What is Selling Value not Price?
Selling Value not Price is a sales methodology of charging customers based on the value they receive from a product or service, not the cost to deliver the product or service.
Why is Value Selling Important?
The ability to Sell Value not Price is important because it allows companies to at least make a profit and at best charge a premium. Companies selling on price are rarely successful in the long term as they are sacrificing profits for sales turnover.
1. Value Based Selling Techniques
Selling Value, and our ability as Salespeople to communicate that value to our prospects, is a common challenge for most salespeople in today’s competitive marketplace. If your product or service has become commoditised, if your deals are mostly price-driven and/or the market is very transactional, it can be difficult to differentiate yourself from the competition.
This can be very frustrating when you lose sales deals because the buyer has neither recognized nor understood the Value you deliver, and let you know for sure you are better than the competition.
Well, the following sales strategy on how to sell value not price won’t work every time, but it will make a huge difference if you can execute it consistently and confidently.
In order to Sell Value Not Price we first need to understand what Value is and what our Value Proposition is, because the two may be slightly different. Our Value Proposition is a clear and concise sales message on why choose us for a specific target audience.
Every business should have at least one, and they should be created jointly by sales & marketing. Most businesses will have a general value proposition with more defined propositions for individual products, services or campaigns.
Value, on the other hand, may well differ for every buyer, as human beings are all individuals, which means that they may have personal preferences, needs or desires which creates a definition of Value that is unique to them.
- If possible get a personal referral from one of your existing customers who is already experiencing Value from your relationship. If not then …
- Make sure you are in front of the right buyer. You have a sweet spot in terms of the people who will buy from you, so make sure you are in front of your perfect prospect by profiling your prospects correctly. The best Value Proposition will still fail in front of the wrong buyer. Be disarmingly honest and tell the buyer what the right type of client for you is, including how you are NOT a good fit for companies that are price-driven, as buyers typically don’t see the added value you provide until after they have purchased and experienced your product/service. Don’t be afraid to share some business humility as this is a sign of strength and leadership.
- Ask questions to understand what the buyer perceives as Value, as without this we can only guess what the right Value Proposition will be. This might sound simply like, “Would you mind sharing with me the top 3 things you are looking for when you are selecting new IT suppliers?”
- Once you understand the Value the buyer is looking for, use a Customer Story to demonstrate that Value. For example, if Project Management is important to the buyer then tell them a story of how you went “above and beyond” to satisfy a project delivery for one of your clients. If the value the buyer is looking for is in Customer Service, then tell them a story of how you provide “exceptional” customer service.
2. Value Selling Examples
2.1. Software Sales
Chris was a brilliantly gifted software coder who developed a system for his local bar so they could take restaurant bookings over the internet. The system worked so well the Bar commissioned Chris to build a mobile app for restaurant bookings as most users made bookings from a mobile device.
Chris knew this was a good idea but also knew that he could build additional functionality into the app that would benefit his customer. Chris explained to the bar how a table booking software was good, but that he could build in a promotion feature that would allow the bar to text anyone who installed the app special offers on nights when the restaurant was traditionally slow.
In addition, they could send news on what live bands were booked to play and special offers on beers and drinks. Chris doubled the project value by increasing the value his customers would receive.
2.2. Radio Sales
Nick was a Sales Rep for a Radio Communications company and his standard sales process included taking radio sets with him to visit sales prospects and then using them as part of his presentation. Nick’s radios were the top of the range from Motorola and probably the best in the market.
Every meeting was productive and the radios easily sold themselves, however Nick never got any orders which was really frustrating. The reason Nick was so unsuccessful was that after every meeting, Nicks’ prospects simply Googled the model of Motorola Radios he had just shown them and bought them from the internet.
In order to stop this happening, Nick changed his Sales Process and removed the Radios, in fact, Nick stopped talking about radios and instead he focused on the business pain, the business impact and financial impact of the problem.
Conversations in Nicks’ meetings started going deeper and in fact, got much longer without even giving the prospects a presentation. Nick stopped using the word Radio and instead, he positioned himself as a Value-added Reseller who provided Communications Solutions.
Nick created sales packages which included monthly service and battery checks and his sales took off.
