the selling process · the selling process 4.1 introduction 4.2 determining customer needs 4.3...

AMT Certification Program - Study Guide

September 2013 (S.G.09.13) Chapter 4

CHAPTER

THE SELLING PROCESS

4.1 Introduction 4.2 Determining Customer Needs 4.3 Developing Sales Strategies 4.4 Presenting Products 4.5 Preparing & Presenting Proposals 4.6 Negotiating 4.7 Closing Orders 4.8 After-Sale Follow-Up 4.9 Review Questions

4.1 Introduction This chapter describes how successful sales engineers, having used the techniques and methods described in Chapters 2 and 3 to gather information and identify decision makers, arrange a meeting and go about the business of making a sale. It defines the process by which sales personnel meet face-to-face with customers with the ultimate objective of closing an order. All the steps outlined here are directly involved in achieving that goal. What does it take to succeed in the business of selling, particularly when the competition is keen, products are comparable and price is an important factor? No single profile fits a modern salesperson, but there are certain characteristics that all good sales people display. They are dependable, ethical, highly motivated, honest, intelligent and good communicators. They can operate without direct supervision and know how to use time efficiently.

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Salespeople also play an important role because they are involved in so many aspects of business operation. For example, because of their interaction with customers, salespeople are often able to make important contributions to:

New product development Pricing decisions Discount offerings Terms and conditions of sale Advertising Marketing plans Product distribution Promotions

Overall, these contributions are a result of the personal effectiveness of successful salespeople in the marketplace. This effectiveness is known as “personal selling” or “relationship selling” and is far more sophisticated than simply making a sale or getting an order. It involves building a partnership between the buyer and the seller that ultimately provides long-term benefits to both.



ORGANIZED SELLING SYSTEMS There are a number of approaches used by successful sales people to get to the buying decision and conclusion of a sale. It may be true that some sales people simply “wing it” and follow no particular plan or process. However, it is generally recognized that those who use a systematic process are among the most successful. Once a basic process is adopted, it will be used in a flexible manner based on each selling situation. Several of the better-known systems in the manufacturing technology business are described in this section for comparison. There are other sales systems, but most follow a similar pattern. Examine the flow chart on the right. It is not the best or only sales process. Rather, it is presented in order to gain an understanding of the basis flow or process of selling. It illustrates that, in most cases, several customer sales calls are required intermixed with periods of preparation, planning and strategy.

1. Obtain Knowledge

Markets

Customers & NeedsCompetitorsBuying Influences

Products & Services

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2. Prospecting - Finding Potential Customers

ResearchTelemarketing

AdvertisingCold Calls

3. Preapproach - Organizing & Planning

Set Sales Call ObjectivesScript an Initial OfferPriorities & Time Mgt.

4. Approach - Contacting the Customer

IntroductionsBrief Sales MessageGet an Appointment

5. Interview & Needs Analysis

Open-Ended QuestionsDiscover Needs

6. Develop Selling Strategy

Link Benefits to NeedsJustification AnalysisCompetitive FactorsBuying Influences

7. Product Presentation

Link With NeedsCustomer ParticipationProof of ClaimsCommunication SkillsDemonstration

9. Proposal Presentation

Highlight Benefits & ValueTrail CloseNegotiations

11. Trial Close Negotiations

12. Close Order Negotiations

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Fig. 1 – Typical Sales Process (Courtesy of Decision Technology, Inc.)



AMT’s MT Sales Fundamentals: 6 Step Process8

Within the context of the flow chart above, it has been shown over a period of the last few decades that this specific 6 step process can be very effective. The Process is as follows: Phone Qualification Shop Tour and Survey Verification Justification Product Presentation Commitment

Phone Qualification: After receiving an incoming sales lead or after data-mining and prospecting have occurred to dig up the nuggets in your territory, when qualifying new prospects, there are two type of prospecting phone calls:

1) The response to an inquiry 2) The cold call

Make both types of calls by beginning with your “elevator pitch” to introduce yourself (from Chapter 2, section 2.8: Prospecting). If this is a cold call, end your elevator pitch with “Should we continue to talk?” It is generally difficult for a prospect to say “No” if your elevator pitch is well-honed. When you get a “Yes”, ask for an appointment at a specific date and time, then give the prospect another option by continuing with “…or would [an alternate date and time] work better for you?” You should be able to arrange an appointment time for a shop tour that is mutually agreeable. If you are calling to respond to an inquiry by the customer, do not mention specific product model numbers or ask if the prospect has reviewed the information they received. The purpose of your call is to qualify the customer further to determine their need and to arrange for a shop tour and survey. Apply (ask) these test questions as qualifiers:

What do they do? (research this on your own at their web site too) Is the shop currently busy? Is there a formal program there or a new program they expect to

bring in soon? Ask about their current installed base of equipment. Ask about the number of shop employees and whether that number

is stable, growing, declining. How many shifts?



Most of all, when responding to an inquiry, get to a “No!” from a prospect quickly. If there is no current need, file this company as a “C” account to be called at a later date so that you can target your “A” and “B” prospects. Shop Tour and Survey: this allows you to conduct a visual inspection of the installed base of equipment, the flow of the shop (or lack thereof), and uncover opportunities for a sale.

Talk to machine operators. Take notes about what you see and hear. Ask meaningful questions, but don’t lead. The truth about your opportunity with this customer is found on the shop floor.

Verification: After the shop tour, meet in a quieter place like the customer’s office or conference room. Using your notes from the shop floor survey, verify with the customer where you noticed bottlenecks in the production process, probe as to whether the customer would be open to suggestions that are “best practice” among other manufacturing companies that could be used in this shop to improve efficiencies in their workflow and their bottom line.

Justification: If you can’t justify it in your own mind, the customer won’t be able to justify it either. Move on. However, you are more likely to uncover inefficiencies that the customer just has not seen. Justification normally comes in these forms:

Cost Savings to produce a part Increasing revenue capability Increasing ROI (Return on Investment)

These justifications appear in the form of the amount of time that can be saved to produce the customer’s parts in a shift, and then over a week, a month, a year. Ask the customer to give you their hourly shop rate. Don’t guess. If they don’t know it, find someone who does know it at the company. Your justification will come in the amount of time you can save them to do a tool change, do a part change, make or measure a part faster, etc. multiplied by their hourly rate.

Product Presentation: Note that this is STEP 5 of the 6 Step Process, and not Step 1. This should be done in a conference room, office or desk. Make sure as many decision makers are present as possible. When presenting your solution, anticipate any possible barriers. The best resolution to an objection is to answer it before it is raised. Have customer testimonials available (remember the elevator pitch: “…companies just like yours”.) so that your customer feels that they are the only one in the industry who is not using your solution. Commitment: Earning the commitment involves multiple actions:



Deal with objections. Any solution may present multiple objections. Deal with each objection, one at a time, until they can be resolved with full agreement.

Close: Get agreement on the solution. If you can’t get agreement, you may not have completely answered all objections.

Arrange to take the customer to visit a shop where the solution is installed. Let your current customer do the selling for you.

Ask for the order. Negotiate: this is best accomplished according to your company

rules and in a team. “You never lose and order by yourself.” ” Become an “orchestra conductor” and bring in the support you need.

AIDINC.1 Buyers are growing smarter, more sophisticated and more demanding. And, in this environment, a salesperson’s ethics and values contribute more to sales success than do techniques and strategies. Basically, selling is an exchange of values. Because different people buy things differently, they need to be approached differently, but still with values, integrity and ethics. This is a six-step system developed by Ron Willingham, author of the best selling book, INTEGRITY SELLING. It is his contention that selling today involves the development of trust, respect and professionalism and that there are six steps that will take a sales person to the conclusion of a successful sale. Notice the very logical progression of the six steps in the program:

The Approach…………. to gain rapport The Interview …………. to identify needs The Demonstration……. to explain features and benefits The Validation………… to prove claims The Negotiation……….. to work out problems The Close…………….… to ask for a decision

They take the buyer and the seller from one level of communication to an intermediate level of verification and affirmation and then on to the next level of communication. Example: Approach is begun. Objective: To gain rapport. When rapport is achieved, the interview begins with the objective of identifying needs. And, so on through the progression.

MODERN2 1 Ron Willingham, INTEGRITY SELLING, (New York, Doubleday, 1987) 2 Carl Henry, HIGH ENERGY SELLING, (High Point, NC, Executive Press, 1990)



Sales trainer and speaker Carl Henry developed this selling system. It focuses on getting to know customers and identifying their specific needs. MODERN selling streamlines the selling process by breaking it into six logical, progressive steps that take the seller and buyer to a win-win sales contract. The six levels are:

Measure……….. get to know the prospect Organize………. move into action Demonstrate…… show how a product or service can solve problems Engage………… get the customer involved physically and

psychologically Review………… go over the problems, solutions and alternatives Negotiate………. settle the terms of the sale and get a signed

agreement SPIN3

SPIN is a system that searches out unrecognized problem areas. Asking the right questions is a big part of the selling process. This system helps develop the questions that identify real needs. It was developed by Neil Rackham of Huthwaite, Inc. With it, meaningful questions are developed by categories. The purpose of each question is to provide information that will zero in on needs.

Situation questions……. to gather background information Problem questions…….. to identify specific problems or difficulties Implication questions…. to more clearly define the ramifications of a

problem Need payoff questions… solution-centered questions

Studies show that successful sales professionals follow an organized selling system or formula. All of these approaches follow a fundamental pattern. They search out customer needs, confirm and clarify those needs or identify problems that may be associated with them and then provide solutions. There is no single sales system serving as the basis for this study guide. Instead, the guide follows a pattern that incorporates the fundamentals of all good selling systems.

ATTITUDES IN SELLING While the sales engineer is encouraged to adopt a selling process that is compatible to their selling style and situation, there is an important psychological factor to be considered. Any selling process is doomed to failure if the sales professional has a misdirected attitude. Attitudes that focus on the product, the territory or the needs of the seller will never be as productive as attitudes that are customer-focused.

3 Neil Rackham of Huthwaite, Inc.



Also, care should be taken not to display negative attitudes in front of customers. When sales professionals make the mistake of complaining about problems from manufacturers, employers, governments, customers or their personal lives the effect is generally the same – an adverse relationship on the customer relationship. A fact of human nature is that we are attracted to positive people and repelled from negative people.

Notes



4.2 Determining Customer Needs

Successful manufacturing technology sales engineers must be able to accurately determine the requirements and expectations of a prospective customer. To do this, they must thoroughly understand the prospective customer’s business and operational requirements. With this kind of knowledge and information, sales engineers can often show how their product can save money, increase productivity or improve quality in ways that the customer had not considered. To acquire this information, pre-sale data must first be reviewed. This means a closer look at account profile data including general, strategic and specific information compiled during and after the ranking process discussed in Chapter 2. It includes those items of information that provide insight into the company being called on, as well as contacts within the company. Proper preparation also includes reviewing any available technical information that might possibly shed light on the needs of the company. The more information that is collected, the better.

APPROACHING CUSTOMERS Initial Meetings

The initial meeting is critical whether it is with a new contact or an established customer. Most authors agree that the most important part of getting ready for a sales call is setting an objective. Whether it is the first contact or the hundredth, every call must have a planned purpose. This section will give the ideas for setting the right objectives. Once in front of the customer, rapport must be established immediately. Arriving on time, making a favorable impression and being fully prepared are requirements for establishing rapport. A good first impression helps put a prospect or customer at ease and helps to encourage listening. A bad first impression often takes a long time to correct. A first impression is usually made even before words are spoken. It is based primarily on visual information—appearance, dress, smile, posture—all of which can indicate an attitude—good or bad, real or imagined. At this point, selling is not the objective, building trust is. Bert Decker, author of You’ve Got To Be Believed To Be Heard says, “…trust comes before believability.” Trust, once developed, produces many benefits: a spirit of cooperation between buyer and seller, communication becomes more effective and there is a greater willingness to share. Trust



must also be nurtured if it is to be maintained. Consistently meeting deadlines, prompt deliveries and promises kept, all play important roles in the development of an abiding trust and a mutually rewarding, long-term relationship.

