| I’ll take it |
| 03.30.08 | |
Cutting prices can lose business “If you can do it for $12, you
can have the business.” With his next three words, Bill lost
thousands of dollars of business. He said, “I’ll take it!”
Too many sales people focus on price and forget about value.
Price is simply what you charge. Value is the sum total of all
of the positive effects that the product or service has on the
buyer’s business. In most cases, your offering has many benefits
for the customer. Each of those has a corresponding value that
adds to the equation. Business customers buy because they
believe that they will get value that is significantly larger
than the cost. In fact, most buyers are unaware of many of the
benefits of their purchases and therefore underestimate the
value they receive.
Every price is too high without an appreciation of value.
If that is true, so is this:
Every price the customer offers, before they understand the
value, is too low!
Could that be why you lose proposals that simply respond to
RFP’s? Maybe the customer can’t find your value in that
sterilized document?
Could that be why you lose when you respond to the caller who
says, “I just need a price?” Maybe they think you are just like
everyone else. After all, you did not bother to tell them any
differently.
Hey, we all reject stuff we don’t understand.
How many times have you seen someone handing out free stuff on
the street or in the mall and simply passed them buy. It’s FREE
and you won’t take it! You don’t see the value.
To increase our chances of making the sale, we must do three
things to ensure that we have maximized value in the customer’s
mind:
1. Understand their business
You must understand your customer’s business well enough to
explain to them how your offering will improve their bottom
line. This means asking more questions and doing more research
before making your proposal. The good news is that once you
understand one company in a given industry, most of the others
will have similar circumstances.
Example:
A distributor of Swiss watches was trying to get a container
load to their US jewelers in time for the critical pre-Christmas
buying season. She was shopping for shippers and two responded.
One offered a price that was $9,000 and assured the shipper that
they could get them there on time. They had years of experience
and many testimonials that showed that they had done it before.
The second shipper cut the price in half and guaranteed that if
the shipment was late, they would rebate 100% of the fee.
Which shipper won the business?
The first one.
They knew that a container of Swiss watches holds 5,000 watches
with a retail price of $3,000 each or 15 million dollars. If the
container arrive late, the watches will have to be sold at an
after Christmas discount. That’s a loss of $1.5 million! Clearly
the distributor would care more about the reliability of company
A than the potential $4,500 rebate from company B.
2. Maximize your value
If is often true that different people in the buying
organization will see different value in your offering. In the
example above, the person on the loading dock might like the
lower price. But the product manager, the CEO and others will
appreciate the value of reliable service.
Identify all those departments in the buying company who might
see value in your offering. Make sure they know what you are
proposing and get them to be internal advocates for your
solution. When you get a large enough cheering section, it’s
like having a “home team” advantage.
3. Include your value in your proposal and quote.
Too often, we make our value propositions in a face to face
discussion with the buyer. Then, when we believe the sale has
been made, we formalize the number in a quotation or proposal.
In many cases, one or more people may review this before it is
signed off. Even the best sales people get blindsided by a
last-minute influencer that was not disclosed earlier. When that
person sees the numbers with no sense of the value, they may
reject the proposal as over priced. Head this off by adding to
the proposal, a summary of the value that you and the buyer
agreed on.
This is the subject of chapter 12 of my new book, The Team
Selling Solution: Creating and Managing Teams that Win the
Complex Sales. Click on the link to learn more about it and to
hear a sample of the book on CD.
So what about Bill and that $12 deal?
The customer had called Bill because he wanted a supplier who
was open longer hours than his current supplier. Bill’s company
is open 24-7-365. He told Bill why he wanted to switch and that
he was currently paying $13 and bought thousands each year.
That’s when he offered Bill the business at $12.
Bill’s mistake?
He failed to see that the customer was currently paying $13 for
less service and wanted more. The customer saw value in Bill’s
hours of operation. If Bill had asked why the extended hours
were so important, he would have learned that the customer was
paying overtime to work with the other company’s shorter hours.
This move would save them many times the cost of the service.
Bill could easily have justified an increase to $15 and still
won the contract! His failure to see his value cost his company
thousands of dollars and cost him some nice commissions.
Remember: Think Value and Win More Sales
For a free copy of “20 Questions That Uncover Your Value”,
please email article18@waterhousegroup.com and ask for article
#18.
Stephen Waterhouse is Principal and Founder of Waterhouse Group
(www.waterhousegroup.com). They specialize in helping companies
increase their sales and profits. He can be reached at
1-800-57-LEARN or steve@waterhousegroup.com.
Re-Print Permission This article may be reprinted in it’s
entirety if the following conditions are met:
The complete tag with the author’s name and contact information
is included immediately after the article. A copy of the printed
article is mailed to the author at 1467 Walnut Creek Drive,
Orange Park, FL 32003 within 30 days of publication. The article
is presented in a positive light as part of an appropriate
business related publication.
