SELLING VALUE:
Presenting a
Value Proposition
Dr. Timothy M. Smith
BP 3503
University of Minnesota
St. Paul, MN
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
What makes a high-performing Rep?
Variables Affecting Performance
Source: Ford, Walker,
Churchill 1988
% Variance in
Performance
Explained
Personal History / Family Background
20.9
Marital/Family Status
11.9
Vocational Skills (Knowing the business)
9.4
General Management Skills
9.1
Sales Presentation Skills
4.8
Responsibility
4.0
Sales Aptitude
3.7
Sales Experience
2.8
Dominance
2.4
Interpersonal Skills
2.2
Self-Esteem
1.9
Non-sales Work Experience
1.4
Educational Content
0.9
Educational Attainment
0.2
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
What makes a high-performing Rep?
Variables Affecting Performance
Source: Ford, Walker,
Churchill 1988
% Variance in
Performance
Explained
Personal History / Family Background
20.9
Marital/Family Status
11.9
Vocational Skills (Knowing the business)
9.4
General Management Skills
9.1
Sales Presentation Skills
4.8
Responsibility
4.0
Sales Aptitude
3.7
Sales Experience
2.8
Dominance
2.4
Interpersonal Skills
2.2
Self-Esteem
1.9
Non-sales Work Experience
1.4
Educational Content
0.9
Educational Attainment
0.2
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
What makes a high-performing Rep?
Type of Product Being Sold
Variables Affecting Performance
Industrial
Consumer
Service
Personal History / Family Background
Weak
Weak
Strong
Marital/Family Status
Weak
Moderate
Strong
Sales Aptitude
Strong
Moderate
Weak
Dominance
Weak
Weak
Moderate
Self-Esteem
Strong
Moderate
Moderate
Sales Presentation Skills
Strong
Moderate
Weak
Moderate
Moderate
Weak
Interpersonal Skills
Source: Ford, Walker,
Churchill 1988
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Characteristics Related to Sales Performance
• Trade Selling
– Age, Maturity vs. Youth
– Empathy (understanding/compassion) vs. Aggressiveness
– Knowledge of customer and business methods
• Technical Selling
– Education and Intelligence vs. persuasiveness
– Product and customer knowledge – usually gained through training
BIG PICTURE…
It’s all about the relationship!
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© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Personal Relationships
Mutual
trust
Common
goals
Open
communication
Commitment
to mutual
fulfillment
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Social
support
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Customer Relationships
Mutual
trust
Common
goals
Open
communication
Commitment
Organizational
to mutual
support
Gain
(Value)
(Weitz et al. 2000)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
The Evolution of Personal Selling
(Weitz et al.
2000)
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© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Selling Value Continuum – What kind of relationship fits?
Wasted Effort
Investment
by
Supplier
Lost Sales
Investment by Customer
(Rackham and DeVincentis 2000)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Transactional Sale
Where Can the Sales Force Add Value?
Recognition
of Needs
Evaluation
Of Options
Resolution
Of Concerns
Customer has
Already
Defined needs
And problems
completely
Customer
already
understands
Alternative
solutions
Customer has
few issues or
concerns
Little or no
Opportunity to
Create sales
value
Little or no
Opportunity to
Create sales
value
Little or no
Opportunity to
Create sales
value
Purchase
Seller can
Help make
Purchase
Painless,
convenient,
And
Hassle-free
Implementation
Customer
Generally
Knows how
to use
product
Little or no
Opportunity to
Create sales
value
(Rackham and DeVincentis 2000)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Consultative Sale
Where Can the Sales Force Add Value?
Recognition
of Needs
Seller can
create most
value early
in the
process by
helping
customers
define needs
Evaluation
Of Options
Seller can
design
customized
solutions and
help
customers
make
informed
choices
Resolution
Of Concerns
Purchase
Transaction
process
is minimized
Seller can
counsel
customers
and help
resolve
concerns
Little or no
Opportunity to
Create sales
value
Implementation
Seller can
advise and
problem
solve
Delivery,
installation,
set-up,
maintenance
issues
(Rackham and DeVincentis 2000)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
PRESENTATION STRATEGY ADDS VALUE
• Pre-approach preparation adds value
• Presentation plan adds value
• Outstanding service adds value with;
– friendly approach
– customer centered presentation
– effective demonstrations
– win win negotiations
– timely close
– after sale service
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
Step Two
PRESENTATION
 Determine prospect needs
 Select product or service
 Initiate sales presentation
Step Three
DEMONSTRATION
 Decide what to demonstrate
 Select selling tools
 Initiate demonstration
Step Four
NEGOTIATION
 Anticipate sales resistance
 Plan negotiating methods
 Initiate double-win negotiations
Step Five
CLOSE
 Plan appropriate closing methods
 Recognize closing clues
 Initiate closing methods
Step Six
SERVICING THE SALE
 Suggestion selling
 Follow through
 Follow up calls
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
BUILDING RELATIONSHIPS
• Become genuinely interested in others
• Smile
• Remember names
• Be a good listener
– encourage other to talk about themselves
• Talk in terms of other’s interest
• Make others feel important
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SPIN SELLING (Situation, Problem, Implication, Need-Payoff)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SPIN SELLING (Situation, Problem, Implication, Need-Payoff)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
Step Two
PRESENTATION
 Determine prospect needs
 Select product or service
 Initiate sales presentation
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
TYPES OF QUESTIONS
TYPE OF
QUESTION DEFINITION
Informationgathering
questions
General questions designed to
get the prospect to disclose
certain types of basic information
WHEN USED
EXAMPLES
Usually at the beginning of a sale
“How many miles per year do
you drive your company car?”