It is important to follow a basic discipline during this first phase of the sales process. It involves putting the potential buyer at ease, and the best way to do this is by listening. Direct the conversation toward uncovering needs and defining problems. Asking questions will help control the meeting, not in a negative context, but by finding out more about the customer. This is part of the process by which a trusting buyer-seller relationship evolves. It consists of a number of steps that take both parties from an initial contact to a level of mutual cooperation for mutual gain. There are at least four and possibly five phases through which buyer-seller relationships evolve:4

1. Awareness, in which both parties search out potential partnering candidates. This is a period of observation. There is no interaction.

2. Exploration, in which both parties examine potential costs and benefits involved in a partnering relationship

3. Expansion, in which both parties begin to share sensitive information. 4. Commitment, in which explicit and implicit pledges are made to continue the

relationship. This is the most advanced stage of this kind of buyer-seller relationship.

5. Dissolution becomes the fifth and final phase of the relationship if the partnership does not succeed. Barriers sometimes develop during the growth of relationships, but anticipation and planning can help. For example, pointing out a problem area to a prospect or explaining how a procedure could be improved must sometimes be handled with great tact. How it and other problems are handled depends on the personality or social style of the customer.

Social styles are basic patterns of communication that people use when interacting.5 Those who recognize these patterns and adjust to them have better buyer-seller relationships than those who do not. Social styles are given different names by different authors and speakers. Here are four typical categories:6

Drivers. Swift, efficient decision makers, they base their decisions on facts. They want businesslike presentations with quick action and follow-up.

Expressives. Warm approachable, intuitive and competitive, they see power and politics as a means to achieving their ends.

4 Weitz, Castleberry, Tanner 5 David Merrill and Roger Reid, Personal Styles and Effective Performance (Radnor, PA: Chilton, 1981) 6 Merril and Reid



Amiables. They achieve their objectives by working with people based on mutual respect rather than power and authority. They avoid risk, change their opinions reluctantly and resent it when sales people do not follow through on commitments.

Analyticals. This type is suspicious of power and personal relationships. They are slow, deliberate, and disciplined decision-makers.

Identifying social styles requires a note of caution and careful observation. The following suggestions can help in making accurate social style assessments:

Concentrate on objectively evaluating customer behavior, not on personal feelings about that behavior.

Avoid such assumptions as: because a person is an engineer, they are automatically an analytical.

Personal questions can often assist in discovering a customer’s social style. Asking about their business background, about their customers or common acquaintances can also provide answers. Look for clues that can reject an assessment as well as confirm it. This is a way of maintaining objectivity. Because sales personnel also have their own social styles, they must learn how to remain versatile and adapt their approach and presentation to each customer’s social style.

INFLUENCERS AND DECISION-MAKERS Though one person may ultimately announce a purchasing choice, a number of people are often involved in making a purchasing decision. Two of the most important types of people involved are influencers and decision-makers.

Influencers These are people inside and outside an organization who directly or indirectly influence the outcome of the buying process. Their function may be to define product specifications, evaluate proposals or check on potential suppliers. Examples of influencers are maintenance personnel, machine operators and tool designers. These are the kind of people who can easily be overlooked because they do not have important titles or positions. There are also social influencers, also without title or position, who have influential personalities. For whatever reasons, they may have a vested interest in the purchase and will try to influence those who do have a say in the decision. Their influence may be good or bad as far as the seller is concerned. It’s important for the seller to find out where these influencers stand and to address the issues that are important to them.



Decision-Makers These are the people involved in making a final purchase choice. In one case, it may be a purchasing agent; in another, a senior executive or department head. In still another, several people may be involved in deciding, approving and signing the purchase order. Generally, these people have a title or position of authority.

Who these people are and the extent of their responsibility will vary from company to company. It can also vary from purchase decision to purchase decision within the same company. Buying decisions involving influencers and decision-makers are frequently based on a blending of company needs and personal preferences of the people involved in the selection process. Knowing who these people are, their personalities, responsibilities, and individual buying needs are is a very important part of the sales process.

INTERVIEWING CUSTOMERS

Asking the Right Questions There is only one reason for the interview portion of any meeting: to determine the cus-tomer’s needs. Remember, customer needs are of two types: recognized and unrecognized. Sales professionals will endeavor to reveal both. And, the best way to discover needs is by asking open-ended, indirect questions. While telemarketing, direct mail and advertising are all legitimate ways of communicating with customers, none will offer the degree of feedback of an in-person sales call. The traditional “who, what, where, when, how and why” questions will usually work to open the discussions. Only rarely should direct questions be asked because they usually prompt one-word answers. Also, proceed cautiously with “why” questions because, intended or not, they can make people defensive. For example, the simple question, “Why did you buy Brand X coolant?” could seem adversarial to someone sensitive about a purchase. A better way to ask this question is “I notice you use Brand X coolant. What has been your experience?” Tips For Asking Questions There are two goals for asking questions:

1. To find out up-front what the customer knows. 2. To reveal information that will assist in planning the selling strategy.

An excellent way to get the initial interview underway is to ask questions about the customer’s shop, especially the workpiece(s). First, always ask the customer’s permission to ask questions. Here are some suggested question items:

Workpiece material? Workpiece size?



Machining operation(s) that need to be performed before and after the proposed machine?

Required tolerances? Production quantities? Operator skill levels? Assembly process required? Family of parts or variations of the workpiece? Anticipated problems in the manufacturing process? Ultimate users or markets?

These kinds of questions can open the door to a highly interactive conversation, which can provide sales engineers with important customer and technical information. One way to encourage more customer feedback is to acknowledge every comment made during the interview. From a practical standpoint, for example, knowing the before and after processing requirements may well provide the opportunity to combine some machining operations that will save the customer additional setups. Good questioning can reveal benefits to the customer that they haven’t even considered themselves. Things To Avoid During the initial interview, do not be forced into making a product presentation before the time is right. The main purpose of the interview stage is to gather as much customer information as possible. Some customers may attempt to force the issue by asking for a presentation or an immediate product explanation. Often, busy executives are pressed for time and will set a time limit and ask to hear about the product. While these are touchy situations, try to avoid selling and to begin asking questions about the customer’s operation in the hope of getting back on track. One helpful procedure is to prepare questions in advance of the actual interview. These questions should serve to define the specifics of the customer's needs. Some sales engineers use prepared checklists to make sure they cover all the bases. Going over the questions before the meeting and having them ready when needed, can make the dialogue much easier. This is not the time to make a product presentation or suggest a demonstration. This is the time to gather information. The SPIN technique7, discussed briefly in Section 4.1 is designed to help identify hidden or unrecognized problem areas by forcing prospects or customers to think about a whole range of factors relevant to the sales situation.

Situation questions are general data gathering questions about background and current facts.

Problem questions are those directed to specific difficulties, problems or dissatisfactions the prospect has experienced.

7 Neil Rackham of Huthwaite, Inc.



Implication questions follow one or more of the problem questions and are aimed at defining the true ramifications of the problem.

Need payoff questions are aimed at determining the usefulness of solving a problem and are solution-centered.

This system is best used in major sales situations—those involving long selling cycles, a large customer commitment, an ongoing relationship and large risks for the customer if bad decisions are made. Thoughtful, insightful, well framed questions, and their answers, become a guide to the specifics that will eventually target needs and problems. As the needs and problems emerge, the customer must acknowledge them.

CUSTOMER NEEDS vs. CUSTOMER WANTS

Experienced sales engineers must be able to identify customer expectations and distinguish between two basic categories of expectations - customer wants and customer needs. Wants, as described by a customer could be more of a wish and may not represent the real need or requirement. If, for example, the statement is made that a machine of specific dimensions, horsepower and other specifications is needed, it may not represent the real need because the customer:

Is unaware of a machine’s full capabilities. May be looking at the wrong kind of machine to do the job. May not be using the best machining process. Is not considering future workpieces. Has not considered alternative workpiece materials.

There are, of course, many other examples. An experienced sales engineer does not accept at face value what a customer says is needed. Instead, he or she probes further to get at the real need. One very practical method is to diplomatically ask to see the shop, the part to be machined or the part blueprints. While some customers still try to justify machine purchases on reducing direct labor costs, enlightened world-class manufacturers have expanded their justification methods. This is because in the last 20 years labor costs in U.S. industry have been drastically reduced -- less than five percent in some industries. As a result, other factors must now be included in the “reasons to buy” category. Some are less tangible than others, but all produce benefits that meet varying customer needs—some easily recognized and some not so easily recognized. The following checklist provides an assortment of issues that sales engineers should consider in differentiating between wants and needs. These items are real needs.



Buying Justifications (Needs)

Obvious Less Obvious Intangible Reduced cycle time Reduced part numbers Improved employee morale Increased production volume Reduced material cost Improved work environment Reduced direct labor hours Labor savings Attract better employees Reduced floor space Lower warranty costs Better skilled employees Reduced inventory Lower legal/insurance costs Customer requirements met Reduced scrap and waste Better goodwill Regulatory requirements met Increased capacity Lower inspection costs Lower workman comp costs Increased flexibility Faster changeover time Improved employee relations Reduced inspection and test

hours Operator safety and

environmental factors Perceived technology

leadership by customers Broader product line

Technical Assistance The manufacturing environment can present some very difficult technical challenges to the sales professional. While in the process of discovering customer needs it may be necessary to pause and consult with management and the application engineering staff. Their experience and manufacturing knowledge can be a valuable resource in developing a solution-based proposal. It may be advisable to involve these resource people directly with the customer. Application engineers have a high degree of believability with customers since most came from the manufacturing environment. Occasionally, they may advise against a solution that the sales engineer or the customer has proposed. At this point, hold a brainstorming session to explore all alternative solutions. If appropriate, include the customer. If, in the final analysis, it is determined that the products or services will not meet the defined needs or solve the problem, as a responsible professional, it is the sales engineer’s ethical responsibility to make that fact known. And, offering assistance in seeking out a reputable company to meet the determined needs and resolve the defined problems can strengthen one’s position for future business.

Customer Expectations So far, we have discussed customer “wants” and “needs” as they apply to machine specifications and application. There are a host of other customer expectations that may include items such as 1) terms and conditions, 2) warranty, 3) financing, 4) application support and 5) training. These expectations can even extend into the emotional and psychological areas of the buyer–seller relationship. For instance, customers may expect a certain amount of attention from you or your company (i.e. number of sales visits per month) or expect a level of warranty service beyond your stated terms and conditions. The experienced sales engineer will discretely ask customers about their experiences and expectations in these areas. Remember, most customer expectations are based on problems experienced in past purchase situations.



The “wants” expressed by customers are normally a combination of facts and perceptions. In the sales and marketing process, customer perceptions, whether fact or fiction to the sales engineer must be taken seriously at this stage of the selling process. Understanding the full range of customer expectations at this point will pave the way for preparing relevant proposals and successful negotiations later in the selling process.

NOTES



4.3 Developing Sales Strategies

Strategy involves organizing resources to best meet the buying situation. Since each sale will have its own characteristics, strategy will have to be adjusted. The information gathered earlier about customer needs will now be applied to solve customer problems. Strategy development involves several components:

Component #1 Set forth well-designed objectives Determining which product(s) or service(s) will meet the defined needs Financial terms or arrangements Service/warranty coverage Installation or start-up procedures

Component #2

Product presentation Proposal Negotiation Conclusion

Component #3

Follow-up After-sale relationship

The goal of any sales strategy is to successfully conclude the sale. There can be an enormous range of considerations involved with each sales effort and these must be narrowed down to specifics based on the prospective customer and the product. And, there are a number of strategies into which these specifics can be combined in order to achieve the sale. Following are selected strategies that sales engineers should understand and apply in the right situations.

FEATURE - BENEFIT SELLING One of the best-known sales strategies is called feature - benefit selling. While the concept has been around for centuries, it was popularized in the 1940s. It is still one of the sales engineer’s fundamental strategies. First, let’s define the two terms:



Features are product characteristics, specifications or attributes. They define the physical and operational machine characteristics that a customer receives for their investment. Benefits relate to the practical value rendered to the customer as a result of using a product’s feature.

