Sales techniques that work in the vending machine business
Ready to start your own vending machine business? One thing you are likely already aware of is that you are to be a one-man show, at least at the beginning. Regardless of the number of machines you own, at first you’ll be managing just about anything, from selecting the type of machines you’d like to buy/lease to securing excellent locations for them to negotiating a good price from your vending stock suppliers.
Owning a business means understanding a little bit of everything – sales and marketing, accounting, operations, inventory management, partner relations, etc. Even when your business grows enough for you to have dedicated route drivers, accountants, and inventory staff, you’d still be the strategic thinker and the main negotiator when contracting new locations or extending the agreements for existing ones. Naturally, none of us has the time to become an expert in each discipline so we all appreciate a bit of good advice and guidance as to what the industry best practices are and how these can be applied to our case.
Since possessing the right sales attitude and skillset plays a critical role in starting and sustaining a vending machine business, we thought we’d share some tips and tricks on what to do and how to behave when you need to wear your salesman’s hat on.
Before you initiate the first contact with a vending location owner/manager
you’d need to do your homework. Going to this initial meeting prepared means you’ll be much more confident, ready to answer questions, and in general, look professional in your opponent’s eyes.
a) Start by defining your value proposition.
Ask yourself, what pain point is my service solving for the location manager? How is he better off with my machines placed in the area? While your sales turnover is generated by end-customers, the actual buyers, in this case, your target persona is the location manager; he’s the gatekeeper who controls your access to consumers. The offer you make should be able to improve their current situation. Have in mind though that you don’t operate in a vacuum. Are there any other vending machines already placed at the location? What do they offer? How’s your offering better/different? You should focus on what you can do for the location owner that’s better than what the competition already does – this is your value proposition. It might be the variety of snacks/sodas that you offer, the payment methods that you provide or simply the fact that you are faster to respond and better cater to your POC’s needs. Your value proposition must be important to the location manager and certainly not easy to replicate by the competition.
b) Emphasize the before/after contrast.
To help the location manager understand the added value your offering brings to their place, you should be able to tell a very good story that builds on and improves the status quo. Your goal is to help your potential location manager clearly see the difference between now and a future where your machines are placed in their location. “Magnify the pain and make the cost real, present, and unbearable. How do you do this? By asking questions and helping your prospect articulate the real cost of their status quo”, explains David Finkel in his article The 5 most powerful sales techniques. He suggests using questions such as:
- “Tell me about your current situation…"
- “What’s not working right now…"
- “What happens if you don’t deal with this and find a solution?"
- “And what is that going to cost you?"
How do you apply these questions to a negotiation with a location manager? Make sure to ask questions that help you reveal the problem your prospect experiences at the moment so that you can position your service as the solution to it.
Analyze and manage your behavior
in order to lead the conversation and increase your chances of a positive outcome of an (especially initial) meeting with the location manager.
- Choose wisely your opening line. Don’t start a meeting by commenting on how bad the traffic/weather is or how busy and tired you are. It just starts the whole conversation off on the wrong foot.
- Don’t speak ill of competitors: say, a competitor has already moved in his machines at the location you are trying to secure. Not only does gossiping create mistrust and undermines your credibility, your location manager is also likely to involuntarily and subconsciously relate those negative traits to you. If you say your competitor is low-quality and unreliable, your potential client can’t help but associate those traits with you, argue the Science of People.
- Show you have high expectations of your prospect location manager – despite what most people believe, using superlatives to describe the person you are doing business with, the location itself, end-customers, etc. actually works in your favor. How? A study reveals that people usually live up to their positive labels. You can say, “It’s great that I can have an open and honest conversation with you” or “You’re such a pleasure to do business with”.
- Mind your body language. Research shows that salespeople who effectively use nonverbal communication are much more successful.
- End the meeting on a high note.
Negotiating the details
Negotiation is not a skill that one can easily master in a day or two. There’s loads written and said about it, and there are hundreds if not thousands of courses and teaching material on the topic. One shouldn’t feel overwhelmed and intimidated, however. While you can’t expect to become the master of negotiations after reading an article or two, there are simple yet very powerful tips you can follow to achieve a win-win scenario for your prospect location manager and yourself.
