“Our margin is eroding by the day, and our sales force is not selling on value rather they are leading with price, which is unsustainable. If this continues, I won’t be here as Head of Sales next year. How can we fix this starting right now?” Sound familiar!
A deafening silence followed for few seconds, which sounded like an eternity, then, a voice. “Sir, I believe that our training department is adept at educating our folks on traditional sales techniques, objection handling, sales process, products functionality, and services. However, frankly, our folks are inadequately prepared to compete against competitor pricing pressure and client savings demands. Hence, the reason they compete on price.”
Second VP of Sales “We need to help define our customer target value with absolute clarity. Then, we will need to educate our sales trainers on how to train our sales force to position target value according to customer needs.”
Define Value?
Everyone intuitively knows what selling-on-value means. Many fail to implement its principles.
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The scenario above is a real-life event. Most organizations are looking for ways to increase profits and margin. There are three ways to do so: Sell more product/services, cut costs, or raise current prices.
- Raising prices is easy but tricky unless managed carefully, it can backfire. Customers can fire you by buying somewhere else.
- Cutting cost has its limits before; you start losing vital resources that are vital to your sustainability.
- Sell more on value to retain margin. Value is the trade-off between the perceived benefits derived from your business solution and the price the customer is willing to pay to acquire it.
According to HubSpot Research’s survey of salespeople revealed more than 50% rely on their peers to get tips for improving. 42% percent looked to their manager, 35% to team training resources, and 24% to media.
Another, HubSpot Research’s survey found that “Sales professionals with three to four years of selling experience spend 50% more time on training than those with two years or less and 110% as those with five years or more — Probably, because rookies aren’t sure if they’re going to stay in sales and veterans don’t believe they need to develop further.”
Education by Osmosis!
Most salespeople skilled enough to sell on value have figured it by trial and error or pure peer osmosis. Most companies educate their salesforce on the competitive advantages derived from their products/services functionality, features, and benefits superiority. However, these product presentations, do not prepare the salesperson on how to provide the context needed for the buyer to understand how the proposed business solution will resolve the current challenge.
Information is Just Data
Excellent information is not an added-value. Sophisticated buyers often do their homework ahead of most meetings. They usually know what they want and the price they are willing to pay. It’s hard to sell value when the product/service sold is perceived as a commodity. It is even harder to sell worth when the seller’s product is complex. Savvy salespeople know how to intelligently challenge buyer knowledge and assumptions while aligning the value proposition with the buyer vision. Your ability to identify your customer priorities and vitals area of challenges will create meaningful dialogue around specifics that require resolution.
Your customer value goals
- What specific needs and objective does your customer need to fulfill?
- How can you assist your customer to meet these objectives?
- Why does it matter to both, the customer and you?
Stories Sell
Selling value is not all about an excellent delivery of facts, insight, and data. Instead, it’s about the flexible packaging of critical information into storytelling.
Product presentation is boring. Customer stories tend to allow the buyer to relax, think, digest the information and decide. According to the Gartner survey, 70% of executive buyers agree that “customer stories and case studies are the best way that providers can communicate differentiation that I trust.”
If I can visualize it, I can buy it
Value is the perception gap in the eyes of the buyer. Great salespeople know how to paint the current situation as is accurately, and project the buyer through the art of visualization into the future to feel all the benefit derived from acquiring the proposed business solution. Your customers’ eyes determine value, not you. The art of visual empowerment works miracles.
It’s not about you!
Focus on the value that matters to the buyer, not to you. Consequently, suspend your connection with your business solution features and benefits. What matters is how your customer sees how he will benefit from your value proposition. If your solution doesn’t fit, do not attempt to make the sell. Instead, propose an alternative solution even if it’s a competitor product.
Your maturity and genuine care will win you the admiration and trust of your customer as well as potentially the start of reverse leads and referral partnership with a competitor. Think long-term, your selflessness will pay massive dividends in term of customer referrals, and competitors reciprocity leads. Keep broadening your perspective and horizon.
Decision Impact
Value is based on perceived worth. Promote the established benefits that current customers are enjoying because of acquiring your business solution. Share testimonials and visuals that reflect these benefits. Buyer love to buy proven, market-tested business solutions. Big purchase decision cannot be influenced by what you think you can do. Instead, a list of happy users and proven results can do the job. Buyers want to purchase a proven solution that works according to plan and most importantly trouble free. Purchasing decisions hesitation is driven primarily by the fear of making financial and reputational mistakes. B2B decision makers are more sophisticated than ever. These value buyers are highly selective in term of acquiring products with a proven brand, supported by great people that act as partners of growth, rather than commission-driven vendors.