(auto leasing)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
TYPES OF QUESTIONS
TYPE OF
QUESTION DEFINITION
WHEN USED
EXAMPLES
Usually at the beginning of a sale
“How many miles per year do
you drive your company car?”
(auto leasing)
Informationgathering
questions
General questions designed to
get the prospect to disclose
certain types of basic information
Probing
questions
More specific questions designed
When you feel the need to obtain
to uncover and clarify the prospect’s more specific information that is
perceptions and opinions
needed to fully understand the
problem and prescribe a solution
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
“What type of image do you
want your advertising to project
to current and potential
customers?”
(newspaper advertising)
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
TYPES OF QUESTIONS
TYPE OF
QUESTION DEFINITION
WHEN USED
EXAMPLES
Usually at the beginning of a sale
“How many miles per year do
you drive your company car?”
(auto leasing)
Informationgathering
questions
General questions designed to
get the prospect to disclose
certain types of basic information
Probing
questions
More specific questions designed
When you feel the need to obtain
to uncover and clarify the prospect’s more specific information that is
perceptions and opinions
needed to fully understand the
problem and prescribe a solution
Confirmation Designed to find whether or not
questions
your message is understood by
the prospect
After each important item of
information is presented
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
“What type of image do you
want your advertising to project
to current and potential
customers?”
(newspaper advertising)
“Do you see the merits of
purchasing a copy machine with
the document enlargement
feature?” (office copy machine)
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
TYPES OF QUESTIONS
TYPE OF
QUESTION DEFINITION
WHEN USED
EXAMPLES
Usually at the beginning of a sale
“How many miles per year do
you drive your company car?”
(auto leasing)
Informationgathering
questions
General questions designed to
get the prospect to disclose
certain types of basic information
Probing
questions
More specific questions designed
When you feel the need to obtain
to uncover and clarify the prospect’s more specific information that is
perceptions and opinions
needed to fully understand the
problem and prescribe a solution
“What type of image do you
want your advertising to project
to current and potential
customers?”
(newspaper advertising)
“Do you see the merits of
purchasing a copy machine with
the document enlargement
feature?” (office copy machine)
Confirmation Designed to find whether or not
questions
your message is understood by
the prospect
After each important item of
information is presented
Summary
confirmation
questions
Usually used after several items of “I would like to summarize what
information have been presented you have told me thus far. You
want a four-bedroom home with
a basement and a two-car garage.
(real estate)
Designed to clarify your
understanding of the prospect’s
needs and buying condition
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
Step Two
PRESENTATION
 Determine prospect needs
 Select product or service
 Initiate sales presentation
Step Three
DEMONSTRATION
 Decide what to demonstrate
 Select selling tools
 Initiate demonstration
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
USING DEMONSTRATIONS PRODUCTIVELY
WHY
WHAT
WHEN
• improves communication
• improves retention speed
• proves buyer benefits
• feeling of ownership
• confidence
• saves time
• product, models, samples
• product, models, samples
• photos, illustrations, reprints
• portfolio, graphs, charts, tests
• testimonial, guarantees
• computer printouts, audio,
visuals
• as a product approach
• to prove benefits
• to overcome objection
• to strengthen close
• to service the sale
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Demonstration Worksheet
Feature to Be
Demonstrated
What I Will Say
(Include Benefit)
What I or the
Customer Will Do
Special computer circuit
board to accelerate drawing
graphics on a color monitor
screen
“This monitor is large
enough to display multiple
windows. You can easily
compare several graphics.”
Have the customer bring
up several windows using
computer keyboard.
Meeting room setup at a
hotel and conference center
“This setup will provide
three feet of elbow space for
each participant. For long
meetings the added space
provides more comfort.”
Give the customer a tour of
the room and invite her to
sit in a chair at one of the
conference tables.
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
Step Two
PRESENTATION
 Determine prospect needs
 Select product or service
 Initiate sales presentation
Step Three
DEMONSTRATION
 Decide what to demonstrate
 Select selling tools
 Initiate demonstration
Step Four
NEGOTIATION
 Anticipate sales resistance
 Plan negotiating methods
 Initiate double-win negotiations
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
NEGOTIATING PRICE
Salesperson Tactics
• Add value by explaining the cluster of
satisfactions
• Discuss price confidently
Customer Tactics
• Budget limitation
• Take it or leave it
• Split the difference
• Discuss value rather than price
• Discuss the relationship of price and
quality
• Discuss difference between price and
cost
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Negotiations Worksheet
Customer’s objection
Type of
objection
Possible response
“Fifteen cases of olives will
take up valuable space in my
receiving room. It is already
crowded.”
