We sales leaders tell our sellers to “sell value”, which is great advice. Unfortunately, it’s insufficient for many sellers. Sellers need general business acumen in order to succeed.
When most people sell value, they keep doing so only until the customer justifies the sale. Most don’t sell to full value: engaging the customer more thoroughly. This means:
- Finding all of the value drivers for each prospect, not just your usual ones.
- Building customer validation for each value driver…dollarized,
Unless you sell to Full Value, any customer has a hard time realizing that value. This can have several drawbacks.
- Your attainable price premium is less, and you are more susceptible to competitive price pressure
- Customer preference isn’t as powerful.
The Basics of Value:
Your customer doesn’t buy your product or service. They buy outcomes delivered by your product or service. The customer weighs the value delivered against the extra cost (any price premium) sacrificed to obtain the outcome.
Many “value selling” sales training courses teach this, of course. Often, sellers “sell value” only until the scale (and the sale) tips in their favor — at the existing price premium. . Sellers are given a list of common value drivers for their product, and work down the list until the deal is won. Here’s the problem: If a competitor increases your price premium at the last minute. That is, if the competition drops their price, they can tip the scales away from you if your “value premium” was only just good enough to win before.
Here’s where Full Value Selling is different:
To insulate against the problem of simple value selling, you need to do one – or both – of two things:
- Maximize the impact of each value driver
- Uncover more value drivers.
Get more impact out of your value:
The price a customer is willing to pay equals the monetary value of an outcome they believe they are
achieving. As the value premium for the outcomes rises above your price premium, customer preference for your solution increases. Importantly, only your customer can articulate any monetary value of outcomes.
Most value selling courses are good at getting the customer to acknowledge and validate value, but almost all stop short of having the customer dollarize that value. That is, until customers mentally assign monetary value to an outcome, it only exists in their mind as an foggy impression. When a customer weighs this foggy approximation against the precisely measurable price premium, they err on the side of caution. They insist that the gut feel be convincing. Better: have a customer form a detailed cost estimate–even a conservative one–rather than let the much higher bar of the “convincing gut feel” rule their decision making.
Realize value for all of the outcomes.
Each outcome has its own value, and they are additive. The average seller focuses on only “the usual value driver suspects” (probably from their marketing or product department). In fact, they usually stop going down the suspect list when a customer indicates they will buy. The pitfall: all of your in-kind competitors know all of those standard value drivers, and many of them claim the almost the same list.
The Catch: Full Value Outcomes Occur Throughout the Customer’s Organization. I can virtually guarantee that your product drives more value for your customer than your standard list. Sales people need to be able to insightfully search company-wide for all of the value drivers.
In order to find all of the outcomes your product or service delivers for each customer, you need great business acumen.
Think of your customer’s business like a black box: a complex machine that takes in resources and produces happy customers (and hopefully profits). A salesperson needs to figure out where that machine leaks oil, which parts are antiquated, how well the components interoperate, which parts the customer is unreasonably proud of, and so on. This takes far more than the narrow product expertise. It takes real business insight.
I like to start with some of the basic tools taught in business schools to understand how companies compete and succeed. Simple, yet insight producing models like Porter’s five forces, and Three generic strategies are a great introduction.
Financial statements for the mathematically challenged
Some salespeople are intimidated by mathematics, so I’ve developed a gentle yet powerful approach to help salespeople understand basic financial statements. Understanding break-even analysis, cash flow, balance sheets and income statements is easier if you’re looking at them for indicators of where and how a company improve its competitiveness.
Surveying the Prospect’s Operation for Value Creation Opportunities
I then use a tool that asks key questions to help a salesperson quickly understand the value-producing machine that is a target customer. I call it the value landscape. Understanding the value-producing “lay of the land” at a customer produces some quick insights into where to look for possible value drivers.
Mapping Customer-Perceived Value Throughout the Value Landscape
Putting value maps onto that value landscape is a next step. Where and how do your product/service’s differentiators impact your customer business, what does that look like, which departments/functions are affected, and how significant does that look given the landscape and cost structure of that particular customer?
…THEN Introduce Full Value and Selling to it.
Finally, the methodology to smoothly get a customer to quantify Full Value is introduced. This takes that analysis into the customer’s mind, validating every value driver in customer-dollarized terms.
Business Acumen: The Foundation for High-Level Differentiation.
As you can see, the more of a business generalist a seller is, the more impact they can find for whatever it is they are selling to a business customer. Selling methodologies applied using a foundation of business acumen become keys to delivering higher customer preference at higher price premiums.
What are your thoughts? Please share them below, share this article with a colleague, or contact me if you would like to discuss in greater depth.
To your success!