The Green Sheet Online Edition
March 08, 2010 • Issue 10:03:01
Follow Wendy's for a winning combo
No, this article is not about hamburgers as a food but rather hamburgers as a pricing approach. I must give credit to my colleague Al Conway, President of the Dayton, Ohio-based business software company ACG Inc., for these concepts, particularly those pertaining to closing larger prospects.
We are all familiar with the Wendy's International Inc. restaurant chain. In its early years, the chain's menu included only a single hamburger and double hamburger.
The owners expected the double to be the hamburger of choice and thus the major sales driver. Yet sales of the double hamburger never met expectations. In fact, sales of doubles were abysmal.
Extensive market research determined that consumers felt the double was excessive in both content and price. So how did Wendy's counter this perception? It introduced the triple hamburger, which resulted in soaring sales for the double hamburger.
Follow-up research determined the single was now perceived as a miserly or cheap choice, while the stigma of excessiveness was shifted to the triple.
What Wendy's learned is a key factor of human nature: when given two choices people select the least expensive; however, when offered three choices the vast majority of people will compromise - in the middle - hence, the dramatic increase in the sales of Wendy's double hamburger.
This same aspect of human nature, the ability to compromise, is integral to sales, yet how many of us consciously apply it?
After doing an extensive need and value analysis with prospective clients, Al Conway provides them with three proposals: single, double and triple feature/benefit/price proposals, each priced appropriately - low, medium and high.
The double addresses prospects' exact need and value equation as they communicated it during the analysis stage. Al pares that down to the core basic deliverables that will achieve the prospects' underlying objective, hence the single at a lower price.
He then draws on his extensive experience to incorporate additional benefits and features, which the prospect might not have included, but that add substantially to the end result and carry greater value and a higher price, hence the triple.
In employing this three-pronged approach, Al has learned that he effectively shuts out his competition on both ends.
His single approach counters what a low-ball price competitor would employ to secure the prospect's business. And the triple approach counters the high-price, high-feature, high-benefit competitor's tactic.
Clients compliment Al on his way of doing business because it demonstrates that Al listens to them. It also shows that he understands their businesses by offering solutions that can be deployed using an initial lower-priced approach, as well as valuable, overlooked features that could dramatically increase their benefits.
Like Al's prospects, almost every one of us compromises. Al's prospects typically select the medium solution and price, the one they indicated to Al they wanted in the first place. This shuts out lower- as well as higher-priced competitors because, when not compromising on the double option, his prospects most often select his higher-priced option, followed by his lower-priced option, all to the detriment of Al's competition.
Key take away for MLSs: utilize three solution/pricing strategies:
- The first mirrors Wendy's basic single, a pared-down basic solution/price.
- The second, or double, reflects the prospect's target need/solution/price.
- The last is the feature/benefit-rich, higher-priced triple.
The webinar close
Next, how often have you invested a considerable amount of valuable time in preparing a drop-dead proposal for a large prospect, but once you deliver the proposal, you never hear from the potential client again?
Having been frustrated in such situations, Al now employs a different approach.
He hasn't delivered an initial proposal to a prospect in almost a year, yet his success rate is up substantially. How does he do that? He uses a collaborative webinar.
Once Al has prepared his three-pronged proposal, he contacts the prospect explaining that the proposal is ready and indicates he wants to schedule an appointment to deliver and discuss it. A date and time are established for this purpose.
As the appointed hour approaches, Al calls the prospect, asking the individual to join him on an already established webinar with a call bridge.
Together they review the current situation and what the prospect wants to accomplish. This is a period of give and take in which the prospect may make clarifications. Once Al and the prospect are in agreement, Al moves to the solution stage.
Each point of the solution supports achieving the client's goal. Again, with collaborative discussion, Al and the prospect refine Al's solution, which addresses the prospect's problems, thus achieving the overall objective.
When both agree that Al's solution is exactly what the prospect wants and needs, they move to the pricing stage. Remember, he has separate pricing schemes for the single, double and triple solution strategies.
Depending on modifications identified during collaboration, Al may turn off screen sharing or call for a break while he adjusts pricing to coincide with the refined solution. Then Al presents his primary pricing scheme: the double, which resolves each point of the previously established current situation and objective.
During the pricing stage, Al controls the presentation without collaboration. This permits him to share the primary scheme (double pricing) first and then move smoothly into sharing the alternatives: the pared-down solution positioned like a Wendy's single, plus the enhanced benefit/feature rich solution pricing scheme, the triple.
The prospect typically becomes a client at this point, ordering what he or she wants from Al's solution and pricing menu.
Key take away for MLSs: Employ a collaborative webinar versus sending your proposal to the prospect and waiting for an answer.
The logical flow of the collaborative webinar teamed with three, feature/benefit/price schemes leads to closing a sale with a large prospect by allowing the potential client to select choices from your menu rather than turning to competitors' offers.
You may also condense this process for smaller prospects, though always employing Wendy's three-tiered feature/benefit/price scenario.
Biff Matthews is President of Thirteen Inc., the parent company of CardWare International, based in Heath, Ohio. He is one of 12 founding members of the Electronic Transactions Association, serving on its board, advisory board and committees. Call him at 740-522-2150, or e-mail him at email@example.com.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.