B2B Sales Training Video #1 : ROI and Circulating Capital

by Victor Antonio

Whether selling a product or a service, one of the keys to positioning yourself as a “sales partner” it to be able to understand the client’s business, but moreover understand what are some of the key pressure points you may be able to impact or improve on.

In this video, I cover the basic pressure points most manufacturers have to deal with.   The goal of the video is to make you, the B2B salesperson, cognizant of where you might be able to help your client which in turn will lead to a sale.


Product versus Profit Presentation

by Victor Antonio


Sales Consultant, Victor Antonio, Value Centric SellingIn any B2B sales situation, it is incumbent upon the salesperson to improve a client’s ability to circulate their capital quicker. This can be done through increasing sales, shortening account receivables or increasing inventory turns.

The ability to increase a client’s sales revenues or decrease their cost are the two main pistons that power any company.  The engine that drives these pistons is the ability to turnover (or accelerate) capital in the most cost effective way.  B2B buyers want to buy products or services that can help them achieve those goals.

So before you give your next sales presentation, here are some questions for you to consider:

  • Does my product (or service) help increase revenue or decrease cost?
  • Does my presentation describe how it does that?
  • Can I quantify those increases or decreases in terms of the client’s business?
  • If so, how soon can the B2B client expect to see a Return On Investment (ROI)?
  • Do I provide the B2B client with proof on how my products help increase revenue or decrease cost?

Whether you’re dealing with the CXO or a Product Line Manager, both want to know the same thing; how can you help me grow?  Your ability to qualify and quantify your proposal in terms of the client’s business unit is the key differentiator in any sales scenario with your competitor.  Selling in today’s environment has changed.

Value Centric Take-away:  Clients no longer want only a product presentation, they also expect to see your profit presentation!


Note: I’ll be posting a video in a few days to illustrate this point.

The Value Conundrum: Cost Savings v. Revenue Increases

by Victor Antonio

create value by cutting costWhen selling a client on value, you’re left with either showing the client how you can reduce their cost or increase their revenue.   Either way, what you’re proposing is a way for the client to improve their profit margin.  Convincing a client that you can help them reduce cost is a far easier sale then convincing them you can help increase their revenue.

Which creates a ‘value conundrum’ when it comes to selling value.  More often than not, clients value a company that can show them how to increase their revenue more than they do a company who can help them reduce their cost.   That said, leading off with a strong cost saving strategy for the client will give you more sure footing than trying to convince the client that you can help them increase sales.  Three reasons why this is so:

1) In general, cost savings are always easier to quantify as compared to a potential revenue increase.  Because they’re easier to quantify (i.e., more objective and tangible), the client is more inclined to believe what you the salesperson (or Business Development) is proposing.

2) Clients know that they have more control over reducing cost than increasing revenue.  Showing the client how your product(s) can help them control their cost give the client a sense of control and ownership of the results.

3) Cost reduction are perceived to have more permanence compared to increase sales/revenues.  When a cost saving measure is implemented, it’s more permanent compared to an increase in potential revenue.

So although cost savings take a backseat to increase revenues when it comes to positioning your product, having the former gives you a stronger position from which to present from.  When selling the advantage of your product or service, lead with cost saving metrics because they’re easier to justify and defend compared to promises of increase revenues if they buy.

Value Centric Take-away: When presenting to your client, lead with cost saving proof and then introduce potential revenue increases they’ll derive from buying your product or service.

Value Attribution – The Discount Deception

by Victor Antonio

Victor Antonio Value Centric Selling Sales consultant and trainer, atlanta georgiaUniversity of Ohio did an interesting study that I thought you might find interesting especially if you’re a proponent of giving product or service discounts.  The school had a theatre department that sold season passes for 10 shows that were put on during the semester.  The folks at the university wanted to test the effect of discounted ticket prices on the show’s attendance for that particular semester.

When a person approached about buying season tickets for $15, they were offer one of three types of season passes.  Out of the 60 students in the test group, one group was sold a season pass at full price.  The second and third groups were sold season passes with a discount of $2 and $7, respectively.  The two groups receiving the discounted passes were told they were receiving a promotion discount from the theatre company.  All three groups had access to good seats.