Features have no importance or significance to a buyer unless they can be related to benefits. By understanding real needs, sales engineers can then translate their products’ features into buyers’ benefits. For example, a machine with a 48-tool automatic tool changer is just that unless a customer understands that additional tools will not have to be reloaded each time a new part is put on the machine. This will reduce setup time and increase spindle-cutting time. This feature, called a tool-changer, now becomes one or more benefits. The best place to look for potential benefits is on the customer’s shop floor. Other financial opportunities can be found in understanding a customer’s business situation. Knowing how to relate features to benefits or vice versa is an important aspect of selling manufacturing technologys and accessories. A good place to begin with is the “Buying Justifications” list in Section 4.2. First, review these manufacturing-related issues and then link them with individual product features. If a feature can be related to a benefit, then it must be brought to the buyer’s attention as a benefit. If not, move on to those that are. Sales engineers should avoid the “more features and less price” mindset of many buyers and competitors. This attitude is, for the most part, based on wants and not needs. (See “Customer Wants vs. Customer Needs” earlier in this chapter.) The customer can play a game with suppliers by leveraging on these two attributes -- more features and/or lower prices. It is a trap that seldom focuses on the real issue – value. Value is always related to practical benefits for the money invested. And, that return on investment must be pointed out to the customer. The value might be something as tangible as an immediate increase in production or as intangible as improved employee morale. Whatever it is, the buyer must understand it and assume ownership of the benefit. The simple calculation for value is as follows:

Perceived Value = (Perceived Benefits) / (Price) Some customers build a matrix of competitive machine features and benefits. They then assign a numerical rating or index value to each feature. Using the formula above they can calculate which proposed machine offers the most perceived value. In other words, they calculate which machine provides the most feature/benefit content for the dollar. Sales professionals who sell benefits and value sell at a higher, more rewarding level. They do it by delving into and thoroughly exploring a customer’s operation in search of those needs, that when met, provide a justifiable benefit for their shop. More sophisticated customers will translate each benefit into a monetary value.



PARTNERING A recent trend in the supplier/customer world is partnering. Buyers and sellers establish partnerships to speed up delivery and improve their quality. To do this, they drastically reduce the number of suppliers and provided support and training for those that have been retained. With fewer suppliers, there are fewer delivery snags, faster response time and closer coordination between ordering and delivery. Most buyer-seller relationships are long term, but are typically one of three types:

Uncommitted. This is a relationship where both parties’ real concern is for their own profits. There is no real commitment to a long-term relationship, merely a working agreement that both parties try to maintain. A good example is the routine purchase of tooling supplies.

Interpersonal. This is a relationship where buyer and seller have a close, trusting relationship. They work together for their mutual benefit and to develop a long-lasting working relationship. Close personal relationships lead to open and honest communication that helps resolve problems and strengthen a partnership.

Strategic. This is the ultimate business relationship with both parties dedicated to mutual profitability. Investment risks are taken by buyer and seller to give the partnership a strategic advantage over other companies by searching out and exploiting market opportunities. Many times the line between where the customer ends and the supplier begins is hard to recognize. The supplier may even have employees and inventory located inside the customer’s facility.

Trust is the critical element in both interpersonal and strategic relationships and is manifested in a number of ways:

Reliability. This is simply the keeping of promises made and is built like the foundation of a building—a brick at a time. The building bricks are keeping appointments, being on time, delivering goods or information as promised. When the foundation is completed, so is trust. At this point, buyers know unequivocally that they can depend on the seller.

Credibility. Credibility is built on real knowledge, not pretense of knowledge about a customer’s company, product or industry. Real knowledge demonstrates competency, which, in turn, strengthens a sales professional’s credibility. Study, training, reading and observation are the keys to achieving knowledge and thus true credibility among customers.

Honesty. Honesty is simply being truthful. It means giving truthful answers even when it is an admission of ignorance about a subject. Honesty is transparent and so, eventually, is dishonesty. But what is seen through honesty is by far the most appealing to customers.



In the practical application of partnering, sub-strategies are developed to enhance the sharing of information and capabilities between buyer and seller. The purpose is usually to assure or improve product quality and service. For example, buyer and seller might duplicate their communication hardware and software, and procedures might be improved in order to maintain an accurate, consistent flow of materials and information between both parties.

VALUE-ADDED SELLING Value-added selling is very suitable to the manufacturing technology business. This far-reaching strategy applies to every area of customer-supplier business chain. Manufacturing technology products in the marketplace fall into one of three basic categories:

1. Innovative products. These are products that are unique enough that they are often without competition or it is quite limited. With these products, there is lots of flexibility in pricing and thus higher profitability. With innovative products, customers are more committed to their source because they can’t get them anywhere else.

2. Very competitive products. These are products with definable differences in specifications or certain features, but which are essentially the same. Customers are only relatively locked in to these products. They can go to another source, but it’s usually a situation of giving up something to get something else.

3. Commodity products. These are products that are very similar to one another with the only significant differentiator being price. Customers buying these products, unless there’s a loyalty factor involved, may buy where the price is lowest.

More and more manufacturing technology products are falling into the commodity category, driven there by modern technology. Product quality may be very similar among these products because they are built using components supplied by the same international companies: motors, spindles, servo drives, control systems and ball screws. Because product differences are minimal, added value for the buyer has become the distinguishing feature among commodity products. Some value-added items that help sell commodity products are:

Availability of application engineers who can help the customer apply the machine

Training programs - programming, operation & maintenance 24-hour parts availability Local or on-site parts and service availability



Specialized account representative or project manager to handle customer needs

Direct communication by e-mail, computer network or picture phone Unique financing plans Extended warranties Turnkey installation with tooling and a run-off of finished parts before a

customer takes delivery These are all things that can be added to a commodity product that increase its value to the buyer. The more that products are alike, the more need there is for value-added features. Many times, value-added opportunities occur where customers incur risks or costs. For example, in tight labor markets customers may have problems with retaining qualified machine operators. A custom, ongoing training program may be the solution. Suppliers may assume some of those risks and costs because they are willing to do so to obtain the business. In other cases, the supplier can do the same job more efficiently or with less risk. Customers may even be willing to pay a premium for the value-added service.

APPLICATION SELLING In application selling the focus is not directly on the machine being sold, but on the process to manufacture the customer’s part price. The sales engineer will normally obtain part prints from the customer and have them analyzed by either the distributor or builder application-engineering group. The part will be processed, a step-by-step sequence of machining operations with recommended tooling and fixturing. The sales engineer will then recommend a machine, either standard or special, to accommodate the process. This can be a very innovative process with the order going to the supplier with the most productive process. When a process application flow chart is developed, be sure to present the calculated costs of each significant process step or level. In some situations, the machine supplier will sell the entire package of machine, tooling, fixturing and programming. This can add real value to the customer purchase. In a turnkey situation, customer parts can actually be produced and qualified at the builder, distributor or customer’s plant before customer acceptance. Application selling situations can become very competitive, especially when different processes are presented to a customer. There could be more than one technical solution to the customer’s problem. In these cases, it is always best to continue the interviewing process until the optimal solution is determined. The sales engineer should know if builders have these capabilities and look for opportunities where customers would benefit from these services. Also, developing strong relationships with the application engineering staff is beneficial. Learn how to use



these technical people in customer meetings and presentations. While their technical expertise is critical to the sale, their customer skills may need coaching.

RELATIONSHIP SELLING

In the many aspects of selling, buyers can develop a close relationship with salespeople. These relationships are usually based on trust and mutual respect so that purchases are made more from the standpoint of the relationship than the company or products the salesperson represents. It’s always a good strategy to try and enhance personal relationships and one of the ways to do this is by understanding the inter-personal and psychological aspects of people. Any comprehensive strategy should include both resolving real needs and enhancing personal relationships. In order to develop a strategy that meets both criteria, it’s necessary to understand the various personality styles of buyers. The sooner a buyer’s style is identified, the sooner the relationship-building process can begin. Earlier in the section on Approaching Customers we talked about four social styles. These are basic patterns of communication that people use when interacting. Those who recognize these patterns will do much better in relationship selling. Here is a recap: Social styles are given different names by different authors and speakers. Here are four typical categories:8

Drivers. Swift, efficient decision makers, they base their decisions on facts. They want businesslike presentations with quick action and follow-up.

Expressives. Warm approachable, intuitive and competitive, they see power and politics as a means to achieving their ends.

Amiables. They achieve their objectives by working with people based on mutual respect rather than power and authority. They avoid risk, change their opinions reluctantly and resent it when sales people do not follow through on commitments.

Analyticals. This type is suspicious of power and personal relationships. They are slow, deliberate, and disciplined decision-makers.

Carl Henry in his book, HIGH ENERGY SELLING, adds to the above styles with what he calls high energy buyers and low energy buyers. He then breaks the two types down even further.

High energy buyers are either socializers or directors.

8 Merril and Reid



Socializers like to interact with people. They love to talk and visit. They take a generally relaxed approach to business.

Directors like to make things happen. They are impatient. They are risk-takers. They operate on the “Let’s get going” approach to business.

Low energy buyers are usually planners or thinkers.

Planners are unhurried and methodical. They take their time making decisions. They pursue security and abhor failure. They take few risks. They are steady and dependable. They are task-oriented.

Thinkers want all the facts before making a decision. They are not adverse to risk-taking if the risk is minimal and

the rewards worthwhile. While not changing their own personal style, a sales engineer should try and blend with the customers. For example, a low energy buyer might appreciate a thoroughly detailed explanation of how a certain procedure or machining process can help cut expenses. Personal relationships are usually built on common interests, values and socio-economic levels. Look for similarities that both parties can discuss. While some relationships come together naturally, others take more effort. In any case, the sales person who genuinely cares about people will have the advantage. Be aware that this empathetic quality is hard to fake. Also, be prepared to spend some extra-curricular social time with these special customers. Relationship selling can be very rewarding because it’s based on friendship and as the friendship grows over time the relationship often continues even beyond the workplace.



ACCOUNT SIZE SEGMENTATION Sellers will generally have small, medium and large-sized customers. Each will require a different selling strategy. Large accounts that provide a large volume of business are called “key accounts.” Manufacturers may appoint distributors or independent reps to call on all accounts within a territory and hold back specific “house accounts” for their own direct selling force. Key accounts require a lot of attention and may even have a dedicated sales engineer. Small and medium-sized accounts may require a more generalized selling strategy. The exception is where specific accounts have been targeted as new potential or additional sales penetration. In these cases a unique or targeted strategy will be employed. If a sales engineer calls on all sizes of customers, a mixed territory strategy is appropriate.

CONSULTATIVE SELLING Consultative selling is a profit-improvement selling strategy developed to sell to high-level decision-makers concerned with profit.9 This strategy is used most effectively with key or targeted accounts because of its time-demand factor. It focuses on earning profits for customers rather than selling them products. Consultative selling uses a customer’s industrial data and business operational data for analyzing profit opportunities and for making strategy decisions. It requires a solid understanding of a customer’s economic situation and the financial savvy to improve things. This profit-improvement approach enables the seller to become a consultant providing a client with added value rather than a vendor selling an added-cost product. Consultative sales personnel sell to “insiders”, managers who will promote their products from within their companies because these products will improve profits. These “insiders” are valuable to the seller because they have access to and influence with the people who make profit-oriented decisions for the company. They are invaluable to sellers because they have access to the financial and product side of their companies, and they speak the language of both. To sell to these insiders, it is necessary to understand how businesses operate and how finances work. It’s also necessary to learn a second language, the language of business—business-ese or “moneytalk.” That’s because in consultative selling, in order to improve a customer’s profits, a sales engineer must understand three specific quantities:

1. The current values in the business that consultative selling can affect. 2. The amount of dollars that can be added. 3. The net worth of the added value produced.

9 Mack Hanna, Consultative Selling, New York, amacom, 1995



Consultative sellers must know their own value to their customer—that is how much they typically contribute to their customer’s profits and how long it takes. Consultative selling aims at long-term, continuing relationships that transact returns from product investments that improve profits and thus represent financial gain. A consultative seller will not simply react to the customer’s request to quote. They will actively seek out companies who may not even be thinking of making a purchase. After a through analysis, they will generate a profit-oriented proposal. These proposals will demonstrate how new equipment purchases will add to cash flow and bottom line profitability. In this sense the consultative seller is proactive and will have very little competition.

