Why You Need to Sell on Value, Not Price
Imagine you’re a manufacturer whose sales approach has been to compete on price, and that’s worked well for you. Then, due to a change in economic conditions, a critical raw material you can’t substitute for has skyrocketed in price. Correspondingly, you have to raise your own prices and inform your customers of that change and why. Unfortunately, you’ve just lost your competitive advantage. Buyers flee to other, cheaper vendors and you’re facing a crisis.
A crisis that could have been avoided if you recognized a hard, fundamental truth of sales today:
Everything is a commodity.
No matter how technical or specialized your product or service is, there’s fierce competition. And that includes us in sales performance. Competing on price is not a viable option for most companies and sales reps. Instead, you need to compete on value. As that imaginary manufacturer I described above, if you’d sold on value, you would have lost far fewer accounts and not be in crisis mode. Why? Because the competitive advantage is the value you sold on – not your price. Thus, even when forced to make your products more expensive, you haven’t lost your competitive advantage.
Which raises the question: If value is today’s key, how do you sell on value?
- Target the buyers who will see the value in your offerings.
Remember buyer profiles and buyer personas? They’re the foundation to selling on value. Know who is likely to recognize and need the benefits of your products and services.
Being able to qualify accurately is another major part of the equation. A prospect might recognize the benefits of what you sell, but said benefits don’t hold enough value for their situation and thus, you’re not a good fit for them.
- Find out from your customers what the value is.
Ask the right questions during discovery and client reviews (Here’s our most recent post of key discovery questions) and you’ll find that customers will tell you your value. Whether it’s a direct statement (reviews) or through explaining their pain points and goals (discovery), it’s quite common for the people utilizing (or potentially using) your offerings to demonstrate the value you bring.
- Learn your buyers’ situations and use them to demonstrate value.
This goes deeper than probing to find out potential customers’ issues and desires. By conducting research and having fruitful conversations, you can get a sense of their situation and show how your solution translates into actual, concrete value for your clients and their unique, current business situation.
- Know your own value – including differentiation.
Many of the suggestions here involve using the buyer as a vector of value determination – which is the simplest and easiest way of doing it. But you should also know what the value of your offerings is, and that includes knowing the points of differentiation (however few or small) from your competition.
While buyers have more research and information than ever before, they don’t have your industry and field expertise. As a sales professional, your specialized knowledge allows you to help the buyer frame and contextualize the information they’ve found within the scope of their needs.
So while a prospect might know, for example, that there’s 25 different vendors that produce and sell corporate accounting software, they might not be aware of the criteria that will help them select the best one.
- The relationships you foster are their own value – and the emotional connections can win you deals.
I’ve alluded to this in the previous point, but relationship-building is one of the best skills you can acquire in a commoditized sales world. It establishes an emotional connection, builds credibility, and makes you as a Trusted Advisor part of the selling on value package.
It’s a philosophy we preach ourselves. If we know we’re not the right fit for you, we’ll point you in the direction of options we believe are. It’s a policy that works – we’ve had numerous clients who weren’t a match, but who appreciated our honesty and help, and later linked up with us as their situation changed and we became the best option.
Even though we’re in a time where everything imaginable is a commodity, people still buy products and services every day. The key lies in shifting from a price-focused mindset to one based on value. And remember this final takeaway: when you sell on price, price will be all the buyer cares about. And no one wins then.
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