“Buyers are treating us as a commodity”, “It’s all about price, price, price”, “we don’t have anything unique”…..given how often we have heard these statements over the last few years, I’d be surprised if these were not also common phrases around coffee machines in your B2B sales department….
There is no such thing as a high margin commodity and the internet has long-since replaced the need for a traditional field salesforce in providing the efficient transactional service that customers in this space demand. So – assuming that your own customer offering is more complex, has real competitive differentiation and you believe you can extract more margin – why is it still difficult to demonstrate value?
There is little doubt – even in more complex sales, buyers today are better equipped than ever to drive suppliers toward commoditisation. Prices are increasingly transparent, comparisons are easily available and today’s technical differentiator is tomorrows ‘me too’ functionality.
In our experience although sales people may believe that they are promoting the ‘compelling value’ of their services or products, the buyer perceives it as neither unique nor compelling.
The results are often varied but include:
- Sales getting stuck early in the pipeline because prospects don’t see the ROI from change
- Price discussions happening too early in the sale – before the sales person has had the chance to build differentiating value, with lower margins as a result
- Decision criteria being focused on price as customers fail to see suppliers as offering anything different from each other…
Some Underlying Issues
At times like this we like to go back to some of the first principles of selling which rarely change – eg “people buy from those they like and trust. They then seek best value and lowest risk.”
The key for every seller is to understand that ‘value’ and ‘risk’ is not defined by the seller but by the customer – and every customer is different. Even your best-loved prospects have to see and believe the value you offer to be able to articulate that to other influencers in their organisation and defend it when challenged by advocates of lower cost solutions.
And to truly differentiate value in today’s complex world shouldn’t be limited to having the best technical solution – value needs to be created by the sales person themselves. Successful salespeople consistently add tangible value themselves in each sales interaction, by educating their customers about their business, market trends and using this to be seen as trusted advisors.
Tony Hughes in his excellent RSVP Selling © work summed this up nicely: “Salespeople need to fund themselves from the value they create from insight and wisdom rather than from the margins that the product or service delivers”
Sadly, from our own experience many salespeople rarely see their role as providing insight and wisdom about their client business – instead they focus on what they know best – their company, products and services…and get frustrated that customers don’t see this as justifying a premium price…
5 Top Tips for Value Based Business Conversations
1. Really understand the end business value you create.
We’ve found that remarkably few companies have made systematic or methodical efforts to understand the true value of their products and services to customers. This has got to go beyond the technical enablers (better process, more accurate information) to the actual end business benefits, which start to justify your solution.
3 Steps will help you to achieve this
- Clarify the economic benefit: How will your customers’ business benefit from using your product – in the private sector this normally means increasing revenues or saving cost. For public sector clients it can be delivering against targets. Make sure this is the end business result that a senior executive would buy into and put numbers against it – and ideally what the client has already told you!
- Pin down a technical advantage: What technical benefit do you give your customers that will enable them to achieve the economic benefit? E.g. better management information, less duplication, better skilled staff etc
- Emphasise your unique service – what you will do that no one else will? E.g. dedicated project management, regular progress reports, free enhancements etc…
Obviously these then needs capturing in a structured way – typically via an Opportunity Plan depending on the Sales Methodology you are using (TAS plans, Miller Heiman Blue Sheets, Greenbank Win-Plans etc.)
2. Engage at the right level
This has got to start from how your salespeople come across, the type of conversations they have and who they have them with. As Tony Hughes stated, “In selling, we are delegated down to people we sound like and this means that salespeople need to learn the language of leadership if they want to engage at senior levels. They need to be equipped in discussing the business case, delivering outcomes and managing risk”. Consider equipping your salespeople with the right personal and business skills via coaching or more formal development – and then make sure that managers support this via coaching and internal pipeline opportunity discussions.
3. Be sincerely curious about your customers
Once you are selling at the right level, don’t fall into the trap of assuming you know exactly what your customer values in a solution and how exactly they will measure this. Instead become an expert questioner – drilling down to really understand what ‘quality’ or ‘risk’ means to them and maybe even getting them to put some numbers around this.
4. Encourage your salespeople to become real experts in their customer’s business
This can be achieved by the way you organise your sales teams – creating sector specialisms can be useful, as can special business training sessions, providing them with specialist up-to-date on-line information services etc…
5. Align your culture and reward mechanisms
There is no point in encouraging sales teams to be high margin Value Based salespeople if you then reward them as transactional sellers. You may need to change your company’s emphasis from revenue to gross margin and reflect this in your salespeople’s pay. Accredit salespeople as Certified Value Based Sellers and pay them accordingly. In short, develop a company culture that acknowledges and rewards Value Based Selling!
Watch out for the next in this series of our Value Based Selling blogs and join us as we take a look at another key success driver.
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