2.3. Software Sales
Alan was an Entrepreneur successfully serving a niche service industry with a SaaS solution he had developed. With over 75% market share Alan wanted to build on his success and decided to launch a second service.
Alan had to choose between continue to service the existing customer niche he had or step outside into a different market.
Alan decided he wanted to lock in his existing clients and went on to develop a product his customers could resell and earn a side income from. Alan already had a database of existing customers so it was easy for him to approach them and help them add value to their own service offering.
3. Value Based Selling Questions
Value based selling questions are used as part of the Consultative Sales Methodology which focus the early sales conversation on the business, financial and personal impact of any problem or business pain. By doing this the prospect has a better understanding of the costs and impact associated with their problem
3.1 Why Questions Are Important
- Generate and build rapport.
- Hear and understand prospects needs, wants, objectives, goals and problems.
- See how your solutions may or may not fit.
- Help gather information to quantify the value.
- Respond to objections.
- Give direction to the dialogue; take the prospect down a certain path of your choosing and help the prospect uncover more Pain.
- Assure the customer they are safe with you – they may be concerned with:
- they are perceived in an organisation.
- the choice will affect the organisation, save money, make money.
- the right decision.
- Create empathy.
- Help you Upsell and Cross-sell.
- Evoke emotion in order to motivate the prospect.
- Stops you from presenting solutions.
- Identify Budget & Decision process.
3.2 Examples of Value Based Selling Questions
- How is this impacting your business?
- What’s the financial impact of this problem to the business?
- What happens if you don’t fix this?
- Given everything on your desk right now where does this rank in your priorities?
- If we come back to you with a viable solution what would happen next?
- Are you sure this is important enough to spend time and money addressing?
- What will you do if we can’t fix this?
- Is this a critical issue that needs urgent attention?
- How important is this to you?
4. How to Sell Value not Time
Many consultants who charge by the day often struggle to achieve their target day rate, as clients are reluctant to pay what they perceive as overly high rates when compared to internal employees. Consultants should understand all their costs and how much they need to charge just to stay in business.
Consultants must charge more because they have their own overheads and not every day is a billable day. For example, a Consultant may choose to undertake a one-day Continuous Professional Development (CPD) course in order to keep up to date with changes in their industry and whilst this is important, customers would not pay for this. Nor do customers pay for holidays, sick pay or all of a consultants expenses
The primary factors in calculating your day rate are
|Desired Gross Salary||£100,000|
|Less Annual Expenses||10,0000|
|Number of working days in a year – 260 days|
|Less Holiday Allowance – 20 days|
|Less Public Holidays – 8 Days|
|Less Sick Days – 5|
|Less Non-Billable Time 25% – 57 Days|
|Net total of 170 Days|
|£529 per day|
There is a much more accurate online calculator that includes a breakdown for taxes that you can use for free at Freelance Solutions.
Now you know what you need to charge it can be difficult to do achieve this, however it can be done if you stop charging by the day and create a number of Consulting products to sell. When you sell a product it removes the connection with the number of days required to deliver the product and therefore allows you to increase your day rate.
Products are purchased based on the value they deliver not the number of days required to deliver. If the phrase Products doesn’t work for you, it may be that Projects is a better term and again although Projects have defined delivery dates they are not billed based on the number of days required to deliver them.
|Products||Package your services and create products that you can sell to customers|
|Pricing Plans||Create service levels with different price points based on the hours required to deliver. This may include delegating parts of the project to junior partners|
|Value Share||Work upfront for free and agree a percentage split based on the revenue or savings that the project delivers|
|Retainers||Offer monthly retainers which are not defined by time|
It’s important to remember a good consultant will deliver but not charge “shower time”. This is the non billable time they spend thinking about how they can improve a project, which may be while they are in the shower, walking the dog or out for a bike ride.
It’s not what you charge it’s what you are worth. You must be able to demonstrate quantifiable success in what you do and focus the early sales conversations on this.
5. 30 Ways to Position Yourself to Sell Value Not Price
Often in Sales the problem you are faced with is not something you are doing wrong now but something you missed earlier on in the sales process. In Value Selling setting the scene and Positioning yourself and your company from the very start are vital. Are you Positioned as Luxury, Thought Leaders, or Premium versus Generalists and Low end suppliers? Buyers make judgements on you, your brand and your products in the first 3-5 seconds.
