Get 2X better at Sales & Negotiations by understanding this 3 level "Positioning Pyramid".
Positioning Let’s talk about positioning. Of all the factors we discuss during our sales negotiation training sessions with clients, positioning is quite possibly the most important. I love positioning because it’s the essence of building value—and increasing profit.
Every market is divided into three distinct levels. These fit on what I call the “Positioning Pyramid.” At the low end of every market, you’ll find the “A equals B” position.
This simply means that if you’re selling something that looks the same, weighs the same, operates the same, tastes the same, provides the same service—if everything about what you bring to the market is exactly the same as your competitor’s—then A equals B in every respect. Therefore, the customer absolutely has to base the buying decision on price alone! On the graphic, notice the dollar sign to the right of the pyramid. That’s because at the “A equals B” level of the market, price is everything. This is the “commodity” level of the market, and it’s not a good place to be. If you, your products or services, or your company is perceived at this level, you have no power, not one ounce of leverage, and you will need every trick in the book just to maintain even low-profit margins.
Let’s look at the next level. At this level of the market, the perception is that “A is greater than B.”
It could be that you offer the customer better quality. Your response time may be faster. For whatever reason, people like your product—it’s looks, shape, size, speed, great service. Thus, A is perceived as being greater than B. At this level of the market, price is still a factor, but not the only factor. For value has entered the picture. The decision to do business is based on “perception of value.”
Notice that in the graphic, the dollar sign is smaller, and value gets equal billing. Smart salespeople and sales managers are very skill- ful at moving themselves, their products and services, and their companies out of the “A = B” category and into the “A > B” category in the minds of their customers.
Business markets tend to mature over time. As a result, many sales- people view themselves as selling something that’s becoming just another commodity. That’s not true! Salespeople who understand and can communicate positioning are not perceived at the commodity level by their customers. They not only sell quantity; they sell with good margins.
Look for a marriage of business processes -- something no one has thought of to increase value in a way that isn’t easily copied by the competition. Or, if it can be copied by the competition, they’re going to be a day late and a dollar short.
Here’s an interesting side note: When you’re confronting price, cost justifications just don’t work anymore. The days of poor mouthing and whining about your costs and your troubles are over. Buyers don’t want to hear it. In today’s economy, there’s got to be a value in the equation, especially with large accounts. Creating value just makes more sense to people. It’s a pull instead of a push. It accomplishes the same outcome, but with a completely different feeling.
So at the lower level of positioning, we have “A equals B.” In the middle level, we have “A is greater than B.” At the very top level of positioning we have “Sole Source.”
Sole Source is born at that moment when, in the mind of a customer, you provide something they simply can’t obtain anywhere else. Most companies do a good job of providing a sales force with the tools to move them from A=B to A>B, but that last step, to the sole source level, has to come from you!
It can be a result of personal rapport, or reputation, or of the trust that comes from knowing that even if there is a problem, a top professional will be on the situation with the best solution immediately.
Your challenge as a salesperson is to build value -- and it’s better if you build it before you get to the table. Build value by constantly enhancing your position -- working your way up the pyramid. Remember, if you go into a negotiation at the “A equals B” position and can’t rise above it, you have to sell on price, and your entire sales career will be fighting the commodity box.
If you can position yourself at the “A > B” level, you’re in an excel- lent position to boost margins and delight customers. And maybe, if you’re bright and persistent, you’ll get to a Sole Source level. If you go into a negotiation in the sole source position -- sales are good, margins are good, and Life is Good!
The essence of positioning is to redefine the perception of value in the mind of the other party
Now that we’ve established how this works, let’s get specific on how to build value. It’s a three-step process:
Step 1. Basic level
Know your positioning factors.
Be able to state clearly and precisely what distinguishes you (your product or service) in the marketplace. Start by making a list of the things that move you out of “A = B” into “A > B,” or even “SS.” The items on this list are your “positioning factors.”
A typical positioning factor list might look like this:
Quality products
Good quality control (fewer service calls, higher customer satisfac- tion rates)
Innovative R & D
Market leader
Local presence—many locations
Quick turnaround on service calls
Integrity
Best warranty
Broad platform of products
One-stop shopping
Step II. Intermediate Level
Know specifically how each of these positioning factors benefits the customer, and be able to clearly convey that value.
