What if you were given the green light to go after new business and sell at any price you wanted? You could discount as much as you felt necessary to get the order. What do you think the results would be?
Well, 30 companies in the test below were doing just that. The results are really interesting.
The business department of a major university conducted a test on 100 companies. They divided them into three groups according to how they sold.
~ The first group of 30 companies sold strictly on price. The sales people had as much flexibility as they felt they needed to get the business.
~ The second group of 40 companies was allowed to give heavily controlled price discounts.
~ The third group of 30 companies gave no discounts and sold at book price.
Group one sold the least amount on a per sales person basis, earned less gross profit, return on investment was the poorest in the industry. Price buyers would search for the sales people who sell on price and try to squeeze the price even lower. The sales people constantly complained that there was no loyalty among buyers.
Group two had a higher sales per person than group one, earned a higher gross profit and had a better return on investment. The sales people complained that if they had lower prices they could sell more.
Group three had the highest per person sales, the highest gross profit and the best return on investment.
THE SALES PEOPLE WERE BETTER TRAINED IN SELLING STRATEGIES AND WERE ABLE JUSTIFY THEIR PRICE RATHER THAN DISCOUNT IT!