How to Avoid the “P” Word
How do you have a conversation with a prospect that focuses on value, rather than the “P” word – price? We all understand that price will be a consideration when making a purchase, but when you compete solely on price, you’ve pigeon-holed your offering as a commodity. The first step to competing on value is to make sure your solution is differentiated in the buyer’s mind.
It’s easy to plan to sell on value, but how do you make it happen? Here are three key areas to focus on that will shift your mindset – and your prospect’s – to a value-based conversation.
1) Differentiate Your Solution
The foundation of competing on value is to differentiate your offering in your prospect’s mind. But being different is not being differentiated. Differentiation is a process that happens with each individual prospective buyer. Even for buyers within the same company, individuals may value something different that makes the investment worth it for them. With this in mind, the conversations you have must lead your prospect to answer the question, “Is this particular product or service worth the investment?”
One obvious way to differentiate is with your capabilities. It is important that capabilities are not presented as a list of product attributes – instead, each attribute must solve a problem or address a need that your prospect recognizes. This is what creates the value in making the investment.
You can also differentiate on terms and conditions, customer experience, or by demonstrating how your solution mitigates risk. Solving a problem based on these intangibles, that a competitor has not addressed, also creates value in making the investment.
In addition, building a trusted brand is a long-term strategy to mitigate perceived risk and to differentiate. According to The Edelman Trust Barometer 2020, 70% of respondents say trusting a brand is more important today than in the past. In essence, the report shows that amid the seismic shocks of today’s world, trust is the make-or-break difference for brands; most of the people surveyed feel that brands should act to solve societal problems and advocate for change. When brand trust is earned through words and actions, it builds loyalty, engagement, and advocacy. If you represent a trusted brand with a strong reputation, consider the potential impact this may have.
2) Understand the Business Metrics
Once you have differentiated your solution or offering in your prospect’s mind, the next step is to create value for that solution. A clear understanding of business metrics is essential to leading a value-based discussion and this means asking questions that address business value, ROI, and how your prospect will build the case to buy your solution. To get these answers, many sales reps recognize they need to uncover pain points or problems. But since not all problems are worth solving, you must clearly connect to the business metrics your prospect wants to address.
For example, let’s consider a prospect who is looking at an automation tool to integrate into their Customer Relationship Management (CRM) system. The CRM plugin will help them better track and manage projects. The reason your prospect will potentially buy this SaaS-based software tool is because they recognize they are wasting too much time and money on manual processes, and things are falling through the cracks. This impacts customer service and their bottom line. As you uncover the business metrics, you’ll realize the main benefit to the customer is not really about managing projects more effectively. Instead, the key to this value-based sale is the impact better project management will have on the business objectives of saving money and improving customer service.
Additionally, think about the personal value for your prospect. If the manager you are selling to will no longer have to ask team members to spend their time doing manual input, they will likely be happier and more productive at their jobs, positively reflecting on the manager. Therefore, as you work through the sales process, try to uncover how the buyer may personally benefit from getting the deal done and use this to your advantage.
3) Quantify the Impact
Once you understand the business metrics, the next step is to quantify the impact of your solution. To do so, probe your prospect to answer questions like “How much time?” and “How much money?” Going back to our hypothetical CRM scenario, let’s do the math on the value of time spent.
If the employees tasked with manual input are worth $100 an hour and spending five hours a week on a manual process, that’s $500 a week. If 10 people are doing this manual input for the company, that’s $5,000 a week. Over the course of a year this solution could be saving the company in upwards of $250,000 worth of productivity. If, in this example, the CRM tool costs $20,000, suddenly the investment becomes a no-brainer decision. The calculated benefit far outweighs the cost, and there is quantifiable value in making the purchase.
It is imperative to reinforce the importance of quantifying the business impact. It’s not enough to say “Yes, it’s better” or “We’re going to save you time and money.” Without asking questions that uncover how much time will be saved and then outwardly converting that to a dollar value, the prospect may not justify the worth of the purchase on their own. Driving quantification is a critical step for salespeople to differentiate on value.
Common Business Metrics Tie to Value-based Selling
Saving time and saving money are two of the biggest measurable metrics that sellers can tie into when selling on value. However, they are not the only metrics. I have clients that build business cases on improved cash flow and regulatory compliance as well. Once you recognize that finance is the language of business, and accounting is how businesses keep score – you’ll become acutely aware that business metrics will almost always boil down to dollars and cents in some way. Look at the situation from your buyer’s perspective – whether a prospect’s goal is to increase revenues, decrease costs, save time, improve cash flow, or be compliant to avoid risks and penalties, you must connect your solution’s benefits and value to their unique business objectives.