Why can’t they sell value?
The price we pay for goods and services can be measured numerically, but value is a perception that changes based on an individual’s point of view. How many times have you been appalled by someone else’s spending habits? Frequently, I’m sure, and yet unquestionably others have had the same reaction to your own purchases. One person’s bargain is someone else’s waste of money. What then defines value?
The value of an item is entirely reliant on the customer’s situation.
Let me give you a simple example. Water is a commodity for most of us. It is plentiful, available and there are many places where we can purchase it. In bottles, direct to our homes or even collected in our gardens for free. Anyone selling water might be able to demonstrate very marginal differences in their product compared to those of a competitor; its purity, its source or brand values, but ultimately the difference most of us are prepared to pay for these will be small. Would you pay three times more for a bottle of water at one kiosk when the one next door sells it cheaper? It’s unlikely because the value will likely be the same.
How does the value of the product alter when the buyer’s circumstances change? What if you’d spent three days in a desert without water? Perhaps after finding your way out you discover a lone shop that sells water. Now, would you pay more? If you had the means, of course you would. The product hasn’t changed but the value has because the circumstances and the need of the purchaser has changed. Value isn’t so much about the product itself but the way the customer views it at the moment of purchase based on his or her current situation. Their need for it doesn’t have to be rational as in this example either. Value can be entirely irrational but as salespeople we must try to understand what important to them and why.
Why then do my clients tell me ‘my salespeople don’t sell on value only on price’?
The simple answer, although not the only one, is that they don’t understand the customer’s situation well enough to identify how their product satisfies needs and wants and therefore delivering value. Unless you know the customer intimately you can’t sell on value only on price. If you only focus on the product’s features and not on how they benefit that customer then creating value will come down to luck. If you want to sell based on value then I’d recommend doing the following:
Invest time in getting to know your customer. What are their goals, current circumstances, frustrations, plans, activities, views and preferences. Never stop seeking extra data and opinions from stakeholders.
Understand your product’s unique selling points and what tangible value other customers in similar situations have experienced
Be selective. Go after customer’s that are most likely to see the value of your products and services. Profile existing customers and use that to prospect new ones.
Be brave. Remember value is a perception. Calculating tangible value isn’t always possible but the way you act around price may be enough to create the illusion of value even if the facts are unclear. If you quickly discount the price of your product it sends the wrong signal about value. If you act confidently about pricing it will create doubt in the buyer’s mind.
Build business cases. If your product helps the customer reduce costs or sell more - calculate that in actual £/$. If it saves time or speeds up a process what’s that worth to the customer - what can they do with that time? If it reduces risk or error how can this be expressed in monetary or performance terms. If your product is superior to the competitor’s - and you can prove it - what’s the difference worth to the customer.
When you look at a highly competitive industry, like payments as an example, it can appear that processing a payment is a cost for a business and therefore, because many companies can fulfil that service, a commodity. Then again if you compare simple metrics like payment acceptance rates - the rate at which an online payment is accepted by a particular payment processor - and therefore the volume of business a merchant secures, the difference may be significant. One PSP might have a 84% acceptance rate versus 80%. If the merchant has 1000 transactions a day with a average value of $50 the difference in daily sales with the best performing PSP is $2000 a day. Enough value to justify a few basis points difference per transaction when it comes to pricing.
Finally, following on from this example above, always multiply value. Don’t present it as $2000 a day but $700,000+ a year or overly a longer period if applicable. If you know their business goals for the future then link this value to wider goals and therefore your impact on their overall business.
Remember value is different for each customer so your sales approach has to adapt.
If you’d like to discuss how to optimise value selling in your business get in touch to book an exploratory discussion. tonymoyle@in-sell.co.uk