Here’s a prospect situation you might be familiar with in your complex sales conversations:
The meeting is going exceptionally well. You believe you established the value your company can deliver. You presented your solution and offered a very competitive price.
And then, you hear the all-too familiar comment that shatters your hopes for a closed deal, “Your price is too high.”
This inevitable end can only be a symptom of a larger issue in your sales process.
At the same time sales cycles are growing, the number of “no decisions” in your pipeline is increasing, and it’s tougher than ever to engage C-level executives.
The pressure is on and now you’re questioning your approach.
“If our value strategy is in play, why aren’t customers responding? Why aren’t they investing in our solution?”
At this point, you’d probably be wondering if it's time to ditch the value approach and compete purely on price. Is it time to change from a value strategy to a competitive pricing strategy?
Is Competing On Price a Good Strategy In Your Complex Sales Process?
The short answer? No.
The reality is, if you can’t create and clarify your solution’s value, your customers will likely not take action and will not buy.
At the end of the day, customers want to know how your offering will impact their job responsibility, add value to their business, reduce their company’s costs, and generate additional revenue.
They also want to be sure that your solution will deliver as promised. They don’t just want value added, they want value assurance.
Translation: “Show me how this dream will become a reality and give me the confidence to invest in your solution.”
Why Do Customers Say That Your Price Is Too High?
Nobody buys a value proposition.
That’s because value propositions are usually complex, which makes it more difficult for the customer to translate the value proposed into value achieved.
Prospects also don’t really find value propositions relevant and credible.
Even more, they’re not going to invest their hard-earned or - even more precious - their borrowed capital on the value proposition. That would not sell with their stakeholders.
Right or wrong, customers often dismiss these value propositions as empty words.
They’ll say to themselves,
“So what? All your competitors say they have a high-quality solution with a very similar comprehensive service plan. What’s that got to do with me and my business?”
This brings us to the biggest mistake we can make about our customers.
We assume that they recognize all their problems, understand the financial impact of those problems, are able to establish priorities to resolve those problems, and, finally, will be compelled to act.
Without clarity on proposed value, they’ll reduce the sale to what they can most easily use as a basis for comparison – and that’s price.
Now, you’re on a slippery slope – the downward spiral to commoditization.
What is Commoditization?
Commoditization happens when your product or solution becomes a mere commodity in the eyes of your customers and is compared to other alternatives based solely on price.
This often happens when customers fail to identify the value of your solution outside of the price tag and resort to price comparison.
As the sales professional, it's up to you to clarify value for your customers and help them see how your solution will solve their problems.
You might win this sale, but you can count that the price negotiations will be tough and you’ll end up taking a painful hit on your margins.
So, how do you manage this complex deal without having to sell your value based on price?
Instead of Price, Talk About The Value That Your Customers Stand To Gain
To compel your prospects to take action, you’ll need to accomplish three things with them:
- Define the value in stages that enable them to understand the absence of your solution’s value
- Help them understand the costs and risks they’ll experience if they don’t change
- Build confidence in their ability to acquire and achieve that value for themselves
This helps you thoroughly and effectively demonstrate your solution’s value. When a value translation like this is done properly, the pieces of the customer’s puzzle come together.
In essence, your role is to guide them in discovering and validating your solution’s value for themselves.
They’ll understand how your offering relates to their job and can then evaluate its true worth. They’ll also be able to answer for themselves those nagging questions that are always undermining the conventional sales presentation: “So what? Who cares?”
With these questions resolved, they’ll ultimately recognize you and your company as an ideal source of value for their organization’s challenges. Price will also become far less relevant for them.
Show Customers Absence of Value To Demonstrate Concrete Impact
Absence of value is what it looks like in an organization that has not implemented your solution.
Look for the physical signs (the observable indicators) of the absence of your value.
What costs did those organizations incur that your solution enabled them to eliminate? What revenues were customers not receiving that they now earn?
Keep in mind that if you can’t establish the cost of the problem, you don’t have a problem to solve and you’re back to no relevance.
Value capabilities in and of themselves are inert unless and until customers can connect them to a confirmed absence of value and value requirements within their business.
When salespeople neglect the customer’s perspective, they put both their credibility and relevance at risk.
This is one of the main reasons why many sales pros have a hard time communicating with the C-level executives (a very clear requirement in today’s marketplace).
As job responsibilities change, so do perspectives. So your business conversations should also change based on the value impact on unique job responsibilities (and the financial implications across the company as a whole).
Typically, customers don’t have a quality decision process. Because of this, they can’t accurately determine - without assistance - the financial impact of a problem they should be solving and the value of a proposed resolution.
That’s why it’s up to us to create this process and bring it to them. In doing so, we enhance their decisions and our own credibility.
If we want to excel, we need to become fluent in business-level language and develop the models and our ability to make the required financial calculations. By bringing concrete financial numbers into the picture, we give our customers more motivational force.
All customers live with problems or conditions that could be improved. But only when they recognize that the cost of a particular situation has become too high to ignore (and that they can address it economically) will they act to resolve it.
The cost of the problem, return on solution, investment to resolve, and total value of ownership – these are the financial figures that have the power to motivate customers to invest in high-value solutions and expand their relationships with sellers.
Key Takeaway: Sell and Close On Value, Not Price
When you quantify the risk of doing nothing as well as the risks and rewards of changing, you bring financial clarity to your customer and greatly reduce the perceived risks inherent in their decision to change.
When the customer has a balanced view of the financial ramifications of a decision, you will face less price pressure and avoid commoditization of the high-value solutions you can deliver.
You will gain more sales success and more profitable results for both you and the customers you serve.
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