Here’s why this is so important: Every company has a list like the one you just made. Your competition has one, and it probably looks a lot like yours. As a matter of fact, every salesperson in your own company knows the same list of benefits, yet they have widely varying results. Why, though? What could account for that? Every salesperson in the company has the same products or services available to offer their customers, but some of those salespeople are making more and bigger sales, with higher profit margins.
This is because they are very good at getting across the “So what?” of each benefit they can offer. They don’t expect the customer to be clairvoyant, read minds, or even be exceptionally smart. Instead, They accept that it is their job to be sure that the customers under- stand exactly how each of these positioning factors will improve their lives—in many cases both personally and professionally.
Transition Phrases:
“And what that means to you is...
*“That’s important, and here’s why...”
“Here’s an example of what I mean...”
“Let’s look at how that affects your organization/division...” “Let’s look at how that improves your situation...”
Short transition Phrases:
“And as a result...” “Here’s the bottom line...” “Therefore...”
“Because of this...”
“How this translates is...”
Let’s look at a few examples. Yours will be different because of your situation, but these will give you a feel for the process of be- ing sure they understand how your features impact their world:
Feature - Quality products
Benefits - You will have fewer complaints, and fewer returns
Your repair department will be less busy, and you can reduce staff in that area
Your business will have good will
Referrals will be greater, and more glowing
Feature - Good people
Benefits - Your problems will be handled well the first time, saving you time and money
Feature - Innovative R & D
Benefits - You will be perceived on the cutting edge
You’ll always be the leader
You won’t have to worry about the latest and greatest – we’ll do that for you
Feature - Local presence—many locations
Benefits - You won’t be wasting your time driving to a distant location for service
With gas costing what it does these days, it will save you a bundle. You won’t have to wait for a home office somewhere to make decisions and get back to you
Feature - Quick turnaround on service calls
Benefits -You won’t be “out-of-service” for extended periods
Your staff won’t be sidelined waiting for equipment to return
Broad platform of products
You won’t have to take time and money searching for many different solutions
Everything will be a coherent fit, and will work seamlessly together Instead of having different locations and people to deal with re- garding billing, service, training, you’ll just one point-of-contact
Step III. Master Level
Reach the point where you can select which of these “so what’s” to use, based on the drivers of the other party. For example, if you are negotiating with someone who is driven by power, you will use very differ- ent “so what’s” than if you are dealing with someone who is driven by fairness, being liked, or looking good to his or her boss.
Our research indicates that over 80 percent of salespeople stop at the first step. Many are very good at getting across their differentiation in the marketplace, but only a few deliver the “so what’s.” Fewer still select the “so what’s” based on the drivers of the buyer.
Questions
Why is it so important that you go beyond step one? That is, why is it so important to deliver the “so what’s” based on the buyer’s drivers? And why do we stop at step one? Good questions!
Question 1: Why is it so important that you go beyond step one? If you don’t go beyond the first step, buyers just tune you out. Since every company has a list (and all the lists are good) at best they are, well, “interesting”—and even that is giving them the benefit of the doubt. There’s a problem with “interesting.” It doesn’t move anyone. It’s like channel surfing—you pass a channel and your mind says, “Interesting,” but you don’t stop; you just keep on going.
When you go to steps 2 and 3, though, your dialogue goes past “interesting”; it can even become “compelling!” “Compelling” is good. “Compelling” can cause someone to think differently about a situation. “Compelling” can move someone.
Question 2: Why do we stop at step one? Why do we stop at step one? Why don’t we go on to the “So what’s?” It happens because we live in a world made up of our own bells and whistles. One of the most common mistakes in negotiation is thinking about yourself— your needs—instead of the other person’s needs and how this negotiation can solve them. Let me show you what I mean.
