How to Capture Value for Your Products and Services

by | Mar 28, 2013 | Pricing, Sales

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Follow Up From March 2013 Webinar with Harry Macdivitt

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Q: What advice do you have for reeling in smaller customers who have been given aggressive pricing, without losing their business?

A: Ultimately, you get what you pay for in this world. The temptation these days is to go straight down the road of discounting as soon as a customer tells you it’s too expensive. It’s been my experience that you should stand your ground on pricing, but argue the point that you are delivering real value. Most customers are sensible about this, and will recognize that value. Although they won’t prefer to pay those high prices, they will pay them. What worries me is, if you capitulate to a demand for a lower price, all this does is set up a process of behavior in customers who think, “I got away with this once, let’s see if we can do it again… and again, and again.” That is a really challenging situation.

One of the big temptations for small- and medium-sized businesses is to consider themselves inferior, or at least seriously challenged, by big companies. Some big companies would actually take a contrary view of this and say that they are challenged by the small ones. But if you are a small company, I would recommend against the temptation to cut price simply because you feel inferior. The issue is, can you really identify the value that matters to this particular customer? Go through that process carefully by identifying every piece of value that matters. Some customers, who I call ‘price buyers’, really couldn’t care less about the value of your offering. All they want to know is the price. And for any price you give them, they will tell you somebody else has offered a lower price that very morning! They are a waste of time; it is far better to focus on those who really do understand your value and who will respond to justifiable value propositions.

Q: How much training do you need to provide to salespeople in order for them to effectively communicate value?

A: It’s a question I get asked almost every seminar. Salespeople are absolutely crucial in the process of winning good business at a good price, but it’s terribly easy for them to offer a discount, especially if they’re not being given the right kind of support by management. The support that is necessary here is for them to really understand how to go through the process of discerning value in the customer interview. I favor a ‘discovery’ process where, instead of ‘showing up and throwing up’, you sit down face-to-face with the customer and simply talk about the business. What are the pain points? What are the technical difficulties? You’ve got to be able to do two things. The first is to understand the customer in depth, which means good questioning skills and good listening skills. The second is to understand value, and what it means to the customer. That’s where the Value Triad helps give you a structured vehicle for bringing these two pieces together.

 When it comes to selling on value, there aren’t any shortcuts. You can’t wing it and assume that you’ll have the right answers, because the customer is going to ask you, “So what?” If you don’t have a good answer to the “So what?” question, you’ve blown it. Not every salesperson can be a value salesperson. There are three types of salespeople in a typical organization. Some really get it, are doing it, and instinctively go for value. Others won’t ever understand value, and will deliver a detailed technical presentation that is devoid of any value arguments. Then there’s a group in the middle who want to do the job better. These are the ones that can be trained because when they see the value analysis tools, they realize they’ve been missing something for years.

Finally, I don’t see a lot of coaching these days. Shadowing the boss who is meeting with a customer, sitting down to have a detailed dissection of the meeting, and coaching salespeople into the right way of dealing with things. I think this is a fantastic way of building skills and capability, but that means the sales manager must understand value, too.

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