- Be prepared to address the objections the location owner might have against your offer. Naturally, you can’t read minds, but if you try to walk in your opponent’s shoes, you’d be able to come up with at least one or two doubts that he might have. Try to dissolve these before your prospect has even managed to articulate them (once said aloud, objections tend to solidify and gain ground).
- Ask your opponent a lot of questions to better picture his current situation, to understand his pain points in order to address them later with you offer; when you are proactive, you control the set and rate of the conversation.
- If you are to agree to the location manager’s terms, be sure to get something in return. You shouldn’t accept every single one of the prospect’s demands without making some requests of your own. By establishing a win-win situation, you lay the groundwork for a sustainable, mutually beneficial relationship with your location manager. For example, if you agree with the commission they are asking, try to obtain a guarantee for the foot traffic that will be passing by your machines on a daily basis.
- Be sure to understand the industry standard – if you’ve done your homework, before entering your location manager’s office, you should know what’s typical for this location in terms of commission payable, machine servicing and presentation, the variety of stock that need to be offered, etc. Not only being prepared makes a good impression on your opponent, but it also helps you better formulate your offer without leaving money on the table. As a rule of thumb, always start with a slightly higher offer. Try to provide extra value rather than agreeing to a high commission that’s not sustainable in the long run.
Closing the deal
Entering the closing stage of negotiation is always unnerving. No matter how positive you feel about your presentation thus far and how excited your prospect location manager is, there’s always a chance you’ll lose to the competition, they’ll decide to postpone their decision, or they’ll ask for a commission you can’t sustain in the long run. Using the right words, however, can make a difference: As you’ve surely seen by now, if you act as if the prospect has already accepted your offer, it might sound a bit aggressive and scare them away:
“When should I start placing the machines in your venue?"
“When do we sign the contract?”
“I’ll get the paperwork ready now."
Instead, make the location manager feel comfortable without completely taking off the pressure:
“Is there any reason, if I agree to your terms, that you wouldn’t do business with my company?"
“If I could find a way to deal with [objection], would you sign the contract on [set period in time]?"
“It seems like the machines and snack/soda service my company is offering is a good fit for your venue. What do you think?"
“Why don’t you give it/us a try?"
“Will you commit to doing business with me today?"
“Ready to move forward? I can send over the contract right now."
Congrats! You closed the deal. What’s next?
If you are undecided whether you should work on finding new locations to accommodate the new machines you just bought or persuade the manager you just signed a deal with to increase the number of machines at their location, the choice should always be the latter. According to a study by SignalMind.com:
- Existing customers tend to spend ~ 33% more than new ones.
- The probability of upselling/cross-selling to an existing customer is on average 60-70%, compared to the 5-20% chance of converting a new prospect.
- It’s 6-7 times more expensive to acquire a new customer than to retain an existing one.
Selling more to existing locations is not only beneficial to your company’s bottom line, but it also helps improve and streamline your operations, servicing schedules, and inventory management.
So what can you do to maintain a healthy relationship with your POC/location manager?
Be proactive: be sure to call on your location manager on a regular basis without being too pushy. Keeping a good rapport with your client will help you recognize if there’s any potential for upselling more machines. Plus, it will help you identify any needs that have not been addressed such as a need for shorter service cycles, a new variety of items that should be offered to end-customers, etc.
Solicit feedback: perhaps the best way to figure out what to offer your customers in the future is to simply ask them what they want. In an industry where you have direct contact with your end-users, there are a number of ways you can do so:
- Survey and poll your client base, both directly after they’ve made a purchase and after they’ve used the product for some time.
- Leverage social media and forums to get feedback.
As discussed earlier, however, the vending machine business if a bit different in the sense that we don’t usually have direct contact with the actual buyer/end-customer of our products. In this case, vending management software can be of great help:
Leverage a vending management system: using a VMS right from the start can help you stay in the know about customer preferences by monitoring their purchases real-time. What’s more, you’ll be able to keep your inventory low by tracking product critical levels and items to reorder per machine and per location. Combined with telemetry, a VMS helps you understand as soon as there’s a technical issue with a machine and thus optimize your service cycles. This all helps you establish a good rapport with your location manager by providing excellent customer service and keeping end customers happy.
Ready to win another location by providing timely service and the right mix of products? Waste no time, start your free trial of VendSoft VMS today.