Differ or Fall
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Smart customers buy results. Decision makers are often willing to pay above market price for business solutions that provide an edge, increase profit, eliminate waste or increase brand awareness. The same customers will force you to sell below market price if you cannot separate yourself from the rest of providers with similar, commoditized generic business solutions.
Sell on value. Great business solutions create demand, be fair but do not lower your price when asked. Customers are programmed to ask; however, they often yield when the perceived value derived from the business solution exceed opportunity cost.
Educate to Elevate
Educate your customer beyond what most sales professionals provide. Your buyers will realize the value-add of having you as a growth partner quickly. Never focus just on the sale, focus on adding so much value to the relationship first. Consequently, you will achieve long-term benefits and higher referral rate as an extension of your brand and doctrine of genuine care.
Several CXO level buyers had attested that the business solution purchased often has more to do with the quality of people behind it than any product innovation superiority.
Imaginary Product Benefits
Selling a product with no unique benefits is hard. However, massive advertising and right positioning along with topnotch quality salesmanship can turn a highly-commoditized product into a sought-after brand. Selling coffee is a commodity, Starbucks made it into “The Coffee experience journey.” Changes in perception, color, texture, packaging can generate unique distinctions that can elevate the most commoditize product into a premium brand that command premium price. Differentiating a non-differentiated product is all about careful positioning and market perception changes.
You are a Potent Distinction
If the business solution you are selling has no significant distinction that separates you from your competitors. Then, you become the only distinction (level of professionalism, work ethics, product mastery, skill-set). You will be able to charge a little more than your competitors just because of your competency and unique skill-set. If your business solution is unique, then you should cost according to the value derived from your business solution. The higher the investment, the higher the risk, the higher the engagement you should expect from your client.
Wants vs. Needs
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Every buyer knows what he wants; however, many do not understand what they need. That may be the area where you can educate your client. Establishing client needs may be the area of your value-added differentiation. Asking the right questions, can leads to understanding the business needs and uncovering related issues that your customer may not be aware of. The higher the strategic importance of the business solution and the required spend amount, the more decision makers are involved. This is often an opportunity to uncover additional needs based on the parties involved vital strategic requirement list. When needs are clearly defined, and the solution ROI is established, the price will not matter.
Negotiate Value
Never negotiate price, instead, negotiate value. If Your client wants your price reduced, then ask about his level of comfort with reduced functionality or the elimination of specific value-added benefit. Comprehensive business solutions are often competitively priced to meet market demand. Accepting to diminish current price without value shrinking, may position you as someone who padded the price to maximize revenue. Agreeing to a reduction should be fair to both parties. Salespeople that do not make money, do not stay in business for long, nor does the company that accepts that business model.
You Deserve to Make Money!
Rather than discounting your business solution, provide different bundles that represent different add-values that meet the buyer needs, budget and desired options. Providing the customer with more choices is way better than discounting your business solution bundle. Customers have the right to be increasingly demanding, and so should you. If a customer pushes you to a zone where there is no benefit to you or the company you represent. You should deselect doing business with such candidate. Serve the companies that help you stay in business and eliminate those that drive you towards financial ruin.
Sell Bundled Outcome
Position your offer in a way that cannot be rejected by a simple “No” decision. Your goal is the profitable satisfaction of your customer needs. Position your offer where your customer has choices. Such as “How can I get the advantages of this bundle, with the combination of this feature” or “Based on our current needs, bundle ‘A’ works better for me.” Choices empower the customer to achieve a specific outcome. The key is to align your customer needs with a comprehensive bundle that meets his needs.
Never judge the purchasing capability of a customer. Offer you baseline bundle, as an option, but position your top-tier comprehensive offer based on value every time, not because of the price but rather because of the added-value embedded in this ultimate business solution.
Never Oversimplify or Miscommunicate Customer Needs
Many salespeople believe that product quality and price is all that matter. That’s a total fallacy.
Neglecting to align your business solution with the buyer needs and objectives is often a fatal mistake. Besides, never force a solution because of higher commissions or bonus generation, instead sell the right desired business solution, regardless of the price. You are selling a sought-after outcome, and you must be 100% sure that the business solution offered will deliver the expected result. Your reputation, brand, and long-term partnership are being tested with every customer interaction. Your customer centricity molds your reputation, future relationships and future referrals velocity.
Your name and the business solution you provide should be synonymous with total customer satisfaction.
Your Expertise Matters!