SELLING STAGES One of the very important aspects of selling manufacturing technology is selling at the appropriate level so that buyer and seller are, as much as possible, thinking compatibly. For example, a salesperson dealing with a small shop owner may be selling features and benefits. Meanwhile, the owner/buyer is still trying to decide if money should be invested in new equipment. The salesperson’s task here is to bring the customer’s thinking around to legitimate benefits to be derived from investing in new machinery. There are two stages to selling capital equipment products:

Stage One—Risk and Investment. The purpose of stage one is to show the customer why investing in new equipment is the smart thing to do and to bring him or her to a comfortable assurance level. Both should be convinced that new equipment will be a productive investment with appropriate monetary rewards regardless of which product or supplier is chosen. Stage Two—Equipment Selection. The purpose of stage two is to sell the capabilities and benefits of the product and service over the competition.

Don’t make the mistake of trying to sell specific features against a competitor while the customer hasn’t bought into the idea of improving their manufacturing operation. Learn how to sell manufacturing philosophies and their long-term business benefits.

THE DISTRIBUTORS’ ROLE Distributors are a major, though indirect channel to the marketplace, particularly for manufacturing technology products and accessories.10 Distributors can function independently to reach customers, or in combination with manufacturers’ representatives.

10 Robert W. Hass, Business Marketing, A Managerial Approach, Cincinnati, South-Western College Publishing, 1995)



Many firms have industrial distributors calling on customers and prospective customers as a way of holding down the rising cost of field sales. According to Industrial Distribution magazine, there are three types of industrial distributors: the specialist, the generalist and the combination house.

The Specialist Distributor: a distributorship in which one product category consistently accounts for 50 percent or more of all sales. The Generalist Distributor: a distributorship in which no one major product category accounts for 50 percent or more of all sales. The Combination House: a distributorship serving both business and consumer markets.

Distributors serve builders and manufacturers in a number of ways because of the marketing and sales resources they can provide. These include:

An established sales force Close ties to local buyers and influencers Better delivery capability because of their proximity to customers Providing warehousing which reduces builder/manufacturer cost Assuming credit responsibility for customers they serve, relieving the

builder/manufacturer of this responsibility Broader coverage with multi-products Local application for engineering customer systems Local parts and service availability Local marketing efforts: advertising, trade shows, direct mail and such in

customer’s area When builders partner with distributors, it calls for coordinated efforts between both parties to achieve mutual success in the marketplace. To make a partnership with a distributor work, both parties need to understand their position, particularly if the distributor is to provide warehousing and perform delivery, installation and servicing tasks. In order for this relationship to work, both parties must clearly understand their part in the arrangement. A written agreement should be prepared outlining what is expected of both parties. Such an agreement should include the following:

1. A definition of overall objectives of both parties 2. Specific descriptions of what each party expects of the other. Typically:

Compensation schedule Order performance Territorial coverage Technical and sales training Marketing support and data



Showroom Stock machines Product line mix Application and technical support Parts and service Exclusivity Payment terms Cancellation terms Personnel assignments and skills

3. Agreement on regular communication 4. Quick solutions to disagreements 5. A regular review of each other’s performance

THE BUILDERS’ ROLE The builder is defined as a supplier organization that designs, manufacturers or imports manufacturing technology products. For its part, the manufacturer or builder should provide the following assurances to the distributor:

The permanence or longevity of the partnership. The flexibility to respond to market demands. Availability of sales and technical assistance when needed.

Depending on the builder-distributor contract some of the following items may also be provided by the builder:

Competitive products. Quotation and proposal support. National advertising, trade show and promotional support. Sales literature and promotional materials. Sales and service training. Application engineering support. Service and parts support. Lead generation services.

The AMT has published A Guide For Evaluating Builder and Distributor Relationships. Contact the AMT for a copy.



4.4 Presenting Products

PRESENTATION TYPES & TRENDS Presentation Types Many sales personnel are absolutely superb in a sales call with one or two people. Across a desk or conference table they’re relaxed, confident and articulate. On the other hand, many of these same professionals find it difficult to go before a larger group. Sales engineers dealing exclusively with small job shops may never be called on to make a large group presentation. On the other hand, it is not uncommon for key account sales people calling on larger companies to make product presentations to groups of 20 or more people. Whether sitting across from a single customer or standing before a group, the sales presentation is where the seasoned sales engineer should be at their best. Effective product presentations do not just happen. They are the result of careful planning, research and execution and a critical ingredient in the sales process. Good presenters spend a lot of time developing and honing their skills. Like professional athletes, they regularly practice the basics of organization, preparation and delivery in order to build and strengthen their effectiveness before individuals or groups. Learning to be a good presenter takes the same measure of effort it does to learn any other skill—practice, persistence and experience. Buying Teams Companies are using more teams for improved product quality, employee empowerment and interdepartmental communication. With this trend, group buying is on the rise. In fact, more and more companies, large and small, are turning to in-company buying teams for capital equipment purchases. Depending on the type of purchase, these teams can have from 3 to 10 members. For that reason alone, manufacturing technology sales engineers can anticipate an increased demand for stand-up sales presentation to groups composed of department managers, manufacturing engineers, cost accountants, equipment operators and service personnel.



PRESENTATION FOCUS Goals & Objectives When a presentation is on the horizon the first thought should be, “What is the goal of this presentation?” All too often the oversimplified answer is “To get an order.” Unfortunately, this answer may not have enough focus. Specific goals will give the presentation focus and power. Here are some examples of focused goals:

Get our company on the bid list. Convince the customer to make a visit to the builder’s plant. Demonstrate unique product attributes unaware to this customer. Sell the credibility of our application expertise. Ask for the order right after this presentation.

Begin by determining what is to be conveyed to the audience. There are many issues and they will change with each presentation because each customer is different. Most presentations fail because they lacked relevance to the listeners. Make a list of the issues that most affect the customer. Here is a partial list of considerations:

A clear affirmation of the buyer’s needs that must be met. A clear understanding of a specific product and what its capabilities are. A good understanding of the supplier or builder’s capabilities.

Product quality Service & warranty Features & benefits Delivery & installation Turnkey capabilities Engineering & technical details

Emphasize one main point and no more than three sub-points. It’s important to keep an audience focused and the best way is to do this is to stick to a single subject. For example, main theme: A machine that can increase throughput and improve product quality. Its sub-points could be that it will:

Keep critical component machining work in-house. Save direct labor costs. Improve component delivery times. Reduce inspection time and reduce scrap.

The temptation always exists to point out the deficiencies of the competition during a presentation. Most professional presenters warn against this practice. If competitors are mentioned, it should be in general feature and benefits terms, not mentioning specific manufacturers.



PRESENTATION ORGANIZATION

In the days or weeks prior to a presentation, start compiling a list of issues that can be worked into a commentary. The commentary is developed to inform, enthuse and convince an audience of the value of a product in meeting their needs. That could mean replacing old equipment with new or resolving a process or production problem. A prepared script is not necessary; in fact it should be absolutely avoided. The presenter should be familiar enough with the subject to make the presentation using only notes. The presenter should not only know about the product, they should also understand the audience. Here are some of the things a sales engineer should know about the audience they will be presenting to:

What are their needs? A central goal of effective verbal communication is to persuade customers that you are interested in their business only if your products and services meet their needs. Knowing their needs in advance of the presentation is a must. If a presenter is speaking to what they think are audience needs, and they are not, this could be a fatal flaw. Once again, refer to the list of manufacturing issues shown under “Customer Needs vs. Customer Wants” found earlier in this chapter. Needs can also be personal. Review the different buyer styles discussed previously. What are their values? Understanding a group’s value system is very important to making an effective presentation. For instance, if the company places great value on their employees then a point could be made regarding training and increased skill levels. What are the group politics? Internal politics can be an important factor in the success of a presentation. Personal conflicts or competing factions can affect the outcome of a presentation. Understanding these conditions beforehand can help. A call prior to the presentation to key influencers may reveal their hidden agenda for the meeting.

Presentation Format Once there is some understanding of the makeup of the audience, a presenter is better prepared to develop the necessary commentary. The three essential parts of any presentation are the introduction, the body and the conclusion.

1. Introduction An introduction should always include the following elements:

An introduction of the presenter with some background information. A reaffirmation of the specific needs of the customer. An explanation of the purpose of the presentation based on those needs. Some kind of attention-getting device, if possible.



Re-stating needs early in the introduction is critical. The presenter must be certain that their presentation will be directed toward providing answers to the buyer’s verifiable needs. Taking a presentation in the wrong direction because an assumption was made regarding needs can be a catastrophe, particularly if it’s allowed to go on. If the group does not affirm the perceived needs, there are still several options open:

Make a course correction and continue the presentation based on verified needs if the presentation that’s been prepared can be modified on the fly.

Reschedule the presentation, if necessary. Do not try to make the presentation fit the circumstances simply because the time and place have been scheduled. That can lead to disaster.

2. Body

The body of the presentation should include only information the presenter wants to pass on to the audience, and nothing more. It should be presented without a script. Notes are acceptable, but refer to them as inconspicuously as possible. Keep graphics or visual aids to a minimum, but those that are used should be as professional looking as possible. The body should follow a logical progression of significant information. Its purpose is to inform and motivate the buyer to either purchase or agree to purchase. The body should also include a summary that sets the tone for the conclusion.

3. Conclusion

An effective conclusion should bring the audience full circle to material covered in the introduction, often with a playoff of the attention-getter. The conclusion, when appropriate, also can be used to ask for an order or to suggest a call to action.

Sales engineers selling standard products should have an established presentation that is rehearsed regularly. It should include basic items that sell their company, product and personal capabilities. They should be able to comfortably make their presentation to a single buyer, group or buying team.

PRESENTATION IMPACT Demonstrations If it can be arranged, demonstrate the product and the more dramatic the demonstration the better. Get the audience involved. A Chinese proverb says, “Tell me, I’ll forget; show me, I may remember; but involve me and I’ll understand.” And, someone who understands will have an easier time remembering. Sometimes, for safety reasons, a



customer cannot be allowed to operate the machine. Having a customer’s operator do the job, even if it requires taking time to train them, adds dramatically to the demonstration’s impact. When the demonstration is over, the customer’s own operator will be an on-site spokesperson to promote the product. If it’s not possible to demonstrate the machine, bringing parts that have been produced by the machine is a viable alternative. If parts aren’t available, consider chips. Their thickness and appearance can tell experienced customers a lot about the machine’s capabilities. Another good tip is to bring machine components along on a sales call. For example, a section of linear guideway or bearing put in the customer’s hands will have a positive impact. Be as creative as possible when it comes to helping decision makers, buyers and influencers remember a product and its capabilities. Handouts Handouts are generally used to help remind the audience of material covered during the presentation. They can also serve to provide detailed information such as specifications and technical data. The quality of handouts should be such that they can be used within the customer’s organization as a secondary presentation piece when the salesperson leaves. They can be used to represent the product to others within the company or, more specifically, anyone within the organization who has a hand in the buying decision. Handout materials are most often distributed at the conclusion of a presentation. Circumstances may sometimes dictate otherwise, but distributing handouts before or during a presentation can create a distraction. If materials are needed during the presentation, limit distribution to one single sided sheet at a time. Visual aids Visual aids can be an important addition to a presentation, but must be handled appropriately. The purpose of graphics or other visual materials is to clarify or illustrate factors that are difficult to visualize, to stimulate audience interest or to reinforce specific points of the presentation. There are several visual aids problems worth mentioning:

First, visual aids should not be relied on so heavily that they overpower the presenter and take away from what is being said. Computerized presentations, which can be vividly dramatic, are the easiest to abuse. Second, some visual aids require lowering the room lights. This can subdue the listeners. There are a number of ways to offset this effect. Some presenters would lower the room temperature, but the best response is to keep the audience interactive with questions and light discussion.

During a presentation, which uses visual aids or computer presentation software, constantly observe the customer’s interest level. Since these presentations follow a prescribed, less flexible format, it is easy to loose the customer’s attention. Memorize the



presentation so that you can jump around and maintain relevance. If the customer is no longer paying attention, Jenkins, Elder and Thomas recommend in their book “How to Sell with a Laptop” to end the laptop presentation and immediately redirect the meeting. Another solution is to create a customized presentation that matches a specific customer’s needs. This will provide the maximum relevance, which is the key to customer interest and retention.