Recently I went to Texarkana, Texas (where I grew up), to visit
My dad, and I wanted to take him out to a nice place to eat. Now, that’s not easy to do in Texarkana, and we ended up at a place called Raleigh Burger. Here’s the scenario: We’re in the car: I’m driving, and my dad is in the seat next to me. We pull up to the squawk box and hear a burst of static, then a crackly voice saying, “%^&%^&%^&&^%,” which is Texarkana-speak for “Welcome to Raleigh Burger. How may we make your dining experience exceptional?”
So we place our order, and I pull around to the pickup window. Now I’m looking in the window, and I can see this kid and hear him talking to the car behind us. So the kid leans into the mike and says, “Whaddya want?” The guy behind us, apparently, has never been
to a Raleigh Burger, and he says, “I hear the burgers are good.” The kid leans over [sigh] and says, ”Yeah, they’re the best in town.” And the guy behind us says, “What’s on ’em?” And the kid taking the order—you know this kid: ’terminal acne, baseball cap turned around with the bill to the back—gives this world-weary sigh, rolls his eyes, and shakes his head.
I had an “Ah-ha!” experience at the Raleigh Burger in Texarkana that day. It dawned on me that this kid thought the guy behind us was the stupidest oaf on earth—because he didn’t know what was on a Raleigh burger! You see, this kid lives in the Raleigh Burger world, where he hears every day about the meat, the special sauces, and the sesame seed buns. (I mean, how could anyone not know what’s on a Raleigh Burger?)
Now, the people in your company don’t live in the Raleigh Burger world, but what world do we live in? That’s right, we live in the ABC Company world, or the XYZ Corporation world, and we hear so much about our own bells and whistles that before long we begin to think in those terms—and guess what? It’s the way we begin to talk.
The truth is, that guy couldn’t care less what your product or service can do—the only thing he cares about is what it can do for him, how his life is going to change as a result of that product or service.
Here’s an interesting note: When you’re confronting price, cost justifications just don’t work anymore. The days of whining about your costs and your troubles are over—buyers don’t want to hear it. In today’s economy, there has to be value in the equation, especially with large accounts. Creating value just makes more sense to people, because it’s a pull instead of a push. It accomplishes the same outcome, but with a completely different feeling.
Sole Source
So at the bottom of the positioning pyramid, we have “A equals B.” In the middle level, we have “A is greater than B.” And at the very top level of positioning, we have “Sole Source.”
We said this before, but it’s so important that it bears repeating: Sole Source is born at that moment when, in the mind of a customer, you provide value they simply can’t obtain anywhere else. Most companies do a good job of providing a sales force with the tools to move them from A = B to A > B, but that last step, from A > B to the sole-source level, often has to come from you!
You can see these market levels in every industry. In the hotel business, at the “A equals B” level you find Motel 6, Scottish Inns, Crown 8, Red Roof Inns, Travelodge, and the other no-frills places, all based strictly on price. At the next level, where A is perceived as being greater than B, we have Marriott, Hyatt, Sheraton, Hilton, and Stouffer. More expensive, and all trying to impress upon us their higher value. At the top, we have Sole Source. There is only one Greenbrier. There is only one Plaza in New York.
My first profession was in the entertainment industry. When I was nineteen I took a break from school and went on the road, playing saxophone with a jazz group, and I just loved it. Even though I went back, finished school, and taught for several years, music—and the entertainment industry in general—is still a big part of my life.
In the entertainment industry, the “A equals B” level translates into “this weekend go to your local lounge, and there’ll be a guy wear- ing a green leisure suit, singing “Feelings.” Now, that’s “A equals B”—there are thousands of these guys, and nothing to differentiate them except for the color of their polyester. And you can bet they’re working for bottom dollar
But at the “A is greater than B” level, you find the professional entertainers who are earning a very good living. You see them on TV, hear them on the radio; they work in Vegas and make records, but they’re not the superstars. At the top, in the Sole Source category, there is only one Chicago Symphony, only one Kenny Rogers or Barbara Streisand, only one Rolling Stones.
Your challenge as a salesperson is to build value, and I repeat, it’s better if you build it before you get to the table. Build value by using the continuum and constantly improving your position—working your way up the pyramid. Remember, if you go into a negotiation at the “A equals B” level and can’t rise above it, you have to sell on price.