Many a times, salespeople are told not to talk about PRICE but about VALUE instead. What is PRICE and what is VALUE? Let us first get the fundamentals on Value Selling right.
Price is the amount that a customer must PAY for getting a product or service.
Value is what the customer GETS when he or she pays for the product or service.
We can now look at these aspects in a little more detail for a better understanding.
As we know, every product or service has a COST associated with it. In simple terms, if we add PROFIT to this, it becomes PRICE or the selling price.
COST + PROFIT = SELLING PRICE
This the only element in the marketing mix that produces revenue. All other elements like product, promotion, distribution, people etc. produce cost. You can see how important it is in controlling the top line and bottom line of any business. It is the salesperson who determines the final price to be accepted for getting an order. Higher the price, higher is the profit and higher the incentive to sell.
As we have seen, value is what the customer gets. It is a tangible benefit that a customer expects after purchasing a product or service. Customers buy because they have a need or want to solve a problem. Value is their estimate of how well your product or service addresses this need. It is the customer’s perception based on several parameters like urgency, need, brand, service, experience, personal relationship etc.
3. When do customers BUY?
Having understood price and value, let us understand when do customers buy? Customers buy when they think they are getting a higher value in comparison to the price that they are paying. Higher the positive difference between value and price, higher is the incentive for customers to buy.
The reverse is also true. If customers think that they are getting a lesser value in comparison to the price that they are paying, they will not buy.
4. What then is value selling?
The whole aspect of value selling is to talk to customers and convince them about the benefit that they will get by using your product or service. For this, you will need a very deep understanding of their needs and buying behavior.
As customers, they are not interested in what you are selling. They are interested in what your product or service does for them, what difference it makes to their company, their lives and how it helps them. It is all about THEM and not YOU.
Value selling focuses on selling the value and not the product or service. Do not talk about your features, processes, and the greatness of your company. Talk about the results that the customers will get. Share examples of past success stories of how you have helped customers in a similar industry solve their challenges. Get referrals and share testimonials to build trust.
Keep in mind that your competitors may also be working on value selling. Remember that the customer will buy from a company that produces the highest value. So as a salesperson, you should ensure that the customer sees a higher value in your offering as compared to your competitors. It is also important to discuss the aspect of overall cost (to customer) of ownership and not only the initial price.
5. What do you need for value selling?
You need to have the mindset of an educator/consultant and approach each interaction with the intention to add value. This will happen only if you have the customer’s best interest in your heart. You will also need a clear understanding of customer industry, buyer persona, competition, and a thorough knowledge of your product.
Once this is in place, you need a strong value proposition that must be communicated to your customer. This is an important area and I think I will cover this in a separate post soon.
Till then, try your best to sell…VALUE