1. SELLING VALUE: Presenting a Value Proposition Dr. Timothy M. Smith BP 3503 University of Minnesota St. Paul, MN

2. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products What makes a high-performing Rep? Variables Affecting Performance % Variance in Performance Explained Personal History / Family Background20.9 Marital/Family Status11.9 Vocational Skills (Knowing the business)9.4 General Management Skills9.1 Sales Presentation Skills4.8 Responsibility4.0 Sales Aptitude3.7 Sales Experience2.8 Dominance2.4 Interpersonal Skills2.2 Self-Esteem1.9 Non-sales Work Experience1.4 Educational Content0.9 Educational Attainment0.2 Source: Ford, Walker, Churchill 1988

3. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products What makes a high-performing Rep? Variables Affecting Performance % Variance in Performance Explained Personal History / Family Background20.9 Marital/Family Status11.9 Vocational Skills (Knowing the business)9.4 General Management Skills9.1 Sales Presentation Skills4.8 Responsibility4.0 Sales Aptitude3.7 Sales Experience2.8 Dominance2.4 Interpersonal Skills2.2 Self-Esteem1.9 Non-sales Work Experience1.4 Educational Content0.9 Educational Attainment0.2 Source: Ford, Walker, Churchill 1988

4. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products What makes a high-performing Rep? Type of Product Being Sold Variables Affecting PerformanceIndustrialConsumerService Personal History / Family BackgroundWeak Strong Marital/Family StatusWeakModerateStrong Sales AptitudeStrongModerateWeak DominanceWeak Moderate Self-EsteemStrongModerate Sales Presentation SkillsStrongModerateWeak Interpersonal SkillsModerate Weak Source: Ford, Walker, Churchill 1988

5. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of 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!

6. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Personal Relationships Common goals Commitment to mutual fulfillment Social support Mutual trust Open communication

7. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products

8. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Customer Relationships Common goals Commitment to mutual Gain (Value) Organizational support Mutual trust Open communication (Weitz et al. 2000)

9. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Evolution of Personal Selling (Weitz et al. 2000)

10. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Selling Value Continuum – What kind of relationship fits? Lost Sales Wasted Effort (Rackham and DeVincentis 2000) Investment by Supplier Investment by Customer Transactional Relationship Consultative Relationship Enterprise Relationship

11. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Transactional Sale Where Can the Sales Force Add Value? Recognition of Needs Evaluation Of Options Resolution Of Concerns Purchase Implementation Customer has Already Defined needs And problems completely Customer already understands Alternative solutions Customer has few issues or concerns Seller can Help make Purchase Painless, convenient, And Hassle-free Customer Generally Knows how to use product Little or no Opportunity to Create sales value Little or no Opportunity to Create sales value Little or no Opportunity to Create sales value Little or no Opportunity to Create sales value (Rackham and DeVincentis 2000)

12. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Consultative Sale Recognition of Needs Evaluation Of Options Resolution Of Concerns Purchase Implementation Seller can advise and problem solve Delivery, installation, set-up, maintenance issues Transaction process is minimized Little or no Opportunity to Create sales value Seller can counsel customers and help resolve concerns Seller can design customized solutions and help customers make informed choices Seller can create most value early in the process by helping customers define needs Where Can the Sales Force Add Value? (Rackham and DeVincentis 2000)

13. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of 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

14. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH Step Two PRESENTATION Step Three DEMONSTRATION  Review Strategic/Consultative Selling Model  Initiate customer contact  Determine prospect needs  Select product or service  Initiate sales presentation  Decide what to demonstrate  Select selling tools  Initiate demonstration  Anticipate sales resistance  Plan negotiating methods  Initiate double-win negotiations  Plan appropriate closing methods  Recognize closing clues  Initiate closing methods  Suggestion selling  Follow through  Follow up calls Step Six SERVICING THE SALE Step Five CLOSE Step Four NEGOTIATION SIX STEP PLAN

15. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH  Review Strategic/Consultative Selling Model  Initiate customer contact SIX STEP PLAN

16. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of 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

17. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products SPIN SELLING (Situation, Problem, Implication, Need-Payoff)

18. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products SPIN SELLING (Situation, Problem, Implication, Need-Payoff)

19. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products

20. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH Step Two PRESENTATION  Review Strategic/Consultative Selling Model  Initiate customer contact  Determine prospect needs  Select product or service  Initiate sales presentation SIX STEP PLAN

21. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products TYPE OF QUESTION DEFINITION WHEN USED EXAMPLES Information- gathering questions General questions designed to get the prospect to disclose certain types of basic information Usually at the beginning of a sale“How many miles per year do you drive your company car?” (auto leasing) TYPES OF QUESTIONS

22. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products TYPE OF QUESTION DEFINITION WHEN USED EXAMPLES Information- gathering questions Probing questions General questions designed to get the prospect to disclose certain types of basic information More specific questions designed to uncover and clarify the prospect’s perceptions and opinions Usually at the beginning of a sale When you feel the need to obtain more specific information that is needed to fully understand the problem and prescribe a solution “How many miles per year do you drive your company car?” (auto leasing) “What type of image do you want your advertising to project to current and potential customers?” (newspaper advertising) TYPES OF QUESTIONS

23. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products TYPE OF QUESTION DEFINITION WHEN USED EXAMPLES Information- gathering questions Probing questions Confirmation questions General questions designed to get the prospect to disclose certain types of basic information More specific questions designed to uncover and clarify the prospect’s perceptions and opinions Designed to find whether or not your message is understood by the prospect Usually at the beginning of a sale When you feel the need to obtain more specific information that is needed to fully understand the problem and prescribe a solution After each important item of information is presented “How many miles per year do you drive your company car?” (auto leasing) “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) TYPES OF QUESTIONS

24. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products TYPE OF QUESTION DEFINITION WHEN USED EXAMPLES Information- gathering questions Probing questions Confirmation questions Summary confirmation questions General questions designed to get the prospect to disclose certain types of basic information More specific questions designed to uncover and clarify the prospect’s perceptions and opinions Designed to find whether or not your message is understood by the prospect Designed to clarify your understanding of the prospect’s needs and buying condition Usually at the beginning of a sale When you feel the need to obtain more specific information that is needed to fully understand the problem and prescribe a solution After each important item of information is presented Usually used after several items of information have been presented “How many miles per year do you drive your company car?” (auto leasing) “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) “I would like to summarize what you have told me thus far. You want a four-bedroom home with a basement and a two-car garage. (real estate) TYPES OF QUESTIONS

25. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH Step Two PRESENTATION Step Three DEMONSTRATION  Review Strategic/Consultative Selling Model  Initiate customer contact  Determine prospect needs  Select product or service  Initiate sales presentation  Decide what to demonstrate  Select selling tools  Initiate demonstration SIX STEP PLAN

26. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products WHY improves communication improves retention speed proves buyer benefits feeling of ownership confidence saves time WHAT product, models, samples photos, illustrations, reprints portfolio, graphs, charts, tests testimonial, guarantees computer printouts, audio, visuals WHEN as a product approach to prove benefits to overcome objection to strengthen close to service the sale USING DEMONSTRATIONS PRODUCTIVELY

27. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Demonstration Worksheet Feature to Be Demonstrated Special computer circuit board to accelerate drawing graphics on a color monitor screen Meeting room setup at a hotel and conference center What I Will Say (Include Benefit) “This monitor is large enough to display multiple windows. You can easily compare several graphics.” “This setup will provide three feet of elbow space for each participant. For long meetings the added space provides more comfort.” What I or the Customer Will Do Have the customer bring up several windows using computer keyboard. Give the customer a tour of the room and invite her to sit in a chair at one of the conference tables.

28. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH Step Two PRESENTATION Step Three DEMONSTRATION  Review Strategic/Consultative Selling Model  Initiate customer contact  Determine prospect needs  Select product or service  Initiate sales presentation  Decide what to demonstrate  Select selling tools  Initiate demonstration  Anticipate sales resistance  Plan negotiating methods  Initiate double-win negotiations Step Four NEGOTIATION SIX STEP PLAN

29. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products NEGOTIATING PRICE Add value by explaining the cluster of satisfactions Discuss price confidently Discuss value rather than price Discuss the relationship of price and quality Discuss difference between price and cost Salesperson Tactics Customer Tactics Budget limitation Take it or leave it Split the difference

30. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Negotiations Worksheet Customer’s objection “Fifteen cases of olives will take up valuable space in my receiving room. It is already crowded.” “This is a poor time of the year to buy a large order of olives. People are not buying at this time.” “I would rather not tie up my money in a large order.” Type of objection Product Time Price Possible response 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.” 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.” 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.”

31. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH Step Two PRESENTATION Step Three DEMONSTRATION  Review Strategic/Consultative Selling Model  Initiate customer contact  Determine prospect needs  Select product or service  Initiate sales presentation  Decide what to demonstrate  Select selling tools  Initiate demonstration  Anticipate sales resistance  Plan negotiating methods  Initiate double-win negotiations  Plan appropriate closing methods  Recognize closing clues  Initiate closing methods Step Five CLOSE Step Four NEGOTIATION SIX STEP PLAN

32. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of 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

33. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products METHODS OF CLOSING THE SALE Trial Summary-of-benefits Assumption Special Concession Negotiating the single-problem Limited choice Direct appeal

34. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Closing Worksheet Closing clue (prospect) “Our staff will need to be trained in the use of this equipment.” “That sounds fine.” “What kind of financing do you offer?” “Well, we don’t have large amounts of cash available at this time.” Closing method Negotiating-the- single problem Direct appeal Limited choice Assumption Closing statement (salesperson) “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.” “Good, may I get your signature on this order form?” “We have two financing methods available: ninety-day credit or two-year-long term financing. Which of these do you prefer?” “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.”

35. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products The Six-Step Presentation Plan Step One APPROACH Step Two PRESENTATION Step Three DEMONSTRATION  Review Strategic/Consultative Selling Model  Initiate customer contact  Determine prospect needs  Select product or service  Initiate sales presentation  Decide what to demonstrate  Select selling tools  Initiate demonstration  Anticipate sales resistance  Plan negotiating methods  Initiate double-win negotiations  Plan appropriate closing methods  Recognize closing clues  Initiate closing methods  Suggestion selling  Follow through  Follow up calls Step Six SERVICING THE SALE Step Five CLOSE Step Four NEGOTIATION SIX STEP PLAN

36. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products Parts of the Sales Presentation Questioning skills Presenting benefits Demonstrating skills Negotiating skills Closing skills As a question approach To find needs and buying motives To probe for buying motives To confirm needs and buying motives As a benefit approach To discover potential benefits As a product approach To clarify need To overcome initial resistance to sales interview To overcome need objection When customer has made buying decision To confirm selection To match up with buying motives To clarify selection To overcome product objection When buyer immediately recognizes solutions To confirm benefits To confirm mutual understanding To present and summarize features effectively To strengthen product claims To overcome source, price, and time objection Whenever buyer presents closing signals 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 Consultative selling skills Selecting solution Need satisfaction presentation Need discovery Servicing the sale SELLING DYNAMICS MATRIX

37. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products SPIN SELLING (Situation, Problem, Implication, Need-Payoff)

38. BP 3503-5503: MARKETING BIO-BASED PRODUCTS © T. M. Smith, 2005 | UNIVERSITY OF MINNESOTA, Department of Bio-based Products SPIN SELLING (Situation, Problem, Implication, Need-Payoff)