Product
Direct denial:
“You will not have to face that problem. With the aid of our
merchandising plan you can display ten cases immediately on
the sales floor.”
“This is a poor time of the
year to buy a large order of
olives. People are not buying
at this time.”
Time
Indirect denial:
“I agree that it has been a problem in the past, but consumer
attitudes seem to be changing.. ... We will supply you with
point-of-purchase material that suggests new ways to use this
high-profit item.”
“I would rather not tie up my
money in a large order.”
Price
Superior benefit:
“As you know, olives represent a high-profit item. The average
margin is 26 percent. With the addition of our $1.00 per case
allowance the margin will rise to about 30 percent. This order
will give you a good return on your investment.”
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
Step Two
PRESENTATION
 Determine prospect needs
 Select product or service
 Initiate sales presentation
Step Three
DEMONSTRATION
 Decide what to demonstrate
 Select selling tools
 Initiate demonstration
Step Four
NEGOTIATION
 Anticipate sales resistance
 Plan negotiating methods
 Initiate double-win negotiations
Step Five
CLOSE
 Plan appropriate closing methods
 Recognize closing clues
 Initiate closing methods
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
GUIDELINES FOR CLOSING THE SALE
• Focus on dominant buying motives
• Negotiate tough points before closing
• Avoid surprises at the close
• Do not isolate prospect during the sale
• Display self-confidence during the close
• Ask for the order more than once
• Recognize closing clues
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
METHODS OF CLOSING THE SALE
• Trial
• Summary-of-benefits
• Assumption
• Special Concession
• Negotiating the single-problem
• Limited choice
• Direct appeal
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
Closing Worksheet
Closing clue (prospect)
Closing method
Closing statement (salesperson)
“Our staff will need to be
trained in the use of this
equipment.”
Negotiating-thesingle problem
“We will send our technical staff to your company as soon
as the product arrives. They will spend two days with your
staff showing them the entire operational program. In
addition, they will be on call for any questions or service
during the following six weeks.”
“That sounds fine.”
“What kind of financing
do you offer?”
“Well, we don’t have
large amounts of cash
available at this time.”
Direct appeal
“Good, may I get your signature on this order form?”
Limited choice
“We have two financing methods available: ninety-day
credit or two-year-long term financing. Which of these do
you prefer?”
Assumption
“Based on your cash position, I would recommend you
consider our lease-purchase plan. This plan allows you to
pay a very small initial amount at this time and keep the
cash you now have for everyday business. I will be happy
to write up your order on the lease-purchase plan.”
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SIX STEP PLAN
The Six-Step Presentation Plan
Step One
APPROACH
 Review Strategic/Consultative Selling Model
 Initiate customer contact
Step Two
PRESENTATION
 Determine prospect needs
 Select product or service
 Initiate sales presentation
Step Three
DEMONSTRATION
 Decide what to demonstrate
 Select selling tools
 Initiate demonstration
Step Four
NEGOTIATION
 Anticipate sales resistance
 Plan negotiating methods
 Initiate double-win negotiations
Step Five
CLOSE
 Plan appropriate closing methods
 Recognize closing clues
 Initiate closing methods
Step Six
SERVICING THE SALE
 Suggestion selling
 Follow through
 Follow up calls
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SELLING DYNAMICS MATRIX
Parts of the Sales Presentation
Consultative
selling skills
Need
discovery
Selecting
solution
Need satisfaction
presentation
• To confirm selection
Questioning
skills
• As a question approach
• To find needs and
buying motives
• To probe for buying motives
• To confirm needs and
buying motives
Presenting
benefits
• As a benefit approach
• To discover potential
benefits
• To match up with
buying motives
• To present and
summarize features
effectively
Demonstrating
skills
• As a product approach
• To clarify need
• To clarify selection
• To strengthen
product claims
Negotiating
skills
• To overcome initial
resistance to sales
interview
• To overcome need objection
• To overcome product
objection
Closing skills
• When customer has made
buying decision
• When buyer immediately
recognizes solutions
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
• To confirm benefits
• To confirm mutual
understanding
• To overcome source,
price, and time objection
• Whenever buyer presents
closing signals
Servicing
the sale
• To make suggestions
• To confirm delivery
and installations
• To handle complaints
• To build goodwill
• To secure credit
arrangements
• To make suggestions
• To use credit as a close
• When making effective
suggestions
• In handling complaints
• To overcome financing
objection
• After suggestion
• To secure repeats
and referrals
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SPIN SELLING (Situation, Problem, Implication, Need-Payoff)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005
BP 3503-5503: MARKETING BIO-BASED PRODUCTS
SPIN SELLING (Situation, Problem, Implication, Need-Payoff)
| UNIVERSITY OF MINNESOTA, Department of Bio-based Products
© T. M. Smith, 2005