Guest Post by Jerry Bernstein. This was originally published in the Aug 2012 edition of ‘The Pricing Advisor’
Link 3: Selling Value
The keys to selling value are:
- Communicating value in language that resonates with the customer. This language should already exist in the marketing messages. It’s up to the salespeople to tailor it to the specific situation the customer faces
- Quantifying value – most salespeople have been taught how to communicate the benefits that customers get; few have been trained to convert those benefits into dollars and cents. The ability to do so affords the salesperson a great advantage in the marketplace
The sales organization will often resist changes to pricing. Why wouldn’t they? Pricing changes almost always affect their income.
The keys to overcoming this resistance are:
- Establishing a compensation program that aligns the company’s and salesperson’s goals
- Creating quotas based on the new compensation base
- Providing training on how to quantify value
- Training in negotiation skills
- Teaching salespeople the ins and outs of procurement organizations
Procurement organizations offer special challenges. One of the tactics that sellers have found valuable when selling to procurement organizations is including their procurement people on the sales team.
It’s often easier for your procurement people to identify the culture, needs and incentives of a prospective client’s organization than it is for your salespeople. If you choose this approach don’t forget
to include your procurement folks in the sales training.
Now that we have the key elements in place to make the sale, let’s get to Link 4 – Pricing value.
Link 4: Pricing Value
The price you charge should reflect the value you provide. Yes, the customer has to get greater value than what they’re paying in price, but most businesses aren’t charging anywhere near the value they’re providing.
There are several ways to get to value pricing. You can:
- Do the math. In B2B transactions, knowing the benefit your prospect will get enables you to calculate the financial impact that benefit will have
- In retail situations you can identify the types of price premiums that noncompeting companies who serve your markets are getting in relation to the lowest-priced alternative
- Use the premiums your most profitable customers are paying to guide your value pricing
Regardless of the methodology you choose, your value pricing must reflect the value discovered through your Value Research. This is the same value that was used to create your brand promise, your marketing messages and your sales scripts.
The next step is to present the higher prices in a way that makes sense for the buyer to pay more. Bundling your offerings often smoothes the transition.
The keys are:
- Customers have to perceive value they didn’t previously see
- The price has to reflect that value
- Customers need alternatives that reflect what they’re currently spending