If you voted in our recent poll about selling with value, thanks! Here are some thoughts about what our respondents said. First, if you know us, you already know that we find that a strong value argument improves your leverage position, and enables you to ask (and get) a higher price for your product or service. That said, you also know that sometimes you can’t differentiate your value, and as a result you will sell as a commodity – price will be the main selection factor. What successful sellers do is this:
- Understand the value of their offering to their client in client terms
- Understand what (if any) differentiation exists between their offering and the client’s competitive alternatives
- Act accordingly: knowing their position on the K&R Leverage Slope™
So when we asked (in the context of an article that asserted a shocking lack of actual value from information technology deployment in US hospitals) how people would act, this is what we got…and what we think.
“I believe in the value of my solutions and will emphasize it…” As of the date of this posting, 25% of our respondents chose this answer. We’d like to say that this is a surprisingly low number, but perhaps it isn’t. By far the most pervasive skill gap we see in sales is an inability to effectively characterize the value that solutions bring to clients. Some value always exists – it’s a given, or there would be NO sales. However, time after time we find that the seller is so rushed to fix terms and conditions or to meet internal (quota) measurements that they spend almost no time adequately describing value. They leave that part up to the client, who “knows what it’s worth”. Then they make a visit to procurement, drop their price, and move on to the next (commodity) sale. Our prediction: the 25% of the poll responders who do this are the top quartile of sales performers.
“Price rules, value doesn’t.” 35% of our voters picked this one. This goes with the saying “time kills all deals” as one we do not find to be effective. Sure, for some markets price is everything, but not in the markets where you want to be selling. Plus, this is a self-limiting and deteriorating business model. Price wars, predatory pricing, manufacturing efficiency plays and so on help, but price-based markets are by definition low-margin. The more the sale depends on price, the less you need a high-priced sales staff because order-takers can quote the price and take the order. However, in concert with the thoughts of the paragraph above… for a single sales situation, you may be in a price-based sale. When it is just one sale, it may be that for this client, the value you provide is not differentiated. They may have no need of your “advanced functions”, there may be no incumbency, or any of several other factors that could lead to this. A single price-based sale is not the same as a price-based market. It goes back to the “act accordingly” action we listed above for successful sellers.
“It depends. The client determines…” It’s hard to argue with this, and if the 40% of the respondents who picked this one did it because of the three seller actions above, and a blended version of answers 1 & 2, then good for them. It underscores one significant difference in approach of the successful from the unsuccessful: the successful know the difference between an approach that starts (essentially), “I’ve got stuff, you should buy it”, and an approach that understands the customer’s needs first and matches the solutions next. Good for you, if that’s you.
“I don’t sell value, because…” Neither of the two answers included here got even a single vote. In one way, that’s great. Apparently the ability to define or then guarantee value is not a barrier to successful sales. It does bring one question up. Time after time, when we teach people to improve their value statement through quantification, we get the objection, “if I do that, the client will ask me to guarantee the value will accrue, and I can’t do that”. In fact, many sellers today can do exactly that, with terms in the contract that are outcome-based. Plus, such a guarantee should only be provided at a price. So if the client wants a guarantee, it should be like buying insurance. In any event, since no one picked these, maybe the problem is disappearing with time.
It was an interesting poll. Watch for another one. Remember, negotiation outcomes are often predictable. We can do it. And, if predictable, they also can be altered, if you know how to approach them. We can do that, too. Contact us to see how we can assist you in driving more revenue and profit for your organization. (td)
Got a question? Email a K&R negotiator directly at email@example.com.