MSU ABM 222 Final Exam Review

Five rules of negotiations-Rule One: Know the goal of the negotiation

- Be specific! • Be clear about your goals going into the meeting - clear mini-max strategy • When the other party is not specific, you get a vague answer, make them nail down details and don't let go until you have them. • When the other side says "we'll talk about this later," • get a date and time for that appointment. • If they say "I can't afford that price," • find out what price they can afford.

Steps in preparing to respond to an objection LAER Model

- Listen - Acknowledge - Explore - Respond

Five rules of negotiations-Rule Three: Avoid direct disagreement

- Never ask a "No" question. • The ideal state of negotiations is that of mutual problem solving; this requires an environment devoid of hostility. • Seek common resolutions rather than points of contention. • Don't ask a question that you know the answer will be "No". Rephrase it into a "Yes" question. • The problem with "no" questions is that they establish a precedent wherein the other side gets comfortable disagreeing with you.

Understand the reseller buying considerations

- When trade salespeople sell to retailers they are competing for space on shelves or floor space. · Ex: Sunset selling tomatoes to Meijer. - Industrial salespeople on the other hand compete for share of mind. · Ex: Goodyear selling tires to John Deere Equipment Manufacturer.

Planning Location and Time Allotment

- Win-Win Scenario: • Neutral meeting location • No time limitations - Win-Lose Scenario: • Meeting location that favors one party • Time constraints lead to non-agreements

Describe characteristics of a good sales call opening

-Create a positive professional impression -Get the prospects attention -Arouse their interest in your product/services -Build rapport - establish credibility -Bridge to a discussion of needs

Why is probing important

-Helps uncover the prospects needs - Two types of probing: - Open ended questions - encourage prospect to open up and reveal information Close ended questions - yes/no responses.

The salespersons creditability as a long term supplier or partner to the customers business directly depends on what the salesperson uncovers based on the questions they ask

-The needs of the customer -The problems the customer wants solved -The goals the customer wants achieved: profit/growth -The way the customer prefers to run their business -The way the customer wants the salesperson to interact with employees -Opportunities the customer wants to pursue

The Seven Principles of Selling Internally:

1. Seek out and receive internal support. 2. Appeal to the higher objective - End results --It is about the whole organization . 3. Probe effectively to uncover the needs of the person you are selling to within the firm. 4. Demonstrate how your solution to the issue benefits the internal customer and end user. 5. Never personalize the issue. 6. Be prepared to negotiate. 7. Sales Support

Define payment terms:s: 2/10 n/30, 2/10 n30 EO

2/10 n30- 2% discount if payed in 10 days or net in 30 days 2/10 n30 EOM- 30 days to pay EOM- End of month -Terms specify the time allowed for the buyer to pay off the due.

Trade Discount:

A discount on retail price of a product that is agreed upon by both parties.

Resellers:

A firm or individual within the distribution channel that purchases the product/service with the intent to sell rather than consume. • In-between the manufacturer and the end user. • Includes wholesalers, retailers, and distributors. • Fight for both sales space on the shelf and mind space. • Top sales performers receive the best and most space.

Selling Price-

Amount a retailer sells for a product

Five rules of negotiations-Rule Three: Avoid direct disagreement

Avoid direct disagreement - Never ask a "No" question. • The ideal state of negotiations is that of mutual problem solving; this requires an environment devoid of hostility. • Seek common resolutions rather than points of contention. • Don't ask a question that you know the answer will be "No". Rephrase it into a "Yes" question. • The problem with "no" questions is that they establish a precedent wherein the other side gets comfortable disagreeing with you.

When to close

BEGIN with the END in mind. Each step taken in a sales call should be leading the seller towards partnering with the prospect. Keep focused on your purpose during each step in the sales process • With each prospect interaction, remind yourself of where you want to go and focus your efforts on moving in that direction. • Without knowing where you are going, you may find yourself taking steps that lead you away from closing the sale.

Negotiating

Bargaining process between two or more parties seeking to discover a common ground and reach an agreement to settle a matter of mutual concern or resolve a conflict.

