For our October Webinar, Steve Laborda shared actionable steps for achieving commercial success by translating existing Value Pricing strategies into sales and marketing. At the end of the session, he answered questions from the audience. In this blog post, we share his live answers.
What is a good example of an “ammunition package” for sales?”
The best way is to not do it how it is done typically, speaking as a marketing person – you start to brainstorm among marketers to ask what sales people need or want to sell value selling. Instead, go and ask your sales guys. So that’s the first thing to do. What needs to be there is some standard, open questions for the discovery phase to help them to not just to go and interview and go through a script, but that they have a basis to start with if they’re not that confident. So that’s an important part. They really need to have these questioning techniques. This database [of questions] is really important.
Obviously when they are in the later stage, they need to have a value calculator – in whatever form. Yeah. Some companies are starting with Excel, which is very painful. LeveragePoint is another approach that they can use to really calculate the value and also communicate and even validate it. Because that’s often kind of forgotten. They talk to the customer and tell you that’s the value that you are getting. And they forget to ask the question – “is it really like that?” And hence, you don’t get the perceived value of the customer if you don’t ask for it. And then the other part is really to kind of getting them to understand what are the value drivers to find out, which are really the key value drivers.
Do you often see companies that claim to sell on value, but really fall back on selling on price or performance? How common is this?
I don’t have all of statistics to prove it, but you saw the Simon-Kucher figure (4 out of 5 chemical companies sell on price, not value), which is telling. I mean four out of five – which is a huge number! And I would say this is often the case, so depending who you ask in an organization, you will hear different answers. Some people just by saying that because they’re able to ask a little premium on the price, they said they already do value-based selling, but they don’t really talk to customers. They don’t really look at customer in a detailed way, because they answer that they know what the customer wants. And I can tell you, that’s not value-based [selling], because the customer should be at the center of everything when you do a value-based selling action.
How would competition-based pricing fit into this framework?
I find this interesting. Sometimes this competition pricing is more performance based, so that is something which still makes a lot of sense. So if you have a product which is able to provide 20% higher performance compared to your competition, so you can ask for 20% more very blindly. But, the challenge is when the competition pricing driving towards a price war. The competitor is decreasing the prices on one customer case, and then you are start under-price just to get those ones. So it’s an unconstructive way doing competitive pricing. But unfortunately that still happens a lot – companies using not as a way to increase prices, but to justify internally why they should decrease prices.
Which functions/seniorities should I make sure are included in an ambassador organization?
From a role perspective or department perspective? From a department perspective, I would say salespeople, but don’t forget the other functions which are needed in value-based selling. So ideally you will have some marketers as well, because you will have to have the value-based pricing. You might have to set this up in the tools to be ready and so forth. It might be key account managers as well. So it depends a bit how your organization is set up, and in which industry you are playing, but it should be a cross-functional effort. Ambassadors also need to be at different levels in the organization, because those ambassadors are kind of “little spies” in a sense to do some engagement or change management across the organization.
Ideally you mix between sales reps, sales managers, sales directors, and some marketing managers or business managers, but it also should be across the globe, ideally. So if your headquarters is in Germany or you’re in the U S, don’t take just people in your headquarters yeah. Because think about the scale-up phase where you will then need to go closer to the other regions and to other countries. So you need to have this, this proximity, not only regionally, but also culturally.