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How to Sell Value Instead of Price

Oct 9, 2007
Sell value and not price. It seems like a simple concept, so easy to understand. Yet accomplishing it can be elusive especially if we overlook one thing.

Do you know the value of what you sell? It may not be what you think it is. There's only one way to determine your product's true value. Without that information, your value-based sales approach may be misguided.

Maintaining focus on value is an important part of any sales encounter for two reasons:

1. Buyers won't pay more for any product than they think it's worth.
2. When buyers perceive competing products to be equivalent, price matters.

Don't believe prospects when they tell you they equate price with value. They really want something more.

Hidden Value Costs the Most

It's easy to tell when you've missed the mark in assessing the value of your offering. The sales cycle seems longer than it should be, and often ends in no decision. Buyers seem confused and frustrated. When prospects cannot find value, they attack price. As a result the cost of sales is high and both revenue and market share suffer.

Buyers really want to understand the value you can deliver for them, but reaching that understanding becomes more difficult every day. Customers search the global market via the Internet looking for value. They soon discover they have more choices among products and services than ever before and are confused by all the "me, too" messages.

When buyers get confused about value, they resort to price shopping. In fact, if you want to compete on price, it is to your advantage to create confusion in your marketplace. However, if you want customers who:

* are a good fit for your service delivery model
* are willing to pay more
* will buy faster and with more conviction
* will become promoters who will rave to others about you

then you may need to change the way you determine the value of what you sell.

Value Isn't What It Seems

It's funny how often marketing and sales folks think they know the reasons why prospects will buy when they really don't have a clue. Many products are used for functions much different from what they were designed for.

Years ago Avon began producing a bath oil called Skin So Soft. It's users rumored that it was a fine mosquito repellent, thus causing consumers to purchase it in droves for that function. Avon noticed this and in 1994 began marketing a new version called Skin So Soft Bug Guard Repellent, which actually includes insect repellent and a sunscreen. Bath oil or bug repellent; either way, you win!

Many carry their cell phones with them all the time, but not because they need to communicate every waking moment. While I was instructing a training course recently, I asked the attendees how many wore a wristwatch. The answer: 72%. When I asked the rest how they kept time, the answer was universal: their cell phone. For these people, much of the value of their cell phone comes from that little display window on the outside of the case that shows the time.

The Electro-Alkaline Company was started in 1913 by five entrepreneurs who planned on getting rich selling liquid bleach in bulk to industries near their small factory in Oakland California. Three years later, they had long exhausted their startup capital and were deeply in dept. Annie Murray, wife of the new general manager, came up with an idea to give away free samples of a less concentrated version of their Clorox product to shoppers at a local general store. Her new value proposition -- stain remover, laundry aid, deodorizer and disinfectant -- caught on, and soon they were receiving requests for Clorox from the east coast and Canada. Once the company understood what customers really valued, sales took off.

The key to selling value is this:

We don't determine the value of what we sell; our customers do.

You can help your buyers discover the value within your offering, but you can't do it for them. Here are three steps to aid their discovery.

Survey Says:

What unusual applications have your current customers found for your product or service? Maybe it's time to ask them this question about what you've sold them: "What makes us worth the money?" You may be surprised by what they tell you.

The best house I've ever owned was all brick on the first story, and all aluminum on the second. What made it the best? Low maintenance. Nothing to paint, nothing to rot, and little to caulk. My real estate agent never pointed out the value in that, but I sure figured it out fast. Recently, Evinrude introduced their E-TEC outboard motors that require zero maintenance for three years. Apparently I represent a fairly large contingent for whom low or no maintenance is a powerful value proposition.

A Simpler Sale

Once you've asked your customers, "What makes us worth the money?" you may have gained dozens of insights as to why your customers value doing business with you. However, presenting your long list of findings to a potential buyer will only confuse them more. Instead, organize your survey responses into four to seven categories. By reducing your long list to a handful of Customer Value Categories (CVC's), you'll make it easier on yourself and your prospective customer.

Value Makes the Price Right

Perhaps your prospect has already reviewed your marketing materials, and maybe even been referred to you by a friend. If you find that they are:

* still not clear about how your offering will be of great value to them
* seemingly overwhelmed with the decision
* too focused on the price

your Customer Value Categories can help your buyer discover relevant value and move the sale forward.

Explain to your prospect that you circled back to your existing customers to make sure they were happy with your product and to learn more about how they were using it. Share with your prospect the summary results from your informal survey; your CVC's. When you explain how other customers -- real people like your prospect -- are finding value in using your product, you'll make it easier for your buyer to get clear about where the value lies for them. Finally, show them your testimonial letters and let them convince themselves. Once customers understand value for themselves, they will agree to pay more and -- most importantly -- pay it to you.

Let the prospect tell YOU what the value is. Then, help them get it. You'll generate excitement about your offering, shorten the sales cycle, and get a better buck for what you sell. No matter how much value you build into your product or service, it's worthless until your customer discovers it.

Copyright 2007 Paul Johnson
About the Author
Paul Johnson works with selling organizations to convert sales trouble into double and triple digit performance breakthroughs. Visit http://ConsultativeSelling.com for a simple definition of Consultative Selling and more sales insights.
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