Five rules of negotiations-Rule Two: Avoid direct disagreement

Be on their side - Never negotiate in terms of "Me". • Negotiation is persuading someone to give up what they want in favor of giving you what you want; talking about yourself will only push them more and more against your way of thinking. • Make them aware that you are fully engaged in their ideas, their feelings, and their needs and they will be far more receptive to yours. • Use terms that include the other person such as "they/them" rather than "I/me". • Cover letter: • After talking to you at the Michigan State University Summer Job and Internship Fair on March 19th and doing some further research on GLCC I believe that it would be a great place to learn new on-the-job skills • Through being the campus rep, I believe I can gain a superior and more advanced knowledge of the sales process through the hands-on experience.

five phases of building a partnership- 5) Dissolution

Dissolution occurs when one of the partners leaves the business due to: • personal relationships. • Death. • Natural market/preference changes. • Failing to monitor competitors. • Complacency!!!! 1. Be able to discuss Territory Management in the sales process and the various aspects of territory management, setting goals. Territory Management: • a process that defines geographical sales territories based on market factors and customer intelligence. • Successful territory managers must balance their lifestyle objectives with their career goals. • Territory managers typically work remotely, and therefore must manage their time efficiently. Successful salespeople use a systematic "self-management process": • 1. Set Goals • 2. Design the sales strategy to allocate resources • 3. Follow a Time Management Process/Plan • 4. Evaluate sales performance

Define the five major types of objections-Need:

Does not need or believe that they need your offerings. • I don't need that. • I need more information before purchasing. • I am just not interested.

Mark-up dollars-

Dollar value added to the cost of goods to arrive at selling price.

five phases of building a partnership- 3) Expansion

Expanding your share of a buyers business - Generating repeat orders: • Be present at buying time - share of miterm-83nd. • Service "beyond the call of duty" but not more than you can realistically maintain. • Provide expert guidance . • Be the consultant. • Help out with the buyer's special activities (Goodwill). Upgrading or Upselling: • Switching the customer to an upgraded or newer product. • Continuously improving increases customer satisfaction/ensures customer retention. Full-line Selling: • Selling a full-line of products related to the customers initial product purchase. • Category Management. Cross-selling: • Selling products to the buyer that are not associated with the initial product. • Improves customer loyalty. • Ex: initially selling a customer life insurance and later selling the same customer auto insurance. Selling the farmer seed and then crop protection products. TQM - Total Quality Management: • Customer and employee focused, process-centered, integrated systems, strategic and systematic, continuous improvement, fact-based decision making, and effective communications.

FOB shipping point:

Freight on Board Shipping; buyer is responsible for cost and labilities once goods are shipped.

Guaranteed Price:

If price falls after purchase, difference is refunded - other terms and conditions that affect this are shipping cost.

Define the five major types of objections- Time:

Priority levels of the buyer. • I need more time to think about it. I will have to meet with my boss to further discuss

-List Price:

Published price from which buyers may receive discounts

Grosse margin dollars-

Retail selling price less the products wholesale price

Five rules of negotiations-Rule Five: Sell from the end.

Sell from the end. • That is, sell outcomes/solutions instead of products. • Always make your case from the angle of the outcome or solution, always make this outcome in terms of the other person and always make it glowingly positive. • If you want a raise, don't sell how much money you want. • Sell how much money you make for the company. That's an outcome of your raise. If you want to sell your product, don't sell it, sell what it does.

Cost of Goods-

Tell the retailer value of inventory cost, How much money is invested in inventory

Cost-out-of-stock-

The amount of profit loss due to insufficient supply to meet demand.

Define the five major types of objections-Product: The benefits that specific prospect receives from the product/service features. • I do not clearly understand the purpose. • I don't understand how I will benefit from that feature.

The benefits that specific prospect receives from the product/service features. • I do not clearly understand the purpose. • I don't understand how I will benefit from that feature.

Define the five major types of objections- Price:

The buyers financial situation vs the value of the product/service. • The value is not greater than the cost incurred. • I do not have the money at this time. § Sell on value, not on price § Establish the value before discussing price

Share of sales-

The contribution to sales, Brand CPW / Total product category CPW

Define the five major types of objections Source:

Where the product/service is coming from or who it is being offered by. • That company does not have a good reputation. • I do not trust the person offering the product.