So it’s important to set your position from the start – you never get a second chance to make a first impression. We have compiled a list of ways that Company’s and Reps can use to demonstrate value and position themselves when selling to your prospects and your customers. These ideas are in no particular order, and we’re not claiming the list is definitive, so please feel free to add your suggestions in the comments section at the end.
1. Cost/Benefit analysis – this is a really simple but effective tool that will help you demonstrate value to prospects in the form of your expertise, credibility and experience.
2. ROI calculator – for those that don’t know ROI stands for Return on Investment. For every pound we put into this solution how many pounds will we get back.
3. Business Case – is a professional document that demonstrates the value of a particular project, and would typically cover topics such as project team, current challenges, organisational impact, goals & objectives, assumptions, constraints, alternatives and milestones.
4. Testimonials – can either be written or a video that states the value they received by working with you. These provide great content for your website, literature, presentations, LinkedIn pages, etc, etc.
5. Case Studies – a description concerning a specific client, of the problems they were experiencing, the solution you provided and then the benefits in the value they received thereafter.
6. Introductions – introduce your clients and prospects to people they can do business with, and they will see a very tangible value in working with you.
7. POC – deliver a small Proof of Concept to demonstrate the value before asking for a commitment to a larger opportunity.
8. Added value – deliver above and beyond your customers’ expectations.
9. Differentiation – if your prospects cannot separate you from your competition then why would they pay more. Differentiation must be built into your value proposition.
10. Comparison to the competition – some companies have been very successful comparing their product/service to their competitors, but be careful not to criticise the competition though.
11. Proactive support – don’t wait on customers coming to you, go to them, especially if you have product recalls, updates or service issues. Every interaction is an opportunity to demonstrate value.
12. Knowledge Base – educate your customers so they can find their valuable answers.
13. Tutorials – can be used for both prospects and customers to sell value.
14. Online guides – provide detailed user guides for any product or service so your prospects immediately can see the value you are selling.
15. Webinars – you can use webinars to attract new prospects and for value selling to existing clients.
16. FAQs – allow your prospects and customers to serve themselves whilst demonstrating your knowledge and expertise through your FAQ page or guide.
17. Content – web content is one of the best ways to attract new business and demonstrate the value at the same time.
18. Demonstrations – whether on a personal or group basis, a well thought through “show and tell” is a well-proven tool for value selling.
19. Videos – with YouTube now being one of the worlds biggest search engines, video is a great way of selling value on the web, on your site and in your presentations.
20. Nurturing – targeted and well-crafted sales messaging via a drip email nurturing programme is a great way to demonstrate the value in your offering with prospects and clients.
21. Availability – try booking a hotel or flight online and you will find a scarcity of product is commonly used to convert prospects on the low end and expensive services.
22. Branding – people do judge a book by its cover so make sure every prospect/client touch-point demonstrates the value you provide.
23. Design – for most companies their website is their prospects first point of contact and a reference point throughout the buyers’ selection process. It is therefore of utmost importance that your website sells the value you provide.
24. Market position – position your product or service as premium, luxury, prestige, expert, thought leader or specialist and buyers will then expect to pay more.
25. Presentation – selling value is essential in any presentation or proposal, after all this is when your buyer is making their decision.
26. Price promise – for many years the John Lewis Partnership have successfully used a price promise in their tag line “never knowingly undersold”, yet everyone knows the success of John Lewis is based on service and unique offerings, not price.
27. Exclusivity – creating a limited offer and scarcity are well documented, emotional buying triggers that are not based on the lowest price.
28. Financial Statements – summarise everything you have delivered and the benefits thereof in financial statements to your clients. These are often handled by Finance departments who may have no idea of the value in the service you are providing.
29. Invoices – like your financial statements, your invoices are often paid by people who might not be involved with you, so reinforcing the value you deliver is a good thing to do.
30. Key account management documents – value selling is a vital part of key account management and needs to be embedded in every account plan.
6. Value Based Selling Training
We include Value Selling in our most popular sales training course on Consultative Selling Skills. This is a one day course delivered either In House at a location of your choosing or as an open course where you may join other attendees and the content is focussed around how to sell value not price. A full list of dates and locations are available online.
7. Recommended Reading
Selling Value is included in our Enterprise Sales Training programmes.