Proposal and sale are miles apart

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“Sounds good. Send me a proposal.”

How many times have you heard that? Too many. So you run back to your office, put together a proposal, send it to the prospect, and start the follow-up process (and the prayer vigil).

The sale should be solidified before the proposal is written. Your proposal should be the essence of what you and your prospect have decided upon. It should be the image of your business. It should be a window to how your company conducts business. Is it?

How many do you win? How many do you lose? If you lose more than you win, it’s much more than the proposal. It’s the process. Count your wins and losses. That’s the scorecard.

When you win proposals, how profitable are they? Are you telling your boss, “Hey, let’s go in real low on this one so we can get the business, and then six months from now, boy we can really lose some money.” Ouch.

Once you lower the price, customers expect a low price all the time. Proposals are there because buyers think they’ll get the lowest price or the best deal by pitting one company against the other. Your job is to make yourself a winner before the proposal happens by creating conditions or terms that preclude others from either bidding or winning.

The first thing you need to do is to determine if it’s a price proposal or a value proposal. If they’re going to take the lowest price only, you’re going to lose even if you win. The lowest price is the lowest profit, or no profit at all.   Here’s the challenge: Can you create a profitability formula or a productivity formula, measured against what you do, that sets a standard for the proposal? You need to convince your buyers there’s a long-term cost, not simply a short-term price.

Are they are buying your price only? Are they taking the lowest bid? If so, they only need a one-sentence proposal, and you don’t need me.  Try this: Don’t do it. … at first. When someone asks me for a proposal, the first thing I say to them is no. That always shocks people.

The reason proposals are there is to lower risk for the buyers, and potentially to lower the cost. But in the final analysis many proposals can be eliminated if your prospects feel that your price is fair, and that their risk is low. If the risk is low and the reward is high, then the answer is always obvious.

Before the decision is made, it’s important to your customers that they know what your product or service will be like after it’s been delivered. This will take away all fear. It may also take away the price-only-decision process.     Customers only spend an hour or two buying, but they may use the product or service for years. You need to say to your customer, “Mr. Jones, I’d like to add a clause to the proposal that insists on proof of salespeople’s claims. And so I am asking you to require five testimonials in video form so that you’ll know any claim a salesperson makes has been validated by a customer, not just a sales pitch.”

Effective proposals are a result of effective sales presentations. Proposals should be the solidifying factor, not the sales pitch. The proposal should document what has been said and agreed upon. The proposal should confirm the sale and all the claims you made about it. Does yours?

Your proposal process is not a regurgitation of your price list. It is not a document to see how much of your profit you can give away. It is not something you prepare to beat the competition.

A proposal is the gateway to a sale that begins or extends a relationship in which everyone profits. The minute you low-ball a price, you’ve gone from a relationship to transaction. The next person who low-balls will beat you. Don’t just win the proposal. Win the value, the profit and the relationship.

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President of Charlotte, N.C.-based Buy Gitomer, Jeffrey Gitomer gives seminars, runs annual sales meetings, and conducts Internet training programs on selling and customer service. He can be reached at (704) 333-1112 or by e-mail at salesman@gitomer.com.