Last month I did an all-day sales training session for a major wholesaler. There were 30 showroom sales consultants in attendance, plus the owners and top management.
I had the opportunity to tour their flagship showroom and to spend some time with a number of their salespeople. These folks are doing showrooms right - everything but the gross profit margin level! The plumbing trades are still dictating pricing. Consequently, gross profit margins were in the 25%-30% range (this varied by location).
After that I spent several days consulting for a smaller, one-showroom, three-salespeople company. Once again, this was a beautifully built-out showroom but generating low margins - and the bulk of this company’s sales are to homeowners.
In both cases there was too much concern for price, price, price and not enough concern for value. I can’t emphasize enough that when you sell (yes, I mean sell) value price becomes less important in the minds of your clients. Certainly price will always be one of the main concerns with your clients, but it shouldn’t be the biggest and most prominent concern.
Every showroom can offer three things: quality, service and price. It is impossible to give the best of all three. If your clients want great quality and service (and most do), then you can’t extend the lowest pricing. If pricing is the most important thing, then you have to take away some quality or service. This is a fact of business and you need to learn how to explain this to your customers - including the plumbing trade.
Here’s another fact of business: operating a showroom is more costly (expense-wise) than operating a wholesale business. The cost of operating a wholesale business is in the 20%+/- range. The cost of operating a showroom is a good 10% higher. I recognize that these expense percentages will vary depending on the size of the operation, the product mix and other variables. But, and this is a big but, wholesalers that operate showrooms tend to extend the same deep discounts to the plumbing trade for both the wholesale and the showroom sales. That just doesn’t make good business sense, does it?
In other words, the plumbing trades get the 40%+/- discount off manufacturer’s list prices on the Kohler, American Standard, Delta, Moen, etc. for both warehouse and showroom sales. If the cost of operating a showroom is 10%+/- more, shouldn’t the discounts on these same products be 30%+/- when sold through the showroom? I certainly think so.
Plus, the plumbers can make more when the discount is less. I’ve explained this in past articles. Please allow me to go through it one more time.
Pricing Example For PlumbersExample #1- Using the standard 40% discount:
Total sale at list price……$30,000
Net price to the plumber…$18,000
Plumbers mark-up on product …10%
Plumbers profit on product…$1,800
Example #2 - Using a showroom discount of 30%:
Total sale at list price……$30,000
Net price to the plumber…$21,000
Plumbers mark-up on product…10%
Plumbers profit on product…$2,100
The plumber makes $300 more.
If you meet with the plumbers that use your showroom (one at a time, never in a group) and you explain that the cost of operating the showroom is considerably higher than the wholesale side - and you show them the above exercise - you should be able to convince them that this is a win-win situation for everyone concerned.
Learn To BragBut now, back to what the title of this article is about: Learning tosell value. In the all-day Selling Skills workshop that I do, we spend a lot of time on this very subject. The first thing I do is impress upon sales consultants the importance of learning how to “brag” about themselves and their showrooms. Hey, if you don’t brag about you, who will?
Here are two exercises I’d like you to do. First, write down five things on why a client should/would want to buy from you (not your company - you)!
YOUR PERSONAL VALUE POINTS
Did you have any of these: professional, committed, compassionate, good rapport builder, good listener, experienced, sincere, great presentation skills, good qualifier, creative problem solver, good follow-through, well-organized, able to focus on the customer, good product knowledge, reliable, good communicator, charismatic, wants to help, good selling skills.
Pick the characteristics that apply to you and start articulating them to your prospects.
Now, list five things on why a prospect should buy from your company:
Your company’s value
How many of these did you have: good reputation, well-trained staff, great products, years in business, family-owned, community involvement, well-managed, after the sale service, involved in the industry, owner’s commitment to excellence, here for the long haul, innovative, job-site delivery, convenient location and hours, team support, great inventories, commitment to continuing education.
Every time you articulate one of these value points about yourself and your company, you’ve added value and made price a little less important. In other words, make value the focal point - not price.
Learning to weave these value points into your conversation with prospects isn’t easy. You have to do it in a way that isn’t obnoxious or makes you appear to be arrogant. But weave them in - you must! I guarantee your competition doesn’t do it (unless they too read and heed this article).
Sell Benefits - Not FeaturesOr put another way: Features Tell - Benefits Sell
When you sell benefits, you’re focusing on your prospects and their needs - what’s of interest to them. When you sell features, you’re focusing on your products and services. If the benefit of your product is of no value to your prospects, they certainly don’t need the feature, no matter what you think.
Here’s another exercise I’d like you to do. Fill in the benefits side of the
features listed. The benefits should explain why the features may be important
to the client. If you only recite features and don’t explain the benefits to
the prospect, you’ll be missing the most important part of the formula. So use
as many words as necessary to explain what the benefits of each listed feature
PVD finish on faucets…Benefit to the client?
Thermostatically controlled shower valve…Benefit to the client?
1/4-turn ceramic disc valve…Benefit to the client?
Pressure-balance valve…Benefit to the client?
2-speed whirlpool motor…Benefit to the client?
When you articulate (sell) benefits, you are adding value. When you add value, what happens to the price? That’s right, it becomes less important.
Make a list of as many product features and benefits as possible. Your showroom might even decide to place some professionally done signage near certain products to point out the important benefits.
If you’ve been reading my articles for any length of time, you know how passionate I am about making good gross profit margins on showroom sales. Your owners didn’t spend all that money to build out great-looking showrooms just to grow sales. They also did it to realize a good return on their investment. (At least I hope that’s why they spent all that money.)
The commitment to improve gross profit margins has to start at the top. Owners and managers must have the intestinal fortitude to face the plumbers and explain why discounting on showroom sales has to be different than the wholesale side. And these owners and managers have to decide that profitable sales are more important than volume of sales. When this happens, margins will move up to the 35%-40%+ range where they should be.
Good selling and start bragging!