Great salespeople focus on providing value to the customer. Building strong relationships salespeople know what the customer values. The value triangle is: Price, Quality, Performance. Customers can only get two of the three. With low price a customer must give up quality or performance (sometimes expressed as “service”). Those buyers who value high quality are more likely to pay the higher price. If not the higher price, then a competitive price but delivered with better performance.
How To Define Value
Think about your personal purchasing decisions. How do you evaluate a major purchase or even a minor purchase made the first time? Take buying a car for example. What’s the concept of value? Well we have a reason to buy the car. If you value a car just to get you from point A to point B then perhaps a cheap used car will do. Maybe you want a car which brings you prestige. Or an all-electric one because you are environmentally conscious. And most likely no matter what the benefit you want from the car, you will have a budget. So here is the mental calculation you make:
VALUE = BENEFIT / PRICE
When the benefit exceeds the price, that’s good value. With ratio of benefit to price less than one we don’t see the value in making the purchase. Great salespeople spend enough time understanding what benefit the prospect wants from the purchase. Then use the concept of value to justify the price.
The Concept Of Value Is Situational
Ever hear this: “A horse! A horse! My kingdom for a horse!”? It’s from the Shakespeare play King Lear. This is the cry the king makes after his horse is killed in battle, leaving him at the mercy of his enemies. The concept of value of his having a horse at this moment is far different from just shopping for a new steed. Great salespeople have the skill to apply value to the prospect’s current situation. They take the time to ask good questions and listen to hear the cost of the problem the prospect wants to solve. Once they know the cost then they present the benefit of their solution relative to relieving the problem.
How The Concept Of Value Works
Now in the US there is a debate on providing booster vaccines against COVID infection. One presentation looked at the value of a booster this way. A booster shot costs about $50 but the cost of a COVID hospitalization could be $30,000. So the benefit of investing $50 to eliminate the high cost of hospitalization has a large positive value (VALUE=30,000/50). And according to the argument this doesn’t even include all the benefits of not taking a hospital bed or potential prolonged effects of COVID infection to the patient. So one can see great value in providing booster shots.
The Concept Of Value Is Not Always Concrete
Great salespeople believe all purchasing decisions are based on emotion. So the concept of value includes the intangibles. People buy from those they like and trust. Building a strong relationship with customers adds value. Exceptional service like prompt response to complaints is a value booster. Solving the customer’s problem in a unique way adds value. When I sold safety products a railroad company was “shopping” for a new vendor to reduce the purchase price of the safety products they bought. Our approach was to reduce the workplace injuries driving down that cost and having a positive effect on morale. So we identified the most impactful safety issues and based our offer on eliminating them. Our concept of value was different than the original value the railroad was looking for.
What Can You Do Right Now With The Concept Of Value?
- Ask good questions and listen well to see what benefit the prospect is looking for
- Understand that prospects will buy when the benefit exceeds the price
- Take advantage of the “hidden” benefits in your solution