Product features

are characteristics of a product that describe its appearance, components, and capabilities. · Tangible items and undeniable facts that can be proven - No one can argue a fact/feature · You can hear, see, smell, feel facts

FOB destination:

buyer is not responsible until they get there goods

-Quantity discount:

incentive offered to a buyer that results in a decreased cost per unit of goods purchased in greater numbers.

Product benefit

is the value that customers realize from a product/service. • Expressed in terms of the prospect's needs, expectations, requirements and motivations. • Benefits are what the customer gains by using the product

• Marketing support

programming

Suggested Retail Price:

salesperson should find out what price the reseller will sell the product/service for.

Define the Halo Effect

· A cognitive bias in which one quality tends to provide a "halo" over our perspective on an entire organization, person, or brand. · (Good First Impression) Help it work for you and your organization, vs. against you

Be able to explain productive listening

· Listen to what the customer says but more important, listen for how they say it. · Facts · Feelings · Non-Verbal Cues

External

· Sales · Margin · Consumer · Service

Internal

· Sales · Spend · Programming · Feedback

Defining closing

· The Closing of the sales call does not always result in the sale of a product/service. · The sales call objective could be; · To be granted a follow up meeting · Have the prospect start a product evaluation/product testing · Receive approval to conduct a site survey · Negotiate final purchase terms

Understand the Value/Benefit Equation Proposition/Risk

· The Value/Benefit Proposition is built entirely on understanding the benefits that the customer is going to realize from using a product/service. A salesperson must understand the needs of the customer along with the long-term implications of using the product/service to effectively get their message across.

Define the "rule of twelve"

· The first twelve inches from the shoulders up - Smile, make eye contact, well groomed. · The first twelve steps a person takes project confidence. The first twelve words a person states include 'Thank you' - Be friendly and sincere - make your greeting about THEM.

Be able to describe the presentation process

· To show/demonstrate to the prospect how the product, service or idea works. · To communicate to the prospect how the product's features can benefit him or her - highlighting the features and benefits that are important to the prospect. · To entice the prospect so much that he or she has to have the product. Step 1: Summarize the Problem • Inquire if your interpretation is correct Step 2: Outline the Solution • Include a key feature/benefit Step 3: Present Selling Points Selling points are reasons why a prospect should buy from you

Successful salespeople use a systematic "self-management process":

• 1. Set Goals • 2. Design the sales strategy to allocate resources • 3. Follow a Time Management Process/Plan • 4. Evaluate sales performance

Special Feature Close

• Adding a special feature if the purchase is immediately executed - limited time offer • Beware: Do not promise more than you can deliver!!

Describe the seven ways of handling objections-3) Compensation/Admission

• Agree with objection BUT further explain how the benefits exceed the objection. • Express the value.

3.) Simple Return on Investment - ROI

• Annual profit/savings on investment. • Evaluates the efficiency of an investment.

Describe the seven ways of handling objections-7) Postpone

• Ask permission to address later in presentation. • Works well with objections regarding price.

Assumption Close

• Assume prospect/customer is willing to purchase and proceed to finalize details • Repeat customers and straight rebuys

5.) Net Present Value (Large capital purchases)

• Calculation of the current value of estimated cash flows, discounted at the given interest rate. • Determines how much an investment is currently worth, based on expected earnings, although accuracy is entirely dependent on the accuracy of the cash flow table.

Balance Sheet Method

• Clearly list out the buyers pros and cons of making the purchase • Only helpful when the value is greater than the cost to the buyer! When in doubt about how the sales process is going attempt a:Trial Close • Low pressure probe to determine the prospects willingness to purchase. • Ex: "Are there any more issues you would like to address?"

Image - Programming/service

• Company history/reputation • Turnaround - service

2)Comparative Cost-Benefit Analysis

• Comparing the net benefit of using one product/service verse another. • Select the product/service with the greatest benefit. • Consider pricing and terms/conditions in comparison.

Advantages of a Sales Career:

• Compensation potential • Challenge • Responsibility • Flexibility in work activities/work schedule • Rewards from making a tough sale • Learning the business from the bottom up • Opportunity for senior management positions

Describe the seven ways of handling objections-4) Feel-Felt-Found

• Demonstrate how others had similar views before trying out the product/service. • Offer trial periods.

