Replace Line-Item Thinking with Total Solution Selling [Part 2]

In this two-part blog series, Zilliant General Manager of Commercial Excellence Barrett Thompson examines what a total solution looks like in B2B, how it differs from line-item thinking and how companies can leverage technology to help sales reps shift to a solution selling mindset.Read Part 1 here.

In the first half of this blog series, Iexplained howB2B companiesoften misstheopportunity to1) provide more value to their customers through total solution selling, and 2) extract some of that value back for themselves bycharginga premium or reducingtheir standard discountstructures.Now let’s explorethree examples of a total solution in specific industries andhow data-driven software can ease the shiftto consultative solution selling.

Electrical Products Manufacturing

Oneofthe customers that we work with delivers electrical solutions to building contractors. The contractor provides a blueprint they received from an architectural design firm that includes the electrical plan. The builder doesn’t know exactly what products it needs, but it knows it needs to deliver 240 volts at 80 amps from the main feed all the way over to the far corner of the building, and it needs toadhere toall applicable electrical building codes. The manufacturer has electrical engineers in its sales department who are tasked with taking the blueprint and turning it into a Bill of Materials that satisfies these electrical specifications and is then passed on for quoting. This “take-off” process adds value far beyond simply the product components that make up that BOM. It saves the builder time and headache, astheycan move on to the next area of concern knowing electrical is in good hands. The electrical manufacturer has turned to Zilliant to ensure this relationship value-add is accounted for in its project pricing.

Food Service Distribution

One of the most difficult industries in which to avoid line-item thinking is food service distribution. Typically, salesrepsdefault to rule-of-thumb margins to price thousands of high-velocity items quickly.If a distributor has invested in a sales intelligence tool, their reps may get an alert telling them they should go after the parmesan cheese business at a restaurant that is currently only buying tomatoes from them. This is highly useful to increase your share of wallet, but this focuson lineitems as a seller does also set you up to be compared to your lowest pricedcompetitor. To go one step beyond that, hold the parmesan cheese for a moment and start a conversation with the kitchen manager about the benefits of consolidating.She may begettingherfood products from 15 different suppliers,meaning that15differenttimesper weeks shehastostop whatshe’sdoingtolet them roll in a pallet of food and make sure theydeliveredthe right things,beforesigningoff onthe orderand puttingthose itemsinto the cooler.

Instead, your value claim can be: “You come to me for fresh tomatoes,butdid you know I also sella wide range of other fresh foods,dry goods,jan/sanproducts, biodegradable to-go boxes and plastic cutlery? How much easier would your ordering, inventory management, logistics and accounts payable be if you came to me forall of these categories?” If you can get the kitchen manager on board with a total solution relationship, suddenly the parmesan cheese becomes a rounding error.

Food distributorscanalsoadd value byhelpingrestaurants with menu planningandoptimization as part of a total solution.

MRO Distribution

Finally, let’stake a lookat an industry that is ahead of most in the total solution game. Imaginea Maintenance, Repair and Operations(MRO)distributor sellsO-Rings, washers, fittings, bolts, lubricants,and otherpartsthatits customer needs to perform 10,000-hour maintenance on abig piece of industrial equipment that runs 24 hours at a plant.The MRO distributorwillput together all those partsin the right quantities andsizes, as well as all the safety gear needed for the job, in one kit. Thatkitted maintenance packageactuallygetsits own SKUIDand the MROdistributorprices it10-15%higher than the cost for all parts bought individually.

Why would anyone buy the kit theninstead of buying a la carte? Because the distributor has solved forconsiderablerisk and logistical complexityassociatedwith the maintenance activity itself.Consider, when the factory takes that piece of equipmentoffline for two hours in the maintenance window,they’re stopping production and giving up thousands of dollars of revenue and profit per hour whilethemachine is sittingthereand the shift workers are at home. Everything is dependent on them being back upin two hours,because thenextshiftiscoming in,productionschedules needtobe met,trucks need to be loadedwith product andthose truckshavetorollon time. What happens iftheybeginthe maintenance andrealize theyforgotto order that second O-Ringor have the wrong size hose?The consequencesof a maintenance delayare horrendous.So, darn right they’regoing topay more for that kit,which provesthat it is possible to charge more for the sum of the parts,as long asyou articulate the valuecorrectly.

Data-Driven Software: The EnginePoweringa Total Solution

As addressed in Part 1, the sheer volume of products, customers and transactionsmake the solution sale difficult for even the most seasoned sales rep.That’s not to say it’s impossible,but it isimpractical toattempt to scale asolution selling culture in an environment in whichpricing and salesteamsrely on manualor one-offprocesses. That’s where the intelligent software tools come in.

Think of it as a two-step process.

Bring more value to your customer(convenience, interoperability, consolidation, etc.)

Hold on to some of that value for yourself

Step one requiresawareness of everything that you could be selling to the customer at any given time, whichan intelligent toollikeSales IQ™accomplishesbyprofilingcustomers and comparing those profiles to an ideal customer.From here you understandwhere youshouldbecross-sellingand whereyou aremissing categorieswithin a given customer accounttoday.Now,ifyou’remissinga lot ofcategories,chances areyou’renot selling a whole solution, soyoucan’t get a premium price. But ifthe insights show you areapproaching a total solution,i.e.if the missed category dollar opportunity is small, that’s a signalthat youmay be approaching what a total solution looks like.Cart IQ™, another AI-driven tool,identifies which other products expand the value of the currentorderscopeand prompts sellers, customer service reps or buyers in direct channels to addthose to their cart. For instance, if a customer is buying a processor and memory, they surely need to also buy an I/Ochips.Cart IQautomatically surfaces that part as a recommended addition to the quote.

Moving on to step two:Onceyou’ve suggestedeverythingyour customershouldbuyand they agreetoadd it to their quote, you now must comeup with a pricefor that orderthat reflects something greater than just the sum of the parts.By configuring discount rules and automatingthem throughPrice Manager™andoptimizing prices at scale withPrice IQ®,you can consistently produce quotes that accurately reflect the value of the total solution you are providing. As an example,you can run the optimizer to come up withline itemprices andteach itthat the more line itemsthere are, the greater indicator that your solutionrepresentsanexclusivevalueto the customer. Hence, the more line itemsthat get addedto a deal, thelower the discountpercentage. It may seem paradoxical, but the bottom line is you’re not as concerned about losing the deal on price because you haveproven yourunique value.The customer is coming to you for a total solution for a reason, soatriculatethat in your sales conversations andreflect that in your price!

Conclusion

To be clear, there is a place for line item thinking, especially when you are in growth or recovery mode with a customer. You can surely mine a lot of gold from transaction data to go afterspecificline itemopportunities. But when you’re the main provider and you offer something to that customer your competitors can’tmatch,you have an opportunity to capture more value for yourself.

Just remember, asHarvard’s Theodore Levitt famously said, “People don’t want to buy a quarter-inch drillbit. They want a quarter-inch hole!”Reorient yoursellingmindset totarget a total solutionwhenever possible and lean on industry-leading software tools toidentify, quantify and price the best deal – for you and your customer.