The Sales Formula

Aug 13, 2019
 

 

 Hello insightful sellers, Adon here the author of insightful selling, and today I would be taking the second episode of insightful prospecting. If you joined us on the first episode, you would recall that we went a little deep on the inner game. If you haven't seen the video or read the first episode transcript, I encourage you to do so because it is critical to your selling and prospecting success.

 

 

The information found in that episode will help you stay in tune internally, because once you find that balance, once you understand that prospecting is part of your identity, and once you realize and recognize that people's opinions no longer matter to you, then you begin to rise as a leader. So I urge you to take out time out of no time to go through the first episode of this series.

 

 

INTRODUCTION

As I mentioned in the book insightful selling, there is a formula that I have for sale, and that's what this transcript is all about. In the first episode of this series, I talked about laying a foundation. I also said that if you have your inner game correct, and if you are focused and have a strategy in place, things will become a little bit easier. In that episode, I mentioned the fact that you can’t always do everything correctly and our decisions can’t be right all the time. Sometimes we might not stick to the script or process of formula, but if you have procedures in place, this will get you back on track if you do steer off or get sidetracked.

 

 

SUMMARY

  • What do we call a sales formula? Well, it is an acronym based methodology process formula that stands for: Study, Ask, Learn, Expose, And solve.

 

 

  • If you're going from a veterinarian to a doctor's office; or a bookstore to a coffee shop; or a hotel to a building service contractor; or a distributor to a manufacturer; you can't possibly add any value.

 

 

  • There's a big difference between companies like Amazon and WalMart (market share driven), and companies like Nordstrom's and BMW (profit driven). Organizations like BMW and Nordstrom’s know who they're selling to, and who they are not selling too.

 

 

  • Why consider the industry, not the customers? Well, studying the industry is more important than studying the customer because once you understand the industry, once you know the way they place orders, or once you understand the internal operations of the industry, you will have little to no problems with the businesses or consumers in that industry.

 

 

  • Before providing any solution to your customer's problems, you need to ask questions. Not any kind of questions, you need to ask questions based on their value creation process.

 

 

  • Once you recognize your potential customer's problem, you need to try to learn more about the problem because your potential customer might not know that they have an issue with turnovers until you mentioned it.

 

 

  • If we want to be successful in prospecting, then we have to create a strategy and build on that strategy.

 

 

 

TRANSCRIPT

The second episode of this series will cover a subtopic under insightful prospecting called the sales formula. What do we call a sales formula? Well, it is an acronym based methodology process formula that stands for:

 

  1. Study
  2. Ask
  3. Learn
  4. Expose
  5. And solve.

 

Let me go over each of them with you very quickly

 

 

STUDY

Before we start making calls or prospecting, we need to study or research our target market. The reason is simple; in today's day and age, and with the Internet and prolific amount of data available at our fingertips, it's essential to recognize that you can't be everything to everybody. You need to realize that you cannot be successful by going from place to place most of the time. What do I mean?

 

 

If you're going from a veterinarian to a doctor's office; or a bookstore to a coffee shop; or a hotel to a building service contractor; or a distributor to a manufacturer; you can't possibly add any value. If you're doing that and that's your process, that means you are a generalist, and you're selling on price.

 

 

True, there are always exceptions to every rule. Nothing's painted with one brush, but most of the time, being a generalist limits your business potential. If you want to trade small, or you want to go after smaller accounts, there's nothing wrong with that, but it will take you more time and effort to secure any reasonable return.

 

You see, there's a big difference between companies like Amazon and WalMart (market share driven), and companies like Nordstrom's and BMW (profit driven). Organizations like BMW and Nordstrom’s know who they're selling to, and who they are not selling to. So if you have a goal of navigating the market place like BMW and Nordstrom, then you can continue with the known established methods; but if you have goals like those of Amazon and Walmart, then you need to do things differently.

 

 

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First of all, pick an industry or industries to study– One, two, or three is fine – but you want to be a specialist while doing it. Why consider the industry, not the customers? Well, studying the industry is more important than studying the customer because once you understand the industry, once you know the way they place orders, or once you understand the internal operations of the industry, you will have little to no problems with the businesses or consumers in that industry.

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So, after studying the industry you plan on trading in, you want to create an assumption. I call it an insightful assumption while some call it hypothesis; it really doesn't matter. The bottom line is that you have an assumption and idea of your customer’s challenges, and you also have a method in place to solve those challenges. Both studying your industry and creating an assumption must be done before you even pick up the phone, or walk through the door of any potential customer.

 

 

Salespeople need to become business people, they need to become sales entrepreneurs, and they also need to become sales executives because, when you start thinking like a business, you start finding ways to improve the efficiencies of that business utilizing your product or service. So you lead with your insight, knowledge, expertise, and all this must point to your product – remember, never lead with your product.

 

 

Now you have studied the industry, you’ve created an assumption, the next step forward would be impacting the income statement of those your prospects, and there’re five significant ways to do that:

 

  1. Revenue: How can you help them increase revenue or sales.
  2. Sales Cost: How can you help them reduce the cost of sale or cost of service.
  3. Gross profit: The difference between revenue and the cost of goods sold = gross profit.
  4. Expenses: How can you help them with administration expenses, lighting expenses, delivery expenses, etc.
  5. Net profit: How can you help them increase their overall turnover or profit.

