How the options strategy can grow profits
This is a great strategy to use when closing ratios aren’t as high as you feel that they could be, or when you feel that your team is not getting as large a share of the customer’s dollar. It is simply creating and offering well-structured options to reduce price haggling and protect profits.
There is an old story about a chain of stores that sold pool tables. There were a few locations greatly outselling all of the others. Upon investigation, the management discovered that the most successful locations had innovated beyond the rules. The secret shoppers were readying to write up the stores for several infractions. First, these rule breakers had the most expensive pool tables on display at the front of the store, where the sun and children were likely to do damage. The sales personnel also were ignoring the directives to get the price range of interest and start selling to that range. Instead, the sales process included a full walk through of all the different pricing options, starting with the most expensive pool tables first. The philosophy and benefits of these unique high-end pieces were fully explained.
“Lifetime guarantee/relationship,” “custom handcrafted pieces of art” and other points of value, once fully understood by the potential customer caused them to spend many more times the average customer spent at the stores who sold by the rules.
The point: customers can’t spend more with you if they aren’t aware of the value offered through your highest priced and best options.
Because many are vexed by the question, “What should we charge?” “What is their investment threshold?” or worse, “Did we leave too much on the table?,” an effective way to overcome those concerns, reduce haggling, unnecessary negotiations and close more deals is to offer a set of options rather than just a yes/no decision. Buyers can negotiate with themselves as to how deeply they want to engage your services or invest in your products by choosing just one, all or a combination of your options.
Some call it “giving a choice of yeses.”
Give your team the tools to offer flexibility in options without implying to customers that there is flexibility in price. Negotiate value/options, rather than negotiating away your profits by cutting your price. If your team is concerned about going over your customers’ budget, show them how they can reduce the amount of services/product/value you will deliver, keep price integrity and yet still secure a profitable engagement.
BIG SALES INCREASES CAN COME FROM LITTLE TWEAKS
Imagine a company that is struggling for survival, and your sales team has a current closing ratio of 25 percent and with ideas like the above, you can increase it to 35 percent. Now imagine with the tactic of asking for more, by offering bigger options, you are able to increase the average size of orders by 25 percent. The synergy of these two leverage points may very well enable you to increase sales by 50 percent to 80 percent and profit margins by a few significant points as well.
Most every company can create a “gold, silver and bronze” version of their offerings. Investing time on a regular basis to innovate how you package your offerings will often be as profitable as R&D and at much less cost. Give your customers a choice of yeses, and watch “no’s” decrease and profits increase.
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