The folks at the University wanted to see if offering discounted passes as opposed to full price passes would make a difference in the attendance for the ten shows.  The results would be as one might expect.  Those who paid full price showed up more often than those who received discount passes.  Now on first glance you might attribute this attendance effect to sunk cost; those who paid full price wanted to recoup their investment (i.e., get the most out of their passes by going to the performances) after having spent $15.

The proverbial fly in the empirical ointment was that those who received the $2 and $7 discount missed equally as many performances.  If the sunk cost was truly in effect, those who only received a $2 discount should’ve attended a few more shows than the group who received a $7 discount.  But that didn’t happen.

What happened is something called Value Attribution; which simply means the inclination to superimpose or imbue a thing with certain qualities or characteristics based on our initial perception.    Our initial impression of a thing causes us to view that very thing in such a way that is consistent with our initial impression.  Simply stated in the case of the discounted season passes, if it’s a cheap ticket, then it must be a cheap show.  Therefore, buying something cheap causes us to devalue or view the object as having little to no value.

In selling the tendency sometimes is to provide the client a hefty discount as an inducement to buy our product.  But given the University of Ohio’s study I think it’s worth pausing for a moment to reflect on how the buyer might view your proposal.  We’ve all been in a situation when someone offers us such a good deal that we wonder, ‘What’s wrong with this picture?’  So it should come as no surprise that your buyer upon receiving a very low price (big discount) may think, ‘Why are they selling it so cheap?  What’s wrong with it?’   Even if the buyer does make the purchase, they may choose not to use it thinking it’s not worth much since the price was so low.

For example, I remember buying a leather jacket that was selling for only $55.  At the time I wondered why it was so inexpensive.  Was it the quality?  Something must be wrong with it!  Whatever the reason, the result was that I hardly used the jacket and after a few months I decided to donate it to Goodwill.  What happenned?  From the very moment I made the purchase, I had already devalued the jacket in my mind.  That perceived devaluation guided my behavior in such a way that I never used the jacket.  Now imagine how my attitude, hence my behavior, towards the jacket would’ve been different if I had paid $250.  I’m sure I would’ve used it more often and it would probably still be hanging in my closet today.

Buying something at a price that’s too good to be true may setup in the buyer’s mind a discount deception.  Just like the season ticket pass holders (or my leather jacket), the buyer may choose not to use the product even after the purchase (i.e., devaluing the item from the beginning).

Value attribution is about controlling perception and the last thing you want is a buyer to associate you (or your company) with selling cheap products or services.  The unintended consequence of heavily discounting a product may be that the buyer, sensing little value, chooses not to buy any other products in the future.  Be careful!

The Value Litmus Test

by Victor Antonio

Value Litmus Test for ProfitabilityAny good salesperson knows the old adage of presenting: telling what you’re going to tell them before you start, tell them and when you’re done telling them, tell them what you just told them.   Sometimes it can easy for the client to get lost in all the data and information being discussed which is why its always best to have a meeting plan or discussion outline ahead of time and then review that information after the information has been shared.

But it’s up to the salesperson to manage the client’s memory load and take away.  By that I mean you want to filter down for the client what you believe are the most relevant and salient points.  If you let the potential client walk without helping them assimilate the information, you run the risk of them not quite understanding your value proposition after you leave the meeting.   You can avoid this mistake by simply summarizing at the end the value your company is offering to help improve the client’s position financially.

Value: If you propose a change that you believe will either significantly increase the client’s top line sales or decrease their cost, putting a value on just how big that increase or savings is crucial.  If the product or service impacts more than one area, quantify each separately and then aggregate them later on the proposals.  Take extra time and care to explain concepts, terminology and quantification methods (i.e., how you arrived at your figures).

Timeline: Once you’ve proposed your cost savings or your revenue increase proposal, the next thing to do is to assign a timeline for when you believe that will happen for the client.   Do not leave it open ended and hope the client will figure out their own Return On Investment (ROI) timeline.   A timeline is just as important a sales metric as ROI or Net Profit.   A client who is investing in your product is thinking two things: “How will I get my money back?” and  “How soon will I be able to get it back?”   Based on the size of the project, you may want to use years for long ROI cycles and quarters for short ROI cycles.    Profit timelines should include at a minimum the Break Even point and a Return On Investment schedule.

