I keep hearing from some sales people that gap selling is not an adequate sales method for dealing with retail customers. That it is better suitable for selling to customers with a strong operational need, where you supply products or services to help run their operations, not for the customer to resell them.
But in my experience gap selling has significant potential in selling to retail customers as it requires you to pay attention to important aspects like:
costs of change,
decision stakeholder needs,
emotional situation, and
managing the deal flow inside the customer.
Business Needs based gaps are important too - especially in retail
Gaps result from two types of needs, operational needs and business needs. While most sales people are used to deal with high impact gaps resulting from operational needs, business needs can play a strong role as well. Especially when dealing with retail customers.
Therefore gap selling's power is in focussing on your retail customer's business needs. I have seen throughout my years to many sales people, who focus primarily on price. Giving too much margin away, while leaving all the other business needs of their customers aside, like:
Cash cycle
Inventory management
Administrative costs
Handling costs
Innovation / Image
Especially the cash position of every retailer is entirely different and often shifting due to strategic decisions. Same retailer have significant cash reserves while other are tight on free cash. Therefore addressing cash cycles and inventory management with different payment terms or delivery conditions (MOQ, lot sizes, delivery time) can be highly consequential to your retail customer and often beat a price concession approach. The same goes for actively improving a retail customer's handling or administrative costs.
And don't underestimate the importance of brand image, even when you are not working in an industry driven by brands.
I remember a case where I was leading a highly contentious price negotiation with the central purchasing team of a global key account. We managed to withstand significant pressure to relinquish margin to them after threatening to walk out of the deal. The reason we could do that was some part luck and a very good discovery.
Listening to the customer we had learned that a core voice in the group management's decision process was the CEO of the one country where our brand was the leading category brand. And we knew that losing our brand from his stores would be unacceptable to him. In no other country was our brand position so impregnable and not every country CEO had this amount of influence in our customer's organisation.
But sometimes good discovery allows you to get lucky. That's why a gap selling based approach is so impactful - also for retail customers.
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