Describe the seven ways of handling objections-2) Indirect Denial

• Deny the objection with a soft response.Describe the seven ways of handling objections- Indirect Denial • Evidence must be provided to reinforce response.

five phases of building a partnership- 1)Building Trust

• Dependability - The buyers perception that the salesperson, the selling company and the product in question will live up to the promises made. • Showing up early • Showing up at convenient times for the buyer • Following through on promised information or materials • Prior experience & training • Third party references • Product demonstrations, plant tours etc.

five phases of building a partnership-2)Exploration

• Each party must develop clear expectations from the beginning. • Direct communication leads to direction. Set the Right Expectations • Know what they expect. • Monitor the ordering to ensure everything runs smooth. • Ensure proper initial use. • Handle customer complaints.

1)Cost-Benefit Analysis

• Establish the costs AND benefits of using the product/service. • Is the profit/savings > costs?

Selecting Individuals Involved in Negotiation Process

• Everyone must be clear on objectives. • Seller wants to have the same number of team members as the buyer. • Everyone involved needs to know their distinct role. Behavior Types • Competing: Assertive and uncooperative. • Accommodating: Obeys to everyone, very cooperative. • Avoiding: Refuses to address issues. Behavior Types • Compromising: "Middle ground" of cooperative and assertive. • Will look for win-win solutions, but the solution may not maximize benefits for both parties. • Collaborating: Assertive and cooperative. • Strives to find the best solution for both parties.

MOTIVATING the Reseller: Contests:

• Exotic trips • Special promotions/merchandise • Entertainment/sporting events Push Money: • Sales promotion incentive funds Additional monies offered to resellers for pushing product

One Time Purchase Strategy

• Go for it!! • One-time interactions do not need to consider long-term implications.

Difference between selling to resellers vs. end users and the three main questions re-sellers are interested in.

• How much will it sell? - Quantity • At what profit will it sell? -Margin How quickly and easily will it sell?- Turnover

Trade Promotions/Allowances:

• Increasing the retailer's inventory, assuming that the "stock push" will compel the retailer to lower prices or engage in other efforts to sell more. • Paying/supporting the retailer for selling efforts, such as building displays or increasing shelf space. • Providing payments for increased sales or share of sales through the retailer at the end of a period - usually a year. These volume "commitments" by the retailers.

Choice Close

• Indecisive on option A or B • Use when multiple objections have been successfully handled • Ex: "Would you like to purchase in quantities of 12 or 24?"

Understand the traits and behaviors of successful salespeople in responding to objections. Successfully responding to objections:

• Knowing every detail and feature of your product/service is important but getting to the true core of the prospect's objection is equally crucial. • Respectfully ask your buyer open-ended questions that probe deeper into the true core of their objection. • With an understanding of your prospect's wants and needs and your product's offerings/abilities, you are ready to tackle any objection based on budget, authority, need, time, and value.

Define and be able to do a simple calculation for: payback period

• Length of time to recover the cost of the investment. $ Investment / $ Annual Profit or Savings

4.) Payback Period

• Length of time to recover the cost of the investment. • $ Investment / $ Annual Profit or Savings

Describe the seven ways of handling objections-6) Pass Up

• Let the buyer talk, acknowledge their opinion, and move onto another topic. • Only use when the information the buyer presents is accurate. You need to continue to show why benefits outweigh the issue.

Disadvantages of a Sales Career:

• Limited supervision • Potential conflict between customer and company demands • Depression from lost sales • Discomfort from asking customers to buy • Negative stereotype Long hours/busy seasons

Trial Close

• Low pressure probe to determine the prospects willingness to purchase. • Ex: "Are there any more issues you would like to address?"

When to use a trial close

• Low pressure probe to determine the prospects willingness to purchase. • Ex: "Are there any more issues you would like to address?"