Conversion: Unless you’re selling into a Greenfield (first time application), you’re more likely than not to come upon some resistance or hesitancy from the client when it comes to making a product or service change.   Change is hard and no one likes it.  Everyone what’s change but the last thing they want to do sometimes is change.  It’s important that your proposal clearly outline how the change-over or conversion, from the old to the new, will take place.  And make sure that timeline coincides with the client’s expectations.  If it doesn’t, you need to reset the client’s expectations early on in the conversation.

Credible: The value proposition you propose has to be realistic, but moreso believable by the client.  Your proposal should clearly delineate the ‘what and how’ the client will benefit from buying your product or service.  Timeline suggestions are tricky.  If you’re ROI window is too long, the client might question its legitimacy; the same is true if you choose a timeline that is to short to realize the process or revenue improvements you are suggesting.

As you develop your presentation and proposal, keep these four points in mind.  To summarize the above, the client wants know: a) Value: How Much, b) Timeline: How Fast, c) Conversion: How Much Work, and finally d) Credible: Is it believable.   Being able to demonstrate and prove each one is will value litmus test clients will be requiring of you and your proposal.

Categories: Selling Value

A Freebie By Any Other Name is a Discount

by Victor Antonio

Victor Antonio Value Centric Selling Sales consultant and trainer, atlanta georgiaIn every exchange of commerce there is a mental buyer and a mental seller.  If a salesperson tries to sway his client to buy the product, than the salesperson is really the seller.  But if the buyer convinces the salesperson that, ‘Now is not a good time’ Or ‘Let me think about it and get back to you’ then the salesperson has been sold by the buyer on the fact that they can’t buy.  The buyer has sold the salesperson on his or her inability to make a decision.  And if the salesperson accepts that position, then the salesperson has been sold.  An ironic point of view don’t you think?

Taking it one step further, if a buyer convinces that salesperson that he should get a better price, then the buyer has sold the salesperson on the fact that his money has more value than the seller’s product.   When a seller can only close a deal on price, then it is almost with certainty that the seller has been outsold by the buyer.

A discount is proof of ineffectual selling; proof that a some sort of sales injustice has been committed.  The heftier the discount the bigger the crime.  Ideally, for a true value centric salesperson, a discount is the nuclear option; used only in cases of extreme emergency when all other options for closing the deal have been exhausted, including the sale of value first.  Then and only then should a discount be used to close the deal.

When we think of a price discount we typically think in terms of how much the price was reduced; by what percentage.  But discounts come in many different forms.  And sometimes these alternative discount methods are not categorized as such, which is why they’re overlooked or ignored but the impact on the bottom line is just as deleterious as if an actual discount were granted to a client.

real cost of discounting price

Not Really!

Clients like to ask for ‘goodies’ when they buy our product or a service.  There’s often an entitlement mentality on behalf of the client who asks and ‘expects’ the salesperson to sweeten the pot with a few extras if they want the order.   From a sales perspective the request may seem harmless, but the impact the company is anything but nonetheless.

Discount alternatives come in all shapes and sizes which is why we need to be aware of what they are and how they impact the company’s bottom line.   Here are a few discount alternatives to put on your radar:

  • Free Training and Resources:  By offering free training, you company has to absorb the cost associated with training your clients at no cost.  The facility cost where the training will be held, the cost of the instructor, the cost of the material produced and to top it off, the opportunity cost of doing free training instead of working on something else that could drive revenue.
  • Free Online or Phone Support: The personnel required to answer the phone and provide client support is another cost that reduces margin.  The cost of a maintaining a phone system and creating an online support system which my have to be integrate with the company’s existing Customer Relationship Management (CRM) or other client maintenance database system will add to the cost.
  • Extended payment terms or Financing:  By deferring when the company gets paid, the opportunity to use that cash flow to either earn interest or utilized for other expansion projects will cost the company money.  By not having cash on hand, the company might have to tap into the line of credit at a higher interest rate.
  • Multi-year Contract with Price Discounts:  By offering the client a price sliding scale over a given period of time only serves to exert more pressure on the company to maintain the necessary margins to make the business line or product profitable.
  • Volume purchases with volume discount levels: Given discounts based on a high volume purchase assumes that the direct cost with manufacturing a product will not go up. False.  Driving more volume through the factory impacts production time, increase material demands and requires more man-hours to meet the demand.  These are just some of the direct costs associate d with higher volumes.  To discount for higher quantities only serves to exacerbate the pressure on maintaining good product margins.
  • Free product or software upgrades: All product (software) upgrades cost time and money to create.  Giving away upgrades may be impacting your margins more than you think.  Although the developer can rationalize that the cost of the upgrades will be spread across a larger client base and will therefore be minimal is a legitimate way of thinking.  But when you start adding up a lot of ‘minimals’, over time they don’t become so minimal.
  • Zero Inventory:  Offering to carry inventory for the client ties up your company’s money.  Slow inventory turns impact cash flow and uses up valuable inventory space.  Salespeople need to see every product on the shelf as a stack of dollar bills with a ‘do not touch or use me until sold’ sign to really understand how high inventory equates to a warehouse of stored money that can be use and loses value every day it sits on the shelf.  A client’s value, or perception, of a product goes down over time. The longer you hold the product the less likely it is the client will pay you what you original asked for.

A Value Centric mindset requires salespeople to start thinking about discounts not only as a percentage of a price, but also becoming aware that giving away free services or extending payment terms is another form of discounting.  And whether it’s a price discount or some sort of free deal, all contribute negatively to the company’s cash flow and margins.

Categories: Pricing Strategies

Esteem Value – The Subjective Side of Value

by Victor Antonio

Victor Antonio Value Centric Selling Sales consultant and trainer, atlanta georgiaThe term value is very difficult to define since value often times is in the eye of the beholder.  Value is made of up several components that contribute to the overall attractiveness of a product (or service) Value has a Use component defined as how the product is to be used to accomplish a given task.   It also has a Cost component which speaks to material and labor required to create the product.

One component that is always present but rarely discussed is Esteem value.  Esteem value is defined as the subjective value a client attributes to the product that makes them feel good about owning the product.

ford focus esteem value centric selling

Ford Focus

For example, if I were to show you two different cars, a Ford Focus and a Toyota Lexus, which one would you choose?  Which one would you value more?  Before you answer, let me first say that the Use component of value is equivalent.  Both cars can get you from point a to point b.  I should also mention, for the sake of this example, that both cars cost the same to manufacture and use almost identical components. So there is no difference in Use value or Cost value.  So what would drive one to prefer one car over the other holding all other variables (e.g., price, quality, service, etc) constant?   The answer is the Esteem value of the car.

One person would value driving an American car as a source of pride and would therefore choose the Ford Focus.  Or the person may simply buy the Lexus for atheistic (i.e., styling, available colors, interior design, etc.) reasons.  Whether it’s out of national pride or just taste, the buyer will buy the car that will make them feel the most pride of ownership.

Apple is a good example of a product that contains a high Esteem component in the value of the products the company manufactures.   Look at the Macs, iPod or iPhones.  All these products have a Use component (functionality), a Cost component and they most definitely have an Esteem component.  People who own Apple products take pride in showing off their “apple logo” when they flip open their portable laptops.   The white headphone designs used with the iPod is another declaration of pride in ownership.

As a salesman selling high tech products, I was very aware of the Esteem component in our products.  Sometimes it was the ‘slimness or sleekness’ of the chassis design or the variety of colors we offered that turned a client’s head.   Clients took pride in being able to design a system where all the chassis and rack colors matched.  Sound silly?  Not to the network operations manager whose identity was tied to how well he managed his facility and the pride he took in his work when potential clients came for a site visit.

It’s hard to calculate the Esteem component value in any product since the value itself is subjective.  But Product Managers and designers should take note that building value into a product isn’t simply about Use (functionality) and Cost, it’s also about how it will the client feel when they own it; the Esteem component of value.

Categories: Selling Value