PERSONAL APPEARANCE Making a good initial impression gets things off to a good start. A negative impression can create a barrier that may never be overcome. Appearance gives off a lot of signals from a lot of perspectives including:

Posture Facial expressions Smile Attire Body language Attitude Enthusiasm

Clothing for women should be businesslike, of good quality and usually with medium to full-length sleeves. Avoid noisy, ostentatious jewelry and makeup should be simple and complimentary. Hair styling should be in keeping with clothing. Clothing for men should be well tailored, suits preferred. The formality of the presentation, or lack of it, will determine whether the suit coat is buttoned or open or even removed. Ties should blend well with the suit being worn. Shoes should be well polished and knee socks worn to avoid a bare leg when sitting. Being clean-shaven is a must and if a beard or mustache is worn, both should be neatly trimmed.

QUESTIONS AND ANSWERS The wrap-up of almost every sales presentation should consist of questions and answers. While many presenters fear this time the most, it can be a very powerful part of the presentation. This is when what is on the minds of the audience comes evident. Therefore, approach the question and answer time with a positive attitude. Besides, a presenter’s knowledge of the subject is usually sufficient enough to enable them to answer questions intelligently.



If you have brought technical support staff to help with the presentation, remember that they may not be comfortable in front of customer groups. Stand next to them during question and answer time and field the questions for them. The best way to answer questions is to prepare for them by anticipating what will be asked and practicing your answers. Questions should not be answered defensively, but rather in the same style and demeanor used in the presentation. If a question cannot be answered, it should be admitted and explained that the answer will be found and provided. Always keep the audience involved in the question and answer process by re-stating each question for the group, maintaining eye contact with the group and obviously directing a portion of the answer to the rest of the group. One benefit of the presentation question and answer time is to verify, once again, the customer’s needs and hear their objections. This verification process is repeated throughout the selling process.

REHEARSAL Where major presentations are involved, presenters should rehearse several times before the actual event. If possible, it should be done before a group of peers who can offer constructive criticism. Another consideration is to rehearse before a video camera and review the tape. Previews provide insights into delivery, posture, movement and overall presence. They help sharpen presentation skills. Other things to watch for are gestures, eye contact, voice levels and fluctuations and speaking speed.

THE MEETING ROOM An experienced presenter knows that with major presentations, if anything can go wrong, it will, so they go to great pains to avoid embarrassing situations by checking out a presentation room whenever possible, particularly the first time. It’s also better to be set up when the audience arrives rather than setting up. There are two areas to check before the presentation starts: on-site equipment and equipment being brought in. On-site equipment could include podium, microphones, electrical outlets, projection screens, projectors (slide/overhead/motion), lighting controls and seating. Equipment brought in could be some of the above items, like projectors, but usually includes, flip charts, slides, transparencies, computers or computerized equipment, handout material, pointers, personal microphones, recording equipment and similar items.



4.5 Preparing and Presenting Proposals

PROPOSAL ORGANIZATION At some point in the sales process, the prospective customer must be presented with a formal, written proposal. Its purpose is to present an organized, detailed explanation of how the seller’s product(s) or service(s) will meet the buyer’s specified needs or solve specified problems, how much it will cost and what the buyer will get for their money. While every objection cannot be anticipated, as many as possible should be referenced in the proposal. A typical proposal consists of four parts:

1. An executive summary. Executive summaries were developed to satisfy the concerns of an executive too busy or uninterested in reading an entire proposal. This is a synopsis (usually one page) describing the buyer’s affirmed need or problem to be solved and the buyer’s means to meet the need or provide the solution. The executive summary is also a good device for stirring the curiosity of those who will be reading the entire proposal.

2. A scope section. This is where the buyer’s needs or problems, as understood by

the seller, are clearly defined. 3. A benefit section. This section explains in detail how the needs will be met or

the problem solved. 4. A contract or quotation section. This section provides detailed information for

the prospective customer on price, delivery information, machine and control service, terms of payment, warranties and other contractual details. Also included is a rundown of estimated cycle times, service life and cost savings defined as "estimates" and not to be regarded as "guarantees."

Remember that a proposal may be used to compare features and prices with those of a competitor. While comparative benefits can be subtly addressed, don’t allow your proposal to be reactionary based on competition. Primarily, proposals should be a response to customer needs.



A proposal should be written to include all pertinent information—nothing more, nothing less. This information will address two areas:

Linking product features with customer benefits. Overcoming anticipated objections.

The above information should be presented as positive statements. For example:

“Access panels can be hinged on any side to allow for simplified installation of grinding wheels.”

Psychologically, the proposal has an interesting role in the selling process. Customers use the written proposal to verify the verbal claims previously made by the sales engineer. The old adage is still true “The written word is more powerful than the spoken word.” In this sense, the proposal is a compelling selling tool.

QUOTATIONS VERSUS PROPOSALS Sometimes a simple written quotation is an acceptable substitute for a proposal. Such a quotation might be used in the sale of commodity type machine tools where specific needs are not addressed. When needs must be referred to, this can be done in a cover letter. Though less comprehensive than a formal proposal, a quotation is still a legally binding contract. As a general rule, quotations should be delivered, not mailed, and explained in person.

PRESENTING THE PROPOSAL A proposal can be channeled in a number of ways. It may go directly to an on-site decision-maker, or it may be forwarded to another person or location for review. If it is being passed along, it is in the seller’s best interest to have an interested party within the buyer’s organization assist with the process. Proposals made to buying teams present another challenge. Team members play different roles and have different interests in the buying process and will often have specified areas of interest. If feasible, separate proposals or proposal sections can be devoted to various team member needs. With a special emphasis on their area of interest, a sale is much closer.11 Even if a sales engineer has written only a part of the proposal, they must still be thoroughly familiar with the entire document and be prepared to respond to any comments from the prospective buyer. This is particularly true where costs are involved. Normally, it’s harder to obtain feedback on a sealed bid proposal once submitted.

11 Weitz, Castleberry & Tanner



However, in most other situations the seller will want to discretely monitor the progress at each step of the customer’s evaluation process. After a proposal is presented, changes may be necessary. It is to be expected that items have been overlooked or need clarification.12 If some portion of the proposal is in question, get specific information as to what it is, provide the necessary data and resubmit the proposal. Nothing is more distracting to a reader than bad grammar, poorly organized thoughts, punctuation or spelling. These things can detract from a seller’s credibility. Therefore, it’s a good idea to have several people go over a proposal to check its composition and accuracy.

NOTES

12 Chester L. Karrass, THE NEGOTIATING GAME, (New York, Harper Business, 1994)



4.6 Negotiations This chapter describes the process of negotiating with customers. In a sense, the entire sales process is an ongoing negotiation. There comes a time, however, in every sale when the buyer must make a commitment. Negotiations are either formal or informal in nature with the latter being in the majority. Sometimes an entire order can be negotiated on the first visit while others may take years to complete. Not all purchases are negotiated. Negotiation is seldom present in a “low-bid” or “an advertised” purchase. In a negotiated purchase, each side allows the other the right and privilege to offer and counteroffer. According to Webster’s Dictionary13, the word “negotiate” means “to confer with another so as to arrive at the settlement of some matter.” During the course of a sale, there are many “matters” to settle. The word “negotiate” comes from the Latin word “negatus” which means, “to say no or deny.” Successful negotiating is a bartering process with a series of offers and counteroffers until both parties agree to a mutually beneficial or positive outcome. A counteroffer is really a “no” stated in a tactful manner with an alternative offer. Therefore, knowing how and when to hold your ground and present an appealing counteroffer is essential.

AN EXCHANGE OF VALUE Any sales transaction is an exchange of value. The buyer trades cash for a usable product. The seller trades a usable product for cash. A successful transaction is made when both parties believe that the value of what they received was equal to or greater than what they gave. This is called a “Win-Win” situation. In successful negotiations, it is possible that both buyer and seller believe they got more than what they gave! “Win-Win” negotiations should be the goal of all collaboration and compromise. Since people have differing value systems, there is often initial disagreement over the value of a potential purchase. Establishing equitable value is the greatest challenge in the selling process.

PLANNING & PREPARATION Before entering into any negotiation it is imperative that proper planning be completed. Chester Karrass, noted author and negotiation expert, made the following statement in his book, THE NEGOTIATING GAME14: “Over 90% of the business leaders in our survey 13 Webster’s New Collegiate Dictionary, Merriam-Webster, Springfield, Mass. 14 Chester L. Karrass, THE NEGOTIATING GAME, (New York, Harper Business, 1994)



ranked planning the most important trait. In my opinion, it is typically a weak area.” Previous chapters stressed the importance of information gathering through territory research and interviewing techniques. This information should be reviewed and expanded if necessary. During negotiating, you can never know too much. Be familiar with proposals, costs, budgets, competition, technical details, financial data and more. Information in a bartering environment is powerful when used strategically. Strategically, there are four things that the sales engineer needs to know about both, the buyer’s and seller’s position. Quite often, some judicious probing early in the negotiating process can reveal this information about customers.

1. Opening position. 2. Target position. 3. Minimum position. 4. What can be negotiated and what can’t.

POWER FACTORS Power is a fundamental aspect of negotiating and should never be ignored. The sources of power are threefold: buyer, competition and your product offering. While the intensity of these will vary, the buyer normally has the most power. Contrary to what many sales professionals practice, the buyer’s power should be maintained and enhanced by the sales engineer throughout the selling process. The skillful sales engineer will purposely negotiate from a strategically weaker position by not threatening the customer’s perceived power. Power factors should be carefully analyzed prior to and during the negotiating session. Examples of power factors are:

Information - critical data that can influence the outcome Position title - people with titles and job positions of power Expertise status - experts who are hard to refute Situation - circumstantial situations that control Reward and punishment - those with power to reward or punish

Plan ahead how these power factors will be handled. Some should be nullified while others may be used to your advantage. For example, if the customer has upper management at the negotiations, then you may want to have your management available. In another case, a customer expert could be influenced with sincere compliments since they enjoy a position based on knowledge.

NEGOTIATING PERSONALITIES



There is no other place in the selling process where buyer and seller personalities are more dramatically displayed than in negotiating. For this reason, the sales engineer should study the buyer personality styles found in this chapter and in the reference books listed at the end of this chapter. Each personality style has its own negotiating orientation. Self-Image Just as personality styles are important, so is the fundamental issue of self-image. On the surface of any negotiation are issues such as products, service, value, features and delivery. However, on a deeper level is a battle of personal worth. The party with the strongest self-image is frequently the winner. To be firm, determined negotiators, sales engineers must realize that their personal value is being tested along with the value of their product and company. While the customer holds the rightful seat of power, do not allow the scales to shift too far. Sales engineers must be convinced of their valuable role to the customer, distributor and manufacturer. Negotiate as a manufacturing consultant --bringing a vast array of experience from other manufacturing customers to every sale-- experience customer’s need and appreciate.

NEGOTIATING TIPS & TACTICS Negotiating is a complex topic, which includes many strategies. It is recommended that the sales engineer study one or more texts on the subject. Several of these can be found in the “Reference Books and Suggested Reading” section at the end of this chapter. Here are some helpful tactics that can increase your effectiveness:

1. Price - Never assume that the price is the most important issue. Buyers are different and have their own set of personal and business needs. Every two years a survey is conducted by the National Tooling & Machining Association (NTMA), which represents many small manufacturers and job shops. They query shop managers as to the importance of various buying factors. Historically, price normally ranks in the middle of the list. While the ranking changes from year to year, Here is a typical NTMA list starting with the most important:

Technology/Precision Service/Training/Parts (including warranty) Setup time/Flexibility Price Cycle time Familiarity with manufacturer Performance/Reliability

2. Broaden Issues - Don’t let the negotiations narrow down to just one issue. Single-issue negotiating sessions usually produce winners and losers. Work to



broaden the issues so that a win-win scenario is possible. Review the full range of customer expectations (needs and wants) discussed in section 4.2.

3. Don’t Assume - Never take for granted you know what the buyer wants. This will limit your creativity and flexibility during negotiations.

4. Personal - Strive to know the customer’s personally. This will help you understand their motives – a critical factor in any negotiation.

5. Give and Take - Don’t give away something without asking for something. Concessions should only be made with offsetting concessions. Before the negotiations, make a list of possible offsetting issues. For example, a price concession might be countered with a change in payment terms.

6. First Offer - Before you make a concession, let the customer make their first offer. Also, be sure you have all their wants on the table before making a commitment.

7. Give Aways - Don’t give away anything unless the customer specifically asks for a concession. If you are inclined to “sweeten the pie,” do so after the deal is settled – only then will the customer see it as good will.

