A sales representative comes to his boss and asks for his approval to lower the price in the offer, because sales slowed down and market is “demanding”. This situation is known to many CEOs in the SME sector, whether they are a production company, a service company or a distributor. However a slow down of our sales may happen for many different reasons and does not necessarily mean that our prices are too high.
If the company doesn’t verify the actual reasons for declining sales and immediately cuts its’ prices, it may unnecessarily lower the profits.
What could be the possible reasons for sales decrease?
- Our salespeople go to potential customers with an offer similar to what is offered by our competitors – when there are no clear differentiators in our offer, customers quickly come up with the idea to negotiate the price
- The offer has clear differentiators, but the sales people are reaching “wrong” customers
- The offer is good, it has clear differentiators, the customer has been properly chosen, but the sales people don’t have right competences to sell it.
The above list does not exhaust all possible causes, but let us note that already each of the above can cause a significant drop in the profitability of our business.
If we have more than one of the above problems, the decline in profitability is multiplied. The above symptoms show that the company is highly likely to do the following:
- The company does not have a proper value offer, or
- The company does not have proper customer segmentation, or
- The company does not have appropriate sales models and sales channels
In this article, I will deal with the problem of the lack of a proper value offer.
What is the value offer?
Let’s start with an example. Let’s imagine that we want to start to produce a CRM system. However, the CRM for a small B2B company with a small group of sales people will look completely different from a CRM for a large organization operating in a full B2B2C model.
What the sales managers in a small B2B company need first of all is the systematization of their sales team’s work – collection of customer data and implementation of a regular sequence of sales activities, as well as the possibility to control these activities and evaluate the progress of the sales process. Such will be the main functionalities in a CRM system for small companies.
Large companies operating simultaneously on the B2B and B2C market will have different problems, and thus – other expectations.
They usually already have a large amount of data about their customers and products, and the company already has various IT systems supporting its work in various areas. What they need is to support their sales and client service and to run regular marketing campaigns to the customer base. On top of this, the new system should be easily integrated with other company’s systems and applications.
The optimal solution for a small B2B company will be a simple CRM system that allows the company to effectively collect customer data and track the progress of the sales process. In turn, the value offer for large companies operating in the B2B2C model will be a comprehensive solution for many users in the company, supporting them in the implementation of tasks such as sales to new customers, servicing the clients, running marketing activities to the customer base, etc.
The value offer is a product or a service that meets customer’s needs or solves his problem in a way that matches his specifics and his expectations.
A small B2B company won’t need many functionalities in a CRM solution. For a small company the value will mean the simplicity of the system, speed and ease of implementation, as well as a relatively low entry and exit barrier.
For large organizations the value will lie in the system complexity, which will cover all company’s needs and will be scalable – will be able to grow in line with the organization and will be seamlessly integrated with the rest of its’ systems.
Building an offer that does not match clients’ expectations – for example too complicated or with too many functions can alienate the consumer who despite our efforts won’t buy our solution.
The key to building “viable”, profitable value offers is good recognition of client’s specifics, which is possible if we have the right customer segmentation. What is a customer segmentation and how to build it will be the topic of my next article from the series “Go To Market by Agnieszka Węglarz”.
About the author of the article:
Agnieszka Węglarz is an independent consultant, business strategist and practitioner in B2B as well as lecturer, speaker and blogger. She has over 20 years of professional experience working as a manager in both large corporations and SMEs, where she was responsible for strategy, marketing and business development.
She worked for many renown Polish and international brands in telco, IT, finance, food and beverages sectors, as well as in FMCG and media.Her area of expertise is business development in B2B, she works mainly with SME companies.
She uses her long term executive experience and training expertise to assist companies and their managers in building their business development strategy through series of workshops. She specializes in business modelling, segmentation, value proposition, sales and marketing strategies and consultative selling.
She runs a business blog on www.agnieszkaweglarz.com and her own YouTube channel – Biznes Ring by Agnieszka Węglarz. You can contact her by writing to: email@example.com or by directly sending a message via LinkedIN.