 

 

This five options listed above are areas you can impact the income statement of your potential customers. Now obviously, saving them 10% on their office supplies is okay if their business model is $20,000, but the only problem with that method of business is, it yields little ROI – more like taking a key of the piano. This is not the way to do business. In business, you need to think bigger; you need to think more like an entrepreneur or sales executives. You don't want to try to save them on office supplies or cleaning supplies; you also do not want to save them on the amount they're spending per month on having someone clean the building.

 

 

You may ask why? The answer is, doing so will only reduce your profitability. If they're paying $2000 a month and you come at $1800, you just took $200 off your pocket. So you see, that's not the way to sell and that's not the way to be impactful. What you need to think of is – “What are all the things that they do that I can help them tweak and improve?” “What are the areas, delivery, ordering, or production?” You need to think of how you can you help them improve in those major areas, not you tackling minor issues because if you can help them improve in one or more of these areas, they're going to hire you without thinking twice.

 

 

The next question is, what is the advantage of using this method? Well, this method is going to present both you and your client with a win-win situation because you will be saving them from the main root of the problem, while also protecting the actual cost of the service you provide. Once you're armed with this information, the second step under the sales formula is “ASK.”

 

 

ASK

Before providing any solution to your customer's problems, you need to ask questions. Not any kind of questions, you need to ask questions based around their value creation process - we will talk more about that in subsequent video transcripts. The value creation process of all consumers and customers is based around two things:

 

  1. The demand side of the business (Value proposition: The reason why people should buy from them)
  2. The supply side (Value chain)

 

 

This two things (Value proposition and Value Chain) makes up the value creation process, and that's where you should channel your questions. Also, when you ask questions, don't forget to create a hypothesis of all you want to do.

 

 

For example, you asked some questions and looking at the answers you got, you recognize that the said customer has a huge issue with his or her turnover, or you discovered that they are having a massive issue with controlling fuel costs. The point is if you did not ask those questions, will you know the problems they need help with? The answer is no! So asking questions is a valuable step that leads you to the third stage under the sales formula titled "LEARN."

 

 

LEARN

Once you recognize your potential customer's problem, you need to try to learn more about the problem because your potential customer might not know that they have an issue with turnovers until you mentioned it, because if they did, they must have tried several ways to solve it.

 

Now that you know the problem, this is not the right time to present your product or services as a solution because if you do, your potential customers might think all you care about yourself not them. What you do instead is, you make use of the fourth step under the sales formula titled "Exposed."

 

 

EXPOSE

How do you expose the problem? It's simple. It means you ask more questions until the customer sees the extent of damage the problem you discovered can cause to his or her business.

 

 

When you want to expose a problem, your questions change to something like this: Mr. Customer, how much turnover do you have per year? Or Mr. Customer, how many people are you hiring at one month? What's the cost involved in hiring? What's the cost involved in replacing those you hired? What's the cost involved in training the new ones you hire?

 

 

When you ask questions like this, you are exposing the problem and with time, your customer start to see the real problem themselves without you spelling it out to them. Immediately they understand the point you are trying to make with all the questions you are asking them; they start seeing you as a professional and as someone who can help solve their problem.

 

 

All this can happen in the first call - (The first day you visit your potential customer.) -  and sometimes in the second, but you want to recognize that you don't have a lot of time to point out the problem to your customer. You need to build a relationship with your potential customer as fast as possible because if you don't, your chances of securing or winning over the contact are very slim.

 

 

So you ask questions, you stun them, you expose the problem and they will definitely need your product or services to fix their problem right away. Why do I say right away? Let's take this example: When do you want a Bandage? When you have a cut or when you don't? Obviously, it should be when you have a cut. The more you bleed the faster you want a bandage, right? It's also not different when it comes to sales. When you expose a problem to a business owner or organization, the quicker and faster they want solutions to the problem you discovered.

 

 

They start asking questions like: "Yes, this is a huge problem, so what do you have? What do you recommend?" When you get to this phase with a potential customer, you then switch to the last step of the sales formula, which is "S" for solve.

 

 

SOLVE

Now that your potential customer knows the problem, the next step is asking solution based questions. Your questions go from: "How many people are you hiring a month?" to: "Okay, what's the cost of hiring them?". It goes from: "You're paying them ten dollars an hour, and they leave after 40 hours, that's four hundred dollars, am I right?" to: "Mr. Customer, is it fair to say that you're spending four hundred per person just for them to leave after a short while?"

 

 

When you ask these types of questions, you're building a case and at the same time exposing the real problem your prospect is facing. The next thing that prospect wants is a solution to the problem. If you can provide a solution to the problem you discovered and exposed, you just earn yourself a loyal customer.

 

 

CONCLUSION

So in closing, we want to recognize that we need a sales process and I advocate the sales formula found in the book insightful selling. If we want to be successful in prospecting, then we have to create the strategy and build on that strategy. And when we have that strategy in place, then we just go from one place to another doing the same process to create the same results.

 

 

So the sales formula is:

 

  1. Study
  2. Ask questions
  3. Learn or identify that your hypothesis is correct.
  4. Expose it through more in-depth questions.
  5. And finally, solve it with the solution based questions then your product or services.

 

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