8. Impossible Demands - Occasionally, there will be demands from customers that cannot be met. This is when you need the courage to say no. Some buyers will use the “impossible demand” to soften you up for the next demand. Putting some humor in your reply can be effective.

9. Decreasing Concessions - Get in the habit of decreasing the amount of your concessions as negotiations progress. Buyers interpret large concessions as a signal that there is still more ground to be gained.

10. Global Cultures - Be familiar with the negotiating customs of different ethnic groups and nationalities. We are in a global community and American negotiating strategies can be counterproductive with other cultures.

11. Concession Value - Any time a concession or counteroffer is made make sure the buyer is aware of the value. If machine features or service issues are being negotiated, convert them to real dollars. Also, be sure to point out the manufacturing benefits every time a feature or option is added. This will raise the value of the concession in the buyer’s eyes.

12. Resist Roll-Over - Display attitudes of firmness and commitment. If you “roll-over” too easily, you may lose the buyer’s respect. This requires some self-confidence and a belief that the product offered has a high value.

13. Tentative Concessions - Make it clear that all concessions are tentative until a final agreement is made. In this way, you can still revisit and nullify an earlier concession if needed to grant a later concession.

14. Irritating Demands - Whenever a customer makes an irritating demand, focus on their motive for the request rather than letting your negative emotions get in the way. Never belittle a customer’s request. Simply request why they are asking and don’t take things too personally.

15. Sticky Issues - Suggest that sticky issues be set aside until later or deferred for review by management. Often they lose importance as other issues are settled and a spirit of cooperation is established.

16. Telephone - Negotiating on the telephone is to be avoided if possible. Communication signals such as body language and facial expressions are lost.



17. Attitudes - Most importantly, customers must believe that the sales engineer really cares about them and holds their best interest in high regard. This is hard to fake, so examine your attitude before negotiation begins.

CUSTOMER TACTICS Just as the sales engineer must have negotiating skills, customers have a set of their own. This is especially true with purchasing agents with a lot of experience or formal training in negotiating tactics. Here are just a few:

1. Low-balling or Nibbling- After the deal is settled, the customer suddenly remembers another requirement that must be included. This could be shipping, perishables or an optional feature. Be firm and remind the customer that a deal has been made and that reopening the deal means renegotiating.

2. Good guy, Bad guy - Typically one customer from a buying group approaches you in an aggressive and unfriendly manner with an unreasonable demand (i.e. low price and fast delivery). While you are emotionally devastated with this request, a second customer group member approaches you and takes on the role of a sympathetic arbitrator. They assume the “middle ground” and automatically position you at the other extreme. Then, they offer to persuade the intimidating partner to come half way if you will do the same. What you don’t know is that was their target position from the start. Once again, be firm and insist on negotiating with the first partner. Continue stating the fairness of your offer.

3. Emotional expressions - Customers can use guilt, shame and emotional outbursts along with facial expressions and tone of voice, to disarm the sales engineer. Remind them that your proposal represents a win-win value for both parties.

4. Browbeating - Customers may put sales engineers on the defensive. They do this by rehearsing negative reports about the product, company or manufacturer. It could include past history with an unrelated product or set an unrealistic deadline. If the main purpose is to “rattle your cage,” then don’t let it! The best response is to make a brief reference to their comment and get back on tract with the real issues and discussing your solutions to the customer’s problems.



PROFITABILITY & THE COST OF MONEY During negotiations, the customer can focus on the selling price. This pressure to be more competitive leads sellers to make “price” and “non-price” concessions. Whenever this occurs, the sales engineer must be acutely aware of how each concession affects the overall profit margin of the transaction. Each concession may have both known and unknown costs and if not careful, the total of all concessions may render the deal unprofitable. Here are some of the concessions that affect order profitability:

Terms of Payment – Most sales are made on a Net 30 day payment schedule. Any extension of the payment schedule will incur an interest cost based on the delayed funds, which is in reality is a short-term loan. Financing Terms – Lower-than-market interest rates and skipped payments can be another cost of money if your company is holding the loan/lease or subsidizing the financing deal. Test Machining – The machining of sample parts to prove capability can be a significant cost factor. The application time for processing, tooling, programming and test machining can be calculated for cost estimates. Extended Warranty – This favorite “deal getter” is another area that must be carefully analyzed. All extended warranties can potentially add cost for the seller. Machines that are not maintained can incur even higher warranty costs. Exchange Rates – Equipment manufactured outside of the United States will experience a cost that fluctuates with international currency exchange rates. The exchange rate is the rate at which one currency may be converted into another. It is also called “rate of exchange” or “foreign exchange rate” or “currency exchange rate.” Since the exchange rate “floats” for most countries, guaranteeing a fixed selling price for machines not yet imported is a significant “cost of money” risk factor. Up-to-date exchange rates and currency calculators can be found at “www.x-rates.com” on the World Wide Web. Various Discounts – There are many types of discounts offered to customers during the order negotiations. Among them are: 1) cash discounts, 2) quantity discounts, 3) corporate partnership discounts, 4) no-cost or reduced cost options or features, 5) transportation and handling costs, and 6) insurance costs to name a few. Discounts must be used judiciously as they can erode the product value from the customer’s perspective as well as decrease profitability.



A seasoned sales engineer should understand the true cost of discounts, concessions and cost of money when engaged in a competitive negotiating with customers. While some sales people are only concerned with getting an order, the sales professional is focused on obtaining profitable orders.

HANDLING OBJECTIONS Attitudes & Perceptions Objections and questions will occur throughout the selling process. While the techniques in this section can be used whenever objections are encountered, they are most appropriate during the negotiation process. Before specific techniques are discussed, it is important to cover two fundamentals:

First, a sales engineer’s attitude must be one of welcoming objections. Objections are a sales engineer’s best friend because they reveal customer needs and opinions. Welcome objections and the valuable information they expose. This attitude will first manifest itself in the form of listening quietly to the customer’s entire objection. Second, openly encourage and solicit questions and objections from customers. The worst objection is the hidden or unspoken issue that can’t be addressed. Ask questions like “Are there any more concerns or issues?” or “What would it take to persuade you?” Soliciting objections should be done throughout the selling process.

Remember, the best preparation for handling customer objections is to have an in-depth knowledge of a customer’s wants and needs. Objections - Reasons & Motives Charles Futrell, in his book ABC’S OF SELLING15 states that there are six types of objections. Bullet points have been added as examples:

1. Hidden objections - those not voiced by customers. Too trivial, personal or challenging for customer to discuss.

2. Stalling objections - those that are used to either postpone the buying decision or dismiss the sales engineer.

Point out the inconvenience and hassle of a new purchase. Express concern over the risks they will assume. Make known their limitations of time or manpower.

15 Charles Futrell, ABC’S OF SELLING, (Burr Ridge, Irwin, 1994 updated 2012 as ABC’s of Relationship Selling Through Service. Available www.Amazon.com)



3. No-need objections - those who express no interest or need for the product

or service. Also used to dismiss the sales engineer. Possibly means your product or service has no relevance to their needs

-- real or perceived. Express “no need” as a way to enhance their power in negotiating.

4. Money objections - those that claim money as a limiting issue. Say that no money is budgeted or available. Indicate that not enough money is available. State that the price is too high.

5. Product objections - those that relate to the product, its features or application.

Need more information. Don’t understand something presented. Don’t like the product or some of its features Compare differences between competitive offerings. Show resistance or opposition to the information presented. Indicate the inequity of the price based on the value received.

6. Source objections - those that relate to supplier companies or sales personnel.

Show satisfaction with their current supplier. Don’t like the company or sales engineer. Bring up past history – good or bad.

One of the best definitions of an objection is: "A customer misunderstanding, not a reason for not buying." This may not always be true, but is certainly accurate far more times than not. Objections should not be confused with a condition not to buy. The lack of money, a change in product plans or a new or alternative solution are typical conditions over which the sales engineer will have no control. A real objection has three parameters:

Fact statement - "Your price is too high." Belief behind the statement - "Your price is too high" really means, "You

are taking advantage of me." Consequence - "I will buy from a competitor and not forget your actions."

It is wise to look beyond the raised objection to ensure the reply addresses the belief upon which the objection is based. The ideal reply will give the potential customer the satisfaction of knowing his viewpoint is understood. Validating Objections The general rule is that all qualified, valid objections should be addressed and answered. However, some experts in selling techniques suggest that, if possible, an objection should be ignored the first time it is raised or until qualified as a real objection. This may be true, but the objection, even if not repeated, may be significant and should be remembered.



If the objection is repeated a second time, it should be immediately answered. Obtain an agreement from the buyer that it was answered satisfactorily. If the objection is not repeated, it may be covered in a positive manner at a future time. Sometimes, answering the objection at a later time in the selling process is better than sidetracking the present discussion. Discretion and wisdom must be employed. Response Types There are three basic response types when answering objections. They are:

Direct denial Indirect denial Non-denial

Direct denial is when the sales engineer gives a strong denial to an inaccurate statement made by the customer. These are extreme situations where the customer’s statement is way out of line and threatens the integrity of the sales engineer or the presentation. Tact should be used. A response might sound like “Mr. Johnson, that statement is simply not true. Our machine was not involved in that fire, besides we have never shipped a machine with that control system.” Only use this response type when the consequences are major. Also, differentiate between statements that are presented as fact versus those presented as opinion. Customer opinions would not warrant a direct denial. Indirect denial is the most common response type. Usually, some truth is evident in the customer’s objection. It could have been true five years ago, but not today. In this case, start by agreeing with the customer and then explain the rest of the story. A typical response might be: “There is some truth to your comment, but with our new model we redesigned the tool change arm.” Basically, look for agreement first, and then present the alternative or real benefits. Non-denial is obviously the best response when the customer’s objection is genuine. At this point, sincerity is called for and a customer may be testing the sales representative’s honesty. A typical non-denial: “Mr. Brown, you are absolutely correct in saying that our parts shipments are slow. We are examining the situation and hope to have it corrected by the end of the month.”

Handling Common Objections Every sales engineer has their own style of handling objections. This talent is developed naturally over years of negotiating with customers. However, there are several well-known techniques that can increase sales effectiveness when used in concert with the sales engineer’s personal style. Here are five basic ways to handle an objection16:

16 Wietz, Castleberry & Tanner



1. Compensation method - In most cases, machine capabilities have both

positive and negative aspects. For example, a machine with a slower traverse rate might have greater table load capacity. A machine with lower spindle speed might have more low-end torque, and so on. Whenever a negative trait is mentioned, be sure to bring up the compensating aspect of the feature. This is probably the most commonly used method of addressing objections. The sales engineer must be well versed in the product and the competitor’s products.

2. Feel-Felt-Found method - Sometimes called the “Judo technique.” The secret of Judo is not opposing the advancing movement of the enemy, but grabbing it, stepping aside and helping it move past you in the same direction. In Feel-Felt-Found, a similar technique is used. After the customer’s objection, state that you know how they “feel” (unopposed action) because, for example, other customers “felt” that way before they found leasing dramatically increased their cash flow. Then, present the new evidence. Caution – don’t overuse this method as it is easily spotted by seasoned buyers.

3. Boomerang method - With this method, a customer’s negative objection is immediately turned around and boomeranged back to the customer as a positive selling point. An example would be a customer who says, “I’m too busy to listen to your presentation.” The response might be “That’s exactly why I must show you our new CAD/CAM software package, it can save you and your staff hours of programming time.” Be careful with this method, as it may be too aggressive for some customers.

4. Pass-up method - In some circumstances the customer’s objections are simply not serious enough to address. Listen carefully as the customer states their objection, then make a brief passing reference to their comment and move on. The trick is in knowing when an objection is not important. Use this sparingly.

5. Postpone method - Timing and sequence are critical to a sales engineer’s negotiating strategy. At times, a customer will bring up an objection prematurely. It would be better to answer it after you cover other prerequisite material. A good response might be: “I can answer that question in just a minute, but first I need to address two issues about CNC operator skill levels.” This is an effective way of dealing with price questions that come early in a presentation or negotiation.

When money or price objections are present, it may be necessary to provide financial justification calculations such as ROI (Return on Investment) to the customer. Customers must view price with respect to its long-term return on investment. Many customers, especially owners, will find additional monies if they see an opportunity to increase cash flow or increase profits. Study Chapter 5 for insights on manufacturing economics.



