The proposal and the sale are miles apart.
“Sounds good. Send me a proposal.” How many times have you heard that? Too many. So you run back to your office, put together a proposal, send it to the prospect, and start the follow-up process (and the prayer vigil). Or do you?
The sale should be solidified BEFORE the proposal is written. Your proposal should be the essence of what your prospect and you have agreed to. It should solidify the sale. It should be the image of your business. It should be a window that shows how your company conducts business. Is it?
How many proposals do you win? How many proposals do you lose? If you lose way more than you win, it’s much more than the proposal. It’s the proposal process. Count the wins. Count the losses. That’s the scorecard, baby. Your scorecard. Ouch!
AND when you win proposals, how profitable are they? Are you telling your boss, “Hey, let’s go in real low on this one so we can get the business, and then six months from now, boy, we can really lose some money.” Ouch!
Once you lower the price, customers expect a low price all the time.
Proposals are there because buyers think they’ll get the lowest price or the best deal by pitting one company against the other. Your job is to make yourself a winner before presenting the proposal by creating conditions or terms that preclude others from either bidding or winning.
The first thing you need to do is determine if it’s a price proposal or a value proposal. If they’re going to take the lowest price, you’re going to lose-even if you win. Why? Because the lowest price means the lowest profit. It may even mean no profit.
The challenge? To create a profitability formula or a productivity formula, measured against what you do, that sets a standard for the proposal. In other words, create a formula that your competition must meet or exceed regardless of initial price.
You need to convince your buyer that there’s a long-term cost, not simply a short-term price.
Are they buying your price only? Are they taking the lowest bid? If so, they only need a one-sentence proposal, and you don’t need me.
Try this: Don’t do a proposal… at first. When someone asks me for a proposal, the first thing I say is “NO.” That always shocks people. (Besides, proposals are a pain in the butt.)
Instead, I ask the person if he or she took notes. If the reply is “Yes,” I say, “Well, let me just sign the notes.” I continue by saying, “All we really need to do is pick a date to begin.” And 30 percent of the time the prospect will say, “You’re right.”
The other 70 percent of the time, the prospect will insist on a proposal. But I’ve just won 30 percent of the business without submitting a paper. And there’s a reason for this. I have sales guts-and you don’t.
The reason for a proposal is to lower the risk to the buyer-and to potentially lower the cost. But in the final analysis, many proposals can be eliminated if your prospect feels that your price is fair and the risk is low. If the risk is low and the reward is high, then the answer is always obvious.
Before the decision is made, it’s important that your customer knows what it’s like to own your product AFTER it’s been delivered. This will take away all risks and all fears. And it may also take away the price-only-decision process.
Customers may only spend an hour or two buying, but they usually use your product or service for years. So you say to your customer, “Mr. Jones, I’d like to add a clause to the proposal that insists on proof of salespeople’s claims. And so I’m asking you to require five testimonials in video form so you’ll know that any claim made by a salesperson has been validated by a customer-and is not just a sales pitch.”
The video testimonial is a powerful piece of support. And depending upon the quality, the video testimonial can be the difference between a sale and no sale.
Three thoughts on testimonials.
1. Testimonials reduce the risk of purchase.
2. Testimonials are the only proof you’ve got.
3. Testimonials MUST be included in every proposal.
Effective proposals are a result of effective sales presentations. Proposals should be the solidifying factor, not the sales pitch. The proposal should document what has been said and agreed to. The proposal should confirm the sale and all the claims you made about it. Does yours?
Your proposal process is not a regurgitation of your price list. It is not a document to see how much of your profit you can give away. It is not something you prepare to beat the competition.
A proposal is the gateway to a value-driven sale that begins or extends a relationship where everyone profits. The minute you lowball a price, you’ve gone from a relationship to a transaction, and the next person with a lower price will beat you-and beat himself. Don’t just win the proposal. Win the value. Win the profit. And win the relationship.
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Jeffrey Gitomer, author of The Sales Bible, is now offering licensed training programs to corporations, as well as distributorships to individuals, based on his best-selling books and the TrainOne online learning series. This process is starting with his newest book The Patterson Principles of Selling. Jeffrey can be reached by phone: 704/333-1112 or e-mail: firstname.lastname@example.org
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