Common departments in internal sales:

• Manufacturing • Credit • Shipping • Administrative • Customer Service Marketing, Sales, andCustomer Service (all must work closely together)

Five rules of negotiations-Rule Four: Power = Information + Alternatives

• Negotiation power goes to those who listen and learn. It's critical to ask questions and get as much relevant information as you can throughout the negotiation process. With information in your pocket, you have power. • Gather information by asking open-ended questions to uncover the other parties needs and interests, and building long term relationships. • The knowledge you have, and the alternatives you have to buying from, or selling to, the other side, is what drives your power in the negotiation.

Multiple Purchase Strategy

• Negotiations often occur because members from both parties are seeking a continued long-term relationship, rather than switching to competitors. • Weigh the pros and cons of getting a good deal today verse what you may want in the future.

Before holding business negotiations, it is important to plan:

• Objectives • Location • Time allotment • Individuals involved

five phases of building a partnership- 4) Commitment

• Occurs when there is an implied pledge to continue the relationship for the mutual benefit of both parties • Seller becomes the "Preferred Supplier" Securing the Commitment: • Commitment must be complete by both parties. • All employees from upper management to line workers and support staff are empowered to help the buyer within their expertise area. • Communication. • The salesperson now takes a more proactive stance in communicating between the companies. Salesperson becomes the agent of change: • Leadership. • Positioning changes. • Resource determination. • Sets strategy and time frame.

Be able to discuss the Strategic Profit Model

• Outline of resellers cost to show tradeoff between profit margin and inventory turnover: o Net sales o Cost of good sold o Gross Profit Margin o Net Profit Margin o Inventory turnover o Gross margin ROI

Three types of sales goals:

• Performance Goals (Relates to outcomes) • Activity Goals (Behavioral Objectives) • Conversion Goals (Measures of efficiency) Examples of Performance Goals: • Number of new accounts • Total sales revenue -Sales in units

Net Sales - Feedback

• Previous sales history • Market share Net Profit Margin - Spend • Pricing terms • Available discounts (Trade/Quantity)

Benefit Summary

• Review major selling points of the presentation - features and benefits • Results in asking for the order

Inventory Turnover - Feedback • Sales history • Third party proof

• Sales history • Third party proof

Common negotiations amongst Business to Business sales:

• Service • Price • Delivery Terms and Conditions • Credit Terms • Performance Guarantees • Communication amongst parties

Direct Request

• Simply asking for the order. • Drivers respond well to this closing technique.

Negotiation Objectives:

• TARGET POSITION: What you hope to achieve. • MINIMUM POSITION: The absolute minimum you will accept. • OPENING POSITION: What is your starting point/offer. Planning Negotiation Objectives - MINI-MAX STRATEGY • What is the minimum I can accept? • What is the maximum that I can realistically ask? • What is the maximum I can give up? • What is the least I can offer?

Five rules of negotiations-Rule Five: Sell from the end.

• That is, sell outcomes/solutions instead of products. • Always make your case from the angle of the outcome or solution, always make this outcome in terms of the other person and always make it glowingly positive. • If you want a raise, don't sell how much money you want. • Sell how much money you make for the company. That's an outcome of your raise. If you want to sell your product, don't sell it, sell what it does.

What characteristics you should portray when closing?

• The closing should be properly timed based on verbal and nonverbal cues from the prospective buyer.

Describe the seven ways of handling objections-5) Boomerang Method

• Use when the buyer misunderstands the benefits. • Turn the objection into a reason for acting immediately.

Probing Method

• Used after an unsuccessful direct close • Asking open ended questions to find the reason for previous objections • Close again with a direct close technique

Describe the seven ways of handling objections-1)Direct Denial

• Used when misinformation occurs. • Rebuttal must include evidence as to why the information is inaccurate.

Be able to discuss Territory Management in the sales process and the various aspects of territory management, setting goals

• a process that defines geographical sales territories based on market factors and customer intelligence. • Successful territory managers must balance their lifestyle objectives with their career goals. • Territory managers typically work remotely, and therefore must manage their time efficiently.

Understanding the meaning of selling internally and the various aspects of it

• selling an idea to employees of the firm who focus exclusively on the company's products/services with the end goal of increasing sales at a manageable rate. Employees must convey the needs of the prospect/customer along with ideas on how the firm can meet those needs to people within the organization.