Small Shop Negotiations: Price vs. Value Small shops where the owner is also the production manager, financial manager and perhaps the sales manager place many manufacturing technology orders. These buying decisions may or may not be group decisions. The perception is that this buyer is always “Price” oriented. This is not the case. He is more likely to be “Value” and “Solution” oriented, but he generally equates “Price” to “Value.” These sales calls are less involved and long proposals may not be required. Here, the sales presentation or demonstration is best made away from the customer’s shop where value features can be presented. This could be a demonstration room or in the shop of another user. In these cases, remember three questions that are always uppermost in a buyer's mind:

1. Will the manufacturing technology do the operations for which it is needed? Is it suitable or the most suitable? Is it a solution for my problem?

2. Is the purchase a good investment for this company? 3. Is the supplier of the machine a responsible company and will they provide needed

service to make the machine useful and productive? Price is not important until the seller knows what the buyer wants. Price determines who gets the order only when the sales engineer can't demonstrate significant differential value. Since the lowest price does not guarantee the best investment, the value of the higher price must be proven to the customer. To do this, put a price on all value-added features such as 24-hour service, faster parts availability, installation assistance, higher resale value, training, longer product life, etc. Then offer these features at no charge. These and other important benefits may be standard, but they do create value for the buyer - value that the competition may not have. In a long, multiple-step sales situation, new objections may surface late in the selling process. This may require re-interviewing the customer to obtain any new information necessary to meet the needs. Each time this happens, confirm with the customer that these are all of their objections before proceeding to negotiate. Do not neglect the experience of the other sales staff employed at the sales engineer’s company or the builder. They can be an excellent resource for both techniques and specifics in handling objections.



4.7 Closing Orders Closing an order is part of the negotiating stage, yet important enough to stand on its own. A courteous, intelligent closing technique is something that should be developed by every sales engineer because the close is the culmination of the entire sales process. However, many sales professionals capable of handling the sales steps preceding the close, experience difficulty at this point. If a sales engineer has done a good job of diagnosing and meeting needs, closing may simply be a matter of finding the opportune moment and asking for the order. If, on the other hand, needs or issues are left unresolved, the process falters. Thus, two major elements involved in closing a sale are resolving issues and timing, which are closely interwoven. Resolving Issues If there is hesitancy to close on the part of the prospective buyer, unresolved issues are usually holding things up. The issues are either real or created by the buyer to stall the purchase. If it’s the former, the issues need to identified and resolved. If the latter, then there’s more work ahead in determining why the buyer is hedging. Getting at unresolved issues means reviewing the buyer needs, getting confirmation on them and focusing on those needs that the buyer feels have not been met. A good way to uncover the important issues is to build an issue list ranked by importance. If a buyer is stalling, then the sales engineer needs to find out why. Are they afraid of making a decision? Is there something wrong with the product that hasn’t been mentioned? Is it something personal? Body language, tone of voice and facial expressions can sometimes offer clues that will help unravel the mystery. These indicators, properly interpreted, can provide a seller with clues to unresolved issues and buyer stalling.17 When these issues are uncovered, they should be promptly addressed. Timing There are probably several good opportunities to ask for an order during the selling process. The challenge is to recognize those times when the buyer is ready. Selecting the right moment involves part logic and part intuition. Sellers often talk their way right past an order by not stopping at some point and asking for the sale. The sales engineer should look for the earliest opportunity to get that commitment. There are, for example, times when a buyer doesn’t want a presentation, but is ready to place an order. The sales engineer should be watching carefully for those opportunities. If the customer interrupts

17 Gerhard Gschwandtner & Pat Garnett, N0N-VERBAL SELLING POWER (Englewood Cliffs, NJ (Prentice Hall, 1985 Updated 2006 to: The Art of Nonverbal Selling: Let Your Customer’s Unspoken Signals Lead You to the Close. Available: www.Amazon.com)



the selling process and expresses a desire to place an order, the sales engineer should cease selling and begin the paperwork. There is always a danger that overselling will bring up new objections. However, unresolved order details should be addressed during the order write-up process.

A Trial Close is a good way to determine whether or not a customer is ready to make a purchase. A question such as, “If we could resolve this issue, would you place an order today?” can usually elicit a response that will provide either a “yes” response or provide clues for the seller. The trial close does not ask for an order, but rather for a buyer’s opinion on the issue.

There are four times during the sales presentation when a trial close can be used effectively:

1. Following the answer to an objection. 2. Following the presentation. 3. Following a strong selling point. 4. Just prior to the close.

If the answer is “no,” the typical reasons are: “We’re not sure you can deliver on time.” “Delivery is too long.” “Price is too high.” Then, it’s time to backtrack or revisit those issues that the customer is having a problem with. But, the trial close has told the sales engineer that this is not the time to press for the commitment, but rather to:

Clarify objections or needs. Re-present and demonstrate capabilities. Try for a new commitment.

Listening to customers’ questions also provides clues to timing. As customers’ questions become more specific, they also grow in intensity and interest. This is a sign that the customer is closer to making a commitment. As mentioned earlier, body language, facial expressions and tone of voice all provide the seller with clues as to where the customer is on the ready-to-buy scale. Body language interpretation is covered in several of the reference books found at the end of this chapter.

Common Misconceptions There are some misconceptions about what’s involved in closing a sale; however, they evaporate if the sales process is built around a long-term trusting relationship. Here are five of the most common fallacies:

1. The buyer holds all the cards. Fact: This is rarely the case if the sales engineer truly understands the customer's needs and requirements.

2. The buyer knows exactly what he wants. Fact: The buyer is rarely able to tell a sales engineer everything about his needs. Real needs must be defined during the interview.



3. A lower price is essential to obtaining an order. Fact: Price is a big factor where commodity products are concerned. However, studies have shown that price often gets more emphasis than it should, since customers do have other needs.

4. The competition is strong, has better prices and more features. Fact: The sales engineer probably does not have all the facts about the competition and the customer does not have enough facts about the sales engineer's prod-ucts.

5. The buyer is the enemy and should be treated accordingly. Fact: The buyer is the person across the table. An attitude of cooperation is essential to building the necessary relationship.

Typical Closing Methods - Caution! Closing techniques, for the most part, are useful with those customers who have a hard time making a decision or a commitment, usually the low-energy or analytical types. In these cases, the sales person sometimes needs to help them get over that last hurdle to the commitment. Some techniques are better than others. Attentive sales engineers choose their closing technique very carefully and customize it to the customer. The following are typical examples of traditional closing techniques:

Alternative Choice: Gives the buyer a choice between two things that are lesser issues. “Do you want the machine in gray or blue?” This leads directly into writing up the order.

Standing-room-only: Uses the strategy of explaining the negative

consequences of not buying now. If you don’t buy this stock machine today, another customer is coming tomorrow who is very interested.”

Continuous yes: The seller constantly asks questions that can only be

answered with a “yes.” When the order is asked for, the buyer’s natural response is “yes.”

Assumptive: The seller, without asking for the order, begins writing

it up, casually asking the customer for the order entry information.

Minor point: The seller asks the prospect to decide on a single

feature rather than the entire machine. When the decision is made, the seller commences writing up the order for the machine. “Do you want the model with motorized tools or a standard turret?”

Although these are the traditional closing techniques, research based on more than 35,000 sales calls over 12 years found that in major sales situations, reliance on these closing



techniques actually reduces the chance of making a sale. It also found that people trained in closing techniques closed fewer sales.18 Fortunately, there are some good alternatives. Effective Closing Methods Effective methods rely on straightforward requests for the order. Buyers expect to be asked for their business. They appreciate sellers wanting to do business with them and telling them so. They also appreciate it when sellers have done their homework. The following are more effective closing methods:

Direct approach: Simply asking for an order works best with decisive customers: “We would really like your business. Can I place an order for you?” “Can we build (or ship) a machine with your name on it?”

Review benefits:

Throughout the presentation, the sales person regularly reminds the buyer of ways in which the product meets their needs. Following a final benefits summary, the seller then asks, “Have we met all your requirements?” If the answer is yes, they then ask, “May we have your order?”

Balance sheet:

This is a good technique for customers who cannot make up their mind -- for no apparent reason. The customer is asked to join the salesperson in listing the pros and cons for a purchase on either side of a line drawn down a sheet of paper. This is a good method for reviewing product benefits and value-added items. Downside: cons may equal or outnumber pros.

During the closing, more than at any other time in the selling process, sales professionals must be themselves. They should not rely on stilted or trite phrases found in a book. The sales engineer must feel comfortable while closing an order in both content and style. The words must be their own words. Don’t try to rush things. After asking for the order, wait silently and wait for the customer to make the next response. Don’t worry if the time lag feels uncomfortable. Getting buyer commitment should never involve tricking or manipulating customers into doing something they don’t want to do. Every close should be based on mutual trust and belief in the salesperson and the benefits of owning the product.

18 Neil Rackham, SPIN SELLING, (New York, McGraw-Hill, 1988)



When The Answer Is “No” Every sales engineer has gotten “no” for an answer -- even when the process went by the book and everything looked good. Sometimes it’s difficult to determine what happened. The fact is customers don’t always give the real reason. They may be embarrassed, angry or unsure about their decision. Also, they might not like the sales person. This could be true, for instance, for a “high-energy” sales engineer who didn’t adapt to a “low-energy” buyer19. A situation like that is a no-win for the sales engineer. The customer’s reason for not buying will be one that can’t be countered because the buyer’s mind is made up. Price is often the reason given, but the real reason usually remains hidden. Whenever possible, the real reasons should be searched out so that they can be corrected or eliminated in the future. It’s also important to clarify just what “no” means. It may be a verbal clue that says: “Not right now;” “More information please;” or any number of unspoken things. Every “no close” situation should be thoroughly evaluated to determine the reason or reasons behind it. Good manners are a must whether the sale is made or not. “Don’t lose it when you lose it” is a good rule of thumb when a sale slips away. A buyer should be thanked for the opportunity and congratulated on making a wise business decision. Such behavior keeps the door open for future business. In the event that an order is lost, the salesman should document the sales situation in a lost-order report. These reports can be a valuable resource to the distributor and builder in future negotiations with this or other customers when the information they contain is reliable. Again, make every effort to get at the real cause of the lost sale.

NOTES

19 Carl Henry, HIGH ENERGY SELLING,



4.8 After-Sale Follow-Up

When a sale is concluded, a whole new phase of the selling process begins—that of follow-up. And, it begins as the ink is drying on the contract. Commercial aspects of order acknowledgment will be discussed in Chapter 5. Satisfied customers are a timesaving, money saving way to new business. Even among those companies where purchases are infrequent, buyer-satisfaction and a strong buyer-seller relationship provides a very definite economic advantage. If, for example, a company can retain 2 to 5 percent more of its customers instead of losing them to competition, the effect is equivalent to cutting costs by ten percent.20 Similarly, it takes an average of seven calls for a first sale, but only three for a follow-up sale, making it easier and less costly to sell to satisfied customers.21 For that reason alone, effective after-sale follow-up is good business. The first phase involves a show of appreciation. Not only is this an extension of common courtesy, it’s a way of strengthening a long-term relationship. Buyers notice sellers who appreciate their business—and a thank you note is a good start. Once a sale has been concluded, there are two important follow-up steps that help a buyer-seller relationship grow and which help develop future business:

1. On-time delivery with smooth installation and startup. 2. Satisfactory resolution of problems or complaints.

The second phase involves promoting a long-term relationship. Gary Karrass in his book “Negotiate to Close” points out that the number one reason for the loss of a customer is a neglect of the relationship by the seller. The following pages will provide insights to counteract the natural tendency to neglect customers.

