It takes just the right mix of personality and talent to be a salesperson. They have the skills to uncover exactly what a customers’ needs are (regardless of what they’re told), finding a solution to the problem, and then offering the best product or collection to meet those needs. If that solution can come at a price that makes the customer happy, that’s even better. The best salespeople know that lowest price does not necessarily equal the highest value.
Few things are as satisfying to a salesperson than winning a sale—the thrill of the signed contract, of facing off with competitors and coming out on top. But sales that are won simply because you had the lowest price aren’t nearly as satisfying—or as lucrative. It’s worth much more—for customer and salesperson—to win a sale on value, rather than price.
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The Long-Term Cost of a “Good Price”
Winning on value means you successfully convinced your customer your product or solution was the best, regardless of price. If you’ve “won” on price, all you’ve managed to convince them of is that you were the most willing to slash your margins. It should come then as no surprise that underbidding your competitors and winning on price alone doesn’t give a salesperson quite the same thrill.
Consider, too, that pricing wins aren’t long-term wins. Sure, you have the business now, but you had to undercut everyone else to get it. Which means there’s a good chance another salesperson could undercut you to steal the business. Customers who are only buying based on price have no loyalty. They have no reason to be loyal, or at least no reason to be loyal to anything other than their own checkbooks.
Surprisingly enough, your higher profit customers will also tend to be your happiest customers. It sounds counterintuitive until you consider that the higher-profit customer is one hundred percent sold on your product or service. They’re not buying based on price. They’re purchasing based on quality, setting the tone for building a relationship to create longevity. Another company could come to them with lower pricing down the road, but so long as they remain convinced of your superior product or (proven) service and entrenched in a relationship with their sales reps and account managers, they’re not going to leave.
Winning on Price Versus Undercutting
Let’s be clear: It’s not an inherently bad thing to win a sale on price alone. But it can be dangerous to let that become your go-to approach, because you risk lowering prices to such a point that your business is no longer able to remain profitable. Understanding accurate cost information on your product helps you know exactly how far you can safely negotiate on your prices and that is accomplished through enterprise resource planning (ERP) software.
How can ERP accounting software do that?
- Forecasting: By tracking a product through every step of its production and fulfillment processes, ERPs can help businesses better understand the lifecycle and demand of a product to make accurate forecasts and purchase materials accordingly. No more spending money on resources you don’t need or can’t use in time.
- Integrated Information: Break your data out of its silos and merge it into a single location. Integrating your ERP system with other platforms such as CRM will keep all your data consistent, unique, and accurate. This means that everyone from salespeople to accounting to purchasing knows the details about every customer, order, and inventory to maintain appropriate inventory or even offer pricing promotions on products that need to move. (That might be a good time to “win” on price!) With access to real-time information, your organization will be able to respond more quickly to changes and capitalize on new opportunities. Which means you might just win that next sale on value.
- Reduced Costs: Because of the information generated and shared in the ERP, costs are reduced across the company, from inventory to manufacturing to materials to transportation and even back office costs. That lets you pass savings on to your customers without needing to resort to lowballing.
Find the Right Value With PositiveVision
At PositiveVision, we know the value of having the right ERP accounting software in place to keep your business running smoothly—and profitably. By streamlining inefficient processes, growing revenue streams, and reducing costs through the right business software and systems, your sales team can head into the field confident that their deals are bringing solid value to the sale regardless of price.
To learn more about how PositiveVision’s ERP accounting software and other solutions can bolster your bottom line, contact our team of experts.