Widen your client perspective when possible, suggest additional functionality that will widen the client curiosity, capability, efficiency and business horizon. Your expertise matters, share ideas and insight that you have witnessed working and where the customer can further benefit. Do it not because you want to sell more, cross-sell or upsell, instead because you genuinely care to grow your customer business, profit, and market share.
Your client may have specific needs, based on circumstances. Make sure that your customers are aware of your full business solutions suite. I witnessed many broken hearts over lost significant opportunities, where an existing client entered a lucrative long-term deal with a 3rd party vendor, not knowing that their current vendor core business was what he just acquired. You must create constant awareness- leave-behinds, send educational material, pieces of literature, share insights, videos and industry breakthrough. Stay in touch with your customer needs. Send updates such as: “Just want to make you aware, that we now provide the following business solution.” New York Times listed our company recently as “the organization with the most comprehensive data analytics based on the latest’s AI breakthroughs.”
Keep your customer’s intrigues, interested, excited to learn more about you, your products, your company and your industry.
It’s OK- Walk Away
Never bid on a proposal, before knowing your customer critical needs, hidden needs and unknown needs (be an inquisitive differentiator). Responding to generic proposals with general company recommendations will position you as an ordinary commoditized company that bids for survival (large corporation and government agency require bidding- that is not what I’m addressing here). Most salespeople jump into the bidding pool without clear process or a sound strategy. “Let’s price it lower than our main competitors. We will figure it out once we win.” Sound unrealistic! However, it’s often the reality of many bidders.
Take the time to explore the company needs, and offer a customized solution that differs from the rest bidders even if your price is substantially higher. Chances, you will win the deal because of your unique strength. The aim is to reach a conceptual agreement with the buyer where the proposal become mere of a binding formality than a negotiating instrument. Aligning with customer objectives and going above the asks, should be the way to win rather than price compression. A “race to the bottom” pricing model is often a loss-loss situation. It usually short-lived initial satisfaction, followed by an extended period of agony and regrets when one realize broken promises related to poor product and services quality and customer neglect. Price-focused customers often feel cheated based on final results and bid-winners think they went above-and-beyond despite suppressed margin.
Deliver on Your Promises!
Lower prices may win you some deals. However, the customer will never give you a break, or compromise in term of delivering on your promises. Regardless of the size of the deal. Walk if you feel you cannot meet current customer demands. Walk if you think that the size of the account is beyond your capacity. Do not stretch to complete inadequately a project that will stress you out, lose you money or ruin your reputation. Think always long-term. Your brand matters, no deal is worth your reputation. It may take you 20 years to build a good reputation, don’t let it evaporate because of greed.
Your Word is your Bond
Confidence in your products, backed by superior market proven results will sell above market standard prices. Your price worth is the perceived value related to the advantage that your solution creates for the buyer. Your customer is looking for a price multiplier an ROI that produce a desired level of satisfaction. The ROI may not be financial; it can be reputational, or awareness driven. Many senior executives want insurances that the big purchase they are about to approve is not going to cost them their job. The adage “nobody ever got fired for choosing IBM.” Decision makers are familiar with making tough calls. However, most worry about fatal mistakes that can tarnish their reputation and make them look like novices. These decision makers want to work with a company that would deliver on whatever they sign-up to do. Your word is your bond is the ultimate differentiator and winning strategy.
Target Whales
Don’t waste time on low-level deals. Don’t sign them because you want to meet your quota. These non-profitable deals take substantial effort, time and energy and steer your attention from value-driven opportunities that are worth your time and energy. Eliminate them all together as they are often labor-intensive and profit-poor. Stay focus on what matters most to you. Do not deviate, despite the urge to get a small win. It’s just not worth your time. All self-respecting professional should assign these small deals to juniors who are still learning the profession.
Conclusion
A reputable brain surgeon with 20 years of success will charge 20 times more than a peer with one year in the profession. Patients are often willing to pay higher prices to be operated by a highly skilled surgeon (price do not matter when your life is online). No one would chance it with an experienced brain surgeon at any cost!
However, we witness sales professional with vast talent, knowledge, and competency compete as equals with rookie peers that turn customer experiences into nightmares.
Sales generalist tend to have a wide range of skills and experience across multi-disciplines. Sales Specialist possesses a unique mastery of a specific complex niche that has individual needs. Expert knowledge should be promoted as a significant differentiator and a value-added competitive advantage.
Competing on price tell the market you are a commodity. Competing on value position your brand as a resource. Competing on price is a losing proposition for most parties involved (Unless you are Walmart). “The race to the bottom.” Is a race where everyone loses something on the long hall. Selling value at a fair market price is the only way to deliver on expected quality, innovation and ensure long-term survival and prosperity.