kind of margin,’ you’re selling against yourself.”
Let’s look at the specific steps Tim took to get the results he needed.
Tim took a scattered group of reps who sold to both to the private and public sector and instead created a unit selling exclusively to government. That helped create specialists inside his organization who could devote all their time to understanding the needs and the changing requirements of their buyers. As he explains: “I needed them to understand that they couldn’t be pricing against themselves.”
Someone can be price sensitive but not allergic to healthy margins, or to your need to make a profit. Tim and his team understood how important it was to redefine what they were selling. They re-evaluated their product line, looked at what was required to make a good profit for the business and found comparable products with better margins.
Tim adopted a clever “inside-out” strategy of connecting with his customers at two levels: the reps talked to decision makers and department heads who guide the customer organization and set the rules, meanwhile the inside sales team connected with front-line buyers in procurement.
Stop thinking about the Procurement Department as a black hole for your time. See them instead as people with unique problems that you are there to help them solve. Their problem: getting great performance for less money. Your solution: better priced products that deliver the same performance, great value and that provide you with better margins. As Tim explains: “Put yourself in their shoes and give them what they need so that they can succeed in their own work and you have a strategy that’s pretty much guaranteed to work.”
To make big, lasting changes, you must first win the hearts and minds of your sales team before you can get them onboard. They need to feel they’re part of the solution. Like Tim, keep your sales team connected at every step so they understand why you’re changing your structures internally, what your goals are and how successful you are as a team in meeting those new goals.
Change is scary and risky. And when you’re changing the rules that govern how you sell, it’s smart to start with a pilot program to prove you can get the results you’ve promised. In Tim’s case, they chose a group that was severely underperforming—essentially there’s no downside to trying something new to get better results than the status quo. As Tim explains: "once they saw we had taken a group that had been negative for nearly 10 quarters and turned them around, they were sold on this within two quarters.”