On-Time Delivery True or not, as far as the customer is concerned, the sales engineer is responsible for delivery when promised, so part of the after-sale follow-up responsibility is keeping track of customers’ orders. When delays occur in the delivery process, the customer must be notified as soon as possible. It would seem logical that shipping early is preferred. However, if the customer is unaware of an early arrival and is not prepared, it can spell disaster. The customer should be notified of delivery dates, times and arrangements made

20 Christopher Power, Lisa Driscoll & Earl Bohn, “Smart Selling”, Business Week, Aug. 3, ‘92pp. 46-48; Frederick F. Reichheld & Earl Sasser, “Zero Defections: Quality Comes To Services”, Harvard Business Review, Sept.-Oct., ’90, pp. 105-11 21 William O’Connell & William Keenan, Jr, “The Shape of Things to Come”, Sales & Marketing Management, Jan., ’90, pp. 36-41



for all late or early arrivals. This means that the sales engineer should be aware of the machine assembly and shipping progress. Installation & Runoff Never assume that service or application engineers will resolve all of the installation and runoff problems, particularly on complex or turnkey projects. Staying in touch with the customer during this time to offer advice and assistance strengthens the buyer-seller relationship and greatly enhances opportunities for future orders. Being on-site when an installation is underway, or shortly thereafter, lets the customer know that the sales engineer’s interest didn’t end when the order was closed. When the installation is complete, the sales engineer should audit the installation, including the appropriate installation and customer staff. This will ensure that the product is productive and the customer is satisfied with the installation. If the buyer is not getting full efficiency from the equipment, be prepared to offer advice or bring in technical backup. Staying ahead of problems is the best way to keep customers satisfied, and spending time on-site with new equipment is the best way to avoid them. On some manufacturing technology orders, customers request that a specified number of customer parts must be manufactured on the equipment to prove capability. This may take place 1) at the builder’s (or distributor’s) facility, 2) at the customer’s facility or 3) both. In the majority of cases the customer is trying to prove the manufacturing process capability of the machine based on a statistical sample of parts. Therefore, it is recommended that the sales engineer be familiar with the basics of Statistical Process Control (SPC) discussed in the Machine Tool Accuracy” section of Volume II. Machine runoff acceptance criteria should be agreed upon during the order negotiation stage and documented in the order or order confirmation. Be aware that when a runoff is completed in a customer’s facility that is QS-9000 certified certain documentation procedures must be followed. A machine runoff acceptance form must be signed by seller and buyer and copies retained by both parties. If delivery or installation delays are the fault of the supplier it is customary to renegotiate the payment terms. Warranty & Preventative Maintenance Issues Machine warranty misunderstandings can be a major impediment to good customer relations. Before the machine installation is complete, the sales engineer should review the terms of the warranty with the customer. Typically, a standard warranty covers machine malfunctions and manufacturing defects for the stated warranty period. Since the majority of new machine warranty requests are based on such things as programming and operator-related crashes it is critical that the procedure for handling these non-warranty situations be discussed before they occur. One method followed by successful sales engineers is to schedule a time with the customer to review the builder’s preventative maintenance schedule. Do not leave this important task to the customer alone, as they may never get around to it. It is critical that



the benefits of following the PM schedule be explained to the customer and the possible effects on the machine warranty. It is best to have this review before completing the machine installation. However, if after the machine is in production it is observed that the customer is not performing the recommended PM, it is advisable to review the benefits again. Handling Common Complaints Promptly responding to complaints is always important, but particularly in the early stages of a relationship-building effort. Complaints most often occur for one or more of the following reasons:

Poor product performance Improper product use Non-compliance with terms of sale

Poor product performance is a situation that must be looked into immediately and corrected as quickly as possible. If the buyer-seller relationship is to continue and develop, solutions must be sought and applied immediately, regardless of what it takes. However, poor performance is not always the fault of the product. Sometimes the cause can be improper or incorrect use. The sales engineer’s task is to identify the issues, manage the resources and provide leadership in the situation. Some builders and distributors handle these problems through their sales engineers while other companies have troubleshooting teams working independently or in conjunction with their sales representatives. Therefore, sales engineers must take the initiative in maintaining good working relationships with service and applications staff. Complaints cannot be completely eliminated, but can be reduced in number by careful planning and attention to detail. When complaints do occur, they should be approached and evaluated in an intelligent, organized manner that:

Examines the situation Searches out an answer Takes action to resolve

1. Examine the situation. Listen carefully and courteously to the complaint, empathizing with the customer being sure to offer an apology. Maintain composure and avoid any antagonism or an attitude that implies the customer is not being entirely straightforward. Make certain that there really is a problem and not improper use or application. The natural tendency, by all parties, is to shift blame. And, making assumptions is a big error for the sales engineer. Search out all available information so that objective evaluations can be made and the appropriate steps taken. The “Tooling” and “Machine Tool Design” chapters in Volume II can help sort out machine and application problems.



Keep customers promptly informed of all activity, otherwise, they can interpret lack of communication as lack of action. 2. Search out answers. When all the information has been gathered and evaluated, develop a solution that builder, distributor and buyer can accept. A fair and decisive plan of action can strengthen the relationship and is usually all a customer expects. Offer a full explanation of the proposed solution so that the customer can be the judge of its credibility. 3. Take action and settle claims. In many cases, the customer will agree to a settlement less than originally requested. Many times customers simply want the supplier to admit an error. Assuming ownership of problems may be the real issue. Be creative in offering settlements. Some possible settlements to legitimate claims include:

Replace the product at no charge. Charge only for replacement parts and absorb the labor. Share replacement costs. Provide a new product at a greatly discounted price. Offer a discounted price on a future purchase.

The recommended solution must be thoroughly understood by the customer who should be able to accept it as fair. Following through on the agreed settlement helps reestablish and strengthen the relationship. It will prove that the distributor and builder want their customers satisfied and will do whatever it takes. It’s the sales engineer’s job to follow through and see to it that all promises are kept. They must educate the user about the product in order to avoid future claims.

Unfair claims. Occasionally, an unfair claim is made and must be handled very cautiously. In these cases, sales management or factory representatives may be involved. The sales engineer should address the following issues to maintain a balanced decision:

Has this customer made a similar claim in the past? What is involved in terms of dollar value and future business? Will a challenge to the claim affect other customers?

Two courses of action are involved here: treat the claim as legitimate or confront the buyer. Occasionally, customers are lost in these disputes. Be sure that whatever the final outcome, the sales engineer has acted with fairness and integrity.



Customer Satisfaction Programs Only 1 in 20 customers with a complaint will ever voice that complaint to the supplier. However, they will tell other friends and associates in the industry. How can the sales engineer deal with this unseen problem? The answer lies in asking customers, on a regular basis, about their satisfaction with the product and supplier. First, the sales engineer should do this informally. Second, an organized approach to customer satisfaction through the use of telemarketing and surveys can be extremely valuable. The sales engineer should never view an organized customer satisfaction program as management’s lack of confidence in their performance. All customer satisfaction measurement should be endorsed by the sales engineer as an effective tool to learn about otherwise unspoken complaints. The sales engineer stands to gain the most in learning how customers view them, their companies and their products. Customer Requested Machine Audits In today’s business environment it is frequently the customer who is requesting the supplier to measure supplier performance. In fact, QS-9000 (an automotive version of ISO-9000) mandates that suppliers measure customer satisfaction. Customer-mandated customer satisfaction measurement may be included in the terms of a formal buyer/seller partnership agreement. In any case, customers may request a post installation performance audit on the equipment after it has been installed. When a performance audit is requested, the sales engineer should first clarify the customer’s expectations. If this was not done as part of the purchase agreement, it must now be done before the audit begins. Clarify the procedures, specifications, tools and gages to be used and the expected results. Keep in mind that while customers may be verifying builder specs and advertising claims, the ultimate goal of any machine performance audit is customer satisfaction.

NOTES



4.9 Review Questions

These review questions are provided for study purposes only and are not on the CMTSE certification exam. Correctly answering these questions does not guarantee a passing exam grade.

1. Which is not a basic element of the communication process?

1. Sender 2. Signal 3. Message 4. Receiver

2. Your product is poorly suited, but another supplier’s product is an excellent

application fit. Which is the best strategy? 1. Steer the customer to the right product, even if a competitor supplies it. 2. Continue to promote your product based on the assumption that service is more

important than application. 3. Try to convince the customer to redesign their workpiece to better fit your

equipment. 4. Notify the competitor and ask for a referral fee to divulge the customer’s name.

3. A sales presentation should be bottom-line focused when presenting to which type of

customer? 1. Controller 2. Doer 3. Talker 4. Plodder

4. Prior to making a sales call, what would be the best action?

1. Call the customer to determine the current political situation. 2. Determine, with your manager, current pricing flexibility. 3. Check the service records on previously sold machines. 4. Determine the goal or objective for the call.

5. What incorporates accepted techniques to use in the approach mode?

1. Statement, demonstration, and/or question. 2. Handout, personal introduction, and/or question. 3. Brochure review, application review, and/or personal stories. 4. Personal introduction, question, and/or financial review.



6. A consultative selling strategy does not focus on:

1. customer profitability. 2. selling price. 3. return on investment. 4. financial justification methods.

7. Partnering trends by customers generally do not include which strategic goal?

1. Improved quality and focus from suppliers. 2. Sharing of capital expense budgets. 3. Reduction in number of suppliers. 4. Lower overall procurement costs.

8. Successful sales people understand that customers relate better when they:

1. mirror the same world-view as the customer. 2. share confidential information as a sign of trust. 3. never give any ground during negotiations. 4. are able to talk about any subject.

9. It is best to cease a laptop computer presentation and take a different presentation

approach when the customer: 1. asks a question about pricing. 2. asks to include a coworker in the presentation. 3. stops paying attention to the presentation. 4. wants to control the pointing device.

10. A sales engineer’s attitude regarding customer objections should be to:

1. welcome objections as a positive way to discover additional needs. 2. recognize that customers’ objections must be tolerated if the order is to be

obtained. 3. arm yourself with a response to every possible objection. 4. maintain an aggressive style and “sell-through” the objections.

11. The heart of an effective proposal should be:

1. delivery and availability. 2. features and benefits. 3. equipment and option pricing. 4. addressing customer needs.

12. Which of the following would be the most beneficial when responding to customer

objections? 1. Clarify that your product is better than the competitors. 2. Bypass minor objections and move to close the order. 3. Immediately arrange a conference call to the factory. 4. Define the scope and difficulty of the objection.



13. During negotiations when is the best time to discuss selling price? 1. When the customer first mentions it. 2. As soon as possible. 3. After the application or time studies are presented. 4. When the customer understands the product value.

14. What would the sales engineer avoid during the final stages of a sale?

1. Overcoming objections. 2. Closing the order. 3. Presenting features. 4. Asking for action.

15. A “trial close” is a good way of:

1. identifying the competition. 2. establishing the product specifications. 3. flushing out undisclosed objections. 4. establishing your position in the negotiating process.

16. When faced with a serious customer equipment installation service issue which would

be least helpful? 1. Treating the customer with respect and genuine concern. 2. Apologizing for any inconvenience on behalf of the manufacturer and/or

distributor. 3. Immediately getting all the details and document the situation. 4. Telling the customer that the installers will be held responsible.



ANSWERS TO REVIEW QUESTIONS 1. (2) 2. (1) 3. (2) 4. (4) 5. (1) 6. (2) 7. (2) 8. (1) 9. (3) 10. (1) 11. (4) 12. (4) 13. (4) 14. (3) 15. (3) 16. (4)



Reference Books & Suggested Reading

Prepared By Title & Author

1. HIGH ENERGY SELLING, Carl Henry, 1990, Executive Press, High Point, North

Carolina (910) 889-3010 2. CONSULTATIVE SELLING, Fourth Edition, Mack Cribbin, 1990, amacom, New

York, New York (212) 903-8315 3. INTEGRITY SELLING, Ron Willingham, 1989, Doubleday, New York, New York

(212) 354-6500 4. THE NEGOTIATING GAME, Revised Edition, Chester L. Karrass, 1994, Harper

Business Publishers, New York, New York (800) 242-7737 5. BUSINESS MARKETING, A Managerial Approach, Sixth Edition, Robert W. Haas,

Ph.D., 1995, South-Western College Publishing, Cincinnati, Ohio (513) 271-8811 6. ABC’S OF SELLING, Fourth Edition, Charles Futrell, 1993, Irwin, Burr Ridge,

Illinois (708) 789-4000 7. SELLING, Building Partnerships, Second Edition, Weitz, Castleberry & Tanner,

1995, Irwin, Burr Ridge, Illinois (708) 789-4000 8. AMT MT Sales Fundamentals Workshop, More information is available at

www.amtonline.org/education/salesworkshops

Visit www.Amazon.com to search for these and other reference materials on selling.



Notes

the selling process · the selling process 4.1 introduction 4.2 determining customer needs 4.3...

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