Why Bother Selling on Value?
One of the most startling changes in selling over the past decade has been the rapid evolution in customers’ overall sophistication and knowledge (courtesy of the Internet). At a recent ASTD conference I attended, I heard one sales training expert say that most customers are 85% through their purchase process before they even call a sales person. And by that time, they may have decided that your competitor was a better option.
So what can you do to ensure that you are selling effectively in this new environment? One of the most impactful things is to ask great questions to uncover customer needs before you talk about your solution. This will force you to stop selling features (knowledge the customer may already know) and start focusing the sales conversation on benefits to the customer.
A more sophisticated and effective approach to discussing benefits with the customer is selling on value. While many sales professionals frequently talk about selling on value, in our experience few of them know how to do it. Selling on value means that you need to successfully identify, quantify, and prove value to the buyer. This takes time and effort because you have to carefully consider the opportunity from the buyer’s perspective: how their business runs, its goals and any challenges in reaching those goals, and their strengths and weaknesses against competitors. Once you understand the buyer’s business, however, you can elevate your sales conversation by proving the value your solution will bring to their situation.
Value is in the Mind of the Buyer
The process of proving the value of your solution starts with understanding a simple equation: Value = Benefits – costs. Let’s consider benefits. You must first carefully consider all the ways the customer can benefit from your solutions. You need to think of both tangible (easy to quantify) and intangible (difficult to quantify) benefits. Then, consider all of the costs the customer will incur by either choosing or NOT choosing your solution. Let’s explore this process in more detail.
The graphic illustrates how the buyer (or customer) has to weigh both benefits and costs.
If you look at the benefits, first think about how your solution can help the customer grow revenue, volume, or market share. This is often the first thing customers think about but remember that their priorities will often depend on where they are in the organization and how their performance is measured. For instance, in the retail business it can be margin, markup, or gross purchases. It is important to determine both professional and personal drivers in order to align your benefits to those drivers.
Other ways you can help a customer grow their business is to enhance their competitive advantage or image. The benefit of increasing productivity is that customers can do more with less, which is a bridge between making and saving money, time, and resources. Be sure to consider how your product or solution can reduce production costs and increase profitability.
Once you have thought about the benefit side of the Value Equation, start thinking about the cost side. The nominal price of your solution is not the only factor. Buyers consider all forms of cost when making a purchase decision, including Total Cost of Ownership, training, cost of changing, opportunity costs and time to market. You are doomed if you think that discounting your price is the best option for making a sale without first considering all the other costs and how they relate to your solution. By gaining a deeper understanding of which of these costs are important to the buyer you will be better positioned to position your solution’s overall value.
Selling on Value Takes Time
Selling on value does take time. Your customer has to trust you enough to let you ask questions about not only their department, but also about related departments. You have to show that you can bring value just by the process of asking the right questions about their business. You might have to get other people in your company involved in helping value the tangible and intangible benefits and predict the costs of implementing the solution. You will need to hone your presentation and perhaps bring in experts from different areas in your company to make a compelling proof of the value of your solution.
What’s the Payoff?
When you invest the time to sell value rather than price or features, your customers are much closer to developing trust in you and your solution. This trust translates into a greater likelihood that they will make a positive buying decision, and make a stronger commitment to you in the long-run. Selling on value paves the way to long-term, profitable customer relationships.