Most salespeople have little capability to effectively build value. Talking about what your company does better or differently or telling a prospect what your value proposition is does not build value. Instead, value is derived from ones ability to consistently accomplish 3 milestones:
- Uncovering the compelling reason(s) to buy and buy from you,
- Understanding the impact, ripple effect and cost of those compelling reasons, and
- Positioning yourself and company as the clear choice to help with numbers one and two. Then the salesperson becomes the added value.
Beyond those three milestones are several facts:
- The moment a salesperson attempts to be competitive on price, any value he or she may have built is forgotten and can no longer be leveraged. All the focus is on price.
- Compromising or negotiating on price sets a precedent. All future discussions about pricing will be based on this compromise.
- If a salesperson does successfully build or create value, or position himself/herself as the added value, they must not allow price to be one of the decision-making criteria.
- 53% of all salespeople are too uncomfortable with the subject to have a conversation about money. How important is it that your salespeople have a conversation about money?
- 33% of all salespeople think that just $500 is a lot of money. How much money are your salespeople supposed to be asking for?
- 40% of all salespeople don’t determine whether their prospect is able to spend what they are about to propose.
- 64% of all salespeople make their own major purchases in a way that will not support the sales outcomes they must achieve.
- 86% of all salespeople believe what their prospects tell them, even when the prospect is bluffing about needing a lower/better price or that the decision will be based on price.
- 52% of all salespeople become emotional as soon as they hear that their price may be too high.
- 47% of all salespeople believe that if they hold their ground on price, regardless of how they do it, their prospect won’t like them anymore.
These statistics are from Objective Management Group. What do they all mean?
Not only do most salespeople have little ability to build value, but even when they do, they quickly undermine it with their self-limiting beliefs, inappropriate behaviors, outdated experiences, and desire to have a competitive price. It’s as if coming in with the right pricing will make them a hero. Unfortunately, it makes them just like everyone else and there isn’t much value in that.
Referring back to points 1, 2 and 3 for a moment, accomplishing those milestones requires that you employ a buyer-focused consultative selling methodology. I have written many articles on the importance of using a consultative approach to differentiate you and your company from your competitors and their companies so that the decision is not based on price.
Despite that, many of the calls and emails we receive are for help on that very topic – opportunities that are about price and only price. Or so our callers believe. When salespeople have an opportunity that is only about price, it can only mean that one or more of these conditions are true:
- Salespeople did not uncover their (not yours) compelling reason to do business with you.
- Salespeople are calling too low in the organization.
- Salespeople are with someone from Purchasing.
- Salespeople have not uncovered the prospect’s motivation for needing the lowest price.
- Salespeople have not asked what part of the solution the prospect could live without.
A friend of mine recently saw a sign that said it all and reminded employees to think about value. It said:
Is like buying oats. If you want nice, clean, fresh oats, you must pay a fair price. However, if you can be satisfied with oats that have already been through the horse…
That comes a little cheaper!
There are other factors that could contribute to salespeople regularly finding themselves in a price-sensitive discussion:
- Salespeople aren’t comfortable pushing back and challenging. Prospects have their way with them.
- Salespeople are too trusting. They accept what the prospect says at face value and because the salespeople don’t question it, they can’t determine if the prospects are bluffing and/or playing games.
There is much more to all of this than meets the eye. That said, there are many things that can be done to put a stop to it:
- Overcoming the weaknesses that allow these problems to occur,
- Role-playing with colleagues,
- New expectations and guidelines and/or
Instead of trying to be a hero by having the lowest price, why not be a hero to your company by having the highest margins? In addition to adding value for your customer, why not add value to your company by being its most profitable salesperson? Instead of acting like every other salesperson, why don’t you put yourself on the spot? Ask, “And would you be willing to spend a little bit more with me in order to get your problem solved the right way, the first time, right now?” If they say ‘no’, you’ll know you weren’t very effective at differentiating yourself and being the added value. If they say ‘yes’ you are on your way to becoming an elite salesperson.