There is more to selling than offering the lowest price. In fact, sometimes “value” has absolutely nothing to do with price. If you are not offering a total solution that meets the critical needs of your prospect, then your buyer will likely buy from someone who can. Value is an extremely part of the selling equation. Your prospects want a superior product or service – one that comes with added benefits such as technical training, extended warranties, top-notch customer service, implementation support, consulting hours and more. They want assurance that if they have a problem or question down the road, you’ll be there with a solution.
Take the following quiz to determine if you are focused on providing your prospects value. Answer YES or NO to each question. A YES answer equals one point.
1. I’m not interested in a one-time sale; I’m interested in building a strong business relationship
2. I help them address their critical business issues such as reduced cost, avoided cost, increased revenue, etc.
3. I always ensure that the risk is balanced against the reward i.e. Investing the appropriate amount against the value of the critical business issue. Would you spend $100k to solve a $10k problem?
4. I always provide my prospects with an ROI calculation to help them understand when the investment will pay for itself.
5. I provide my prospects with calculations that depict how they will save time or money using my product or service.
6. I provide my prospects with calculations that depict how they will make more money.
7. I show how, by quantifying capabilities and comparing the company financial results using my product and without using my product product, side by side, the key business ratios of Return on Assets, Return on Equity, Profit Margin, and Earnings per Share etc. can be compared “at a glance”.
8. I look for ways to provide “added-value” to my prospects. i.e. extended warranties, extra consulting hours, more technical support.
9. I make myself immediately available post-sale to ensure quality implementation.
10. I follow up each quarter, post-sale, to ensure customer satisfaction.
What’s your score? If you scored a perfect ten, congratulations! You are offering your prospects a total solution. You understand the importance of providing prospects with the most value for their investment. A score between seven and nine is still good, but make ten your goal. For those of you who scored below seven points, you may want to read further.
By definition, justification is a reason, fact, circumstance, or explanation that justifies or defends the action being taken. Justification answers the question, Does the end justify the means? Unless you’re dealing with a single individual who has the power, money, and authority to buy without answering to anyone else, justification must be done. Too often salespeople leave this important step up to the prospect or customer to do. They don’t have a model to work from, or they’re afraid to get involved because they don’t know how. I recommend that salespeople initiate the activity and participate with the customer in the value justification activities. If you don’t know how, you must learn.
Value justification gives customers a compelling reason to take action. People will spend money if they can see that doing so will enable them to make more money or save money they’re currently spending.
Salespeople have been participating in ROI (return on investment) analysis and cost justifications for years. Many times I’ve observed salespeople frustrated because, though their proposal was completely justified with a fantastic ROI and a short time frame for payback, the customer still didn’t take action. Why? One reason is that the return and the payback are in the mind of the salesperson and not the buyer. The only way prospective buyers can get the same vision and understand the real value of the solution is if they understand and own both the problem and the solution. As long as salespeople are telling buyers, “We can solve your problems,” they’re not enabling prospective buyers to take ownership.
Historically, salespeople and customers have used terms such as cost justification and ROI analysis instead of value justification or value analysis. I stress the term value justification because I want salespeople to focus their customers and prospects on value. It’s very important for salespeople to know that the higher the price, the more important it is to sell value. Remember, in Solution Selling we define value as Total Benefits minus Total Cost or Total Investment.
Why Participate in Value Justifications?
There are several reasons for participating in value justifications. They include sale cycle initiation, closing a sale, discounting, proof, and avoiding no decisions.
Initiate Sale Cycles. Once you know the value you bring to situations, you can leverage this to help initiate new opportunities and create curiosity in your prospect or customer more easily and quickly.
Close Sales. Value justification creates compelling reasons to take action. With a compelling value justification, buyers often ask to get started early. In other words, the cost or impact of delay is so overwhelming that they can’t afford to wait any longer.
Minimize Discounting. When the buyer and the salesperson know the real (measured and quantified) value, this onerous pressure can be greatly reduced. The buyer is less likely to ask for (or at least expect) a discount, and the salesperson is less likely to feel he or she has to give one.
Provide Proof. Visionaries see how the implementation of your offerings will give them an advantage in the marketplace. However, these visionaries only make up 20 percent of buyers in the market. The other 80 percent are more pragmatic and conservative. They need proof and the demonstration of high value to mitigate the risk that buyers naturally feel at the close of sell cycles. Value justification and value analysis are very important to this segment of the market.
Avoid No Decision. For one reason or another, some opportunities never conclude. The customer makes a no decision (we call this No Decision, Inc., or NDI). One of the main reasons buyers end up making a no decision is that they see no compelling reason to act; they don’t see enough value in the solution.
I contend that we actually do lose these opportunities because buyers do make a decision–they choose an alternative project. They don’t go with you or your competition, but they choose instead to invest that budgeted money with someone else. We all need to stop kidding ourselves about this situation; we lost.
Think of your buyers as people who hold the money like bankers. They don’t sit on the money; they invest it to get a return. You may well be competing against an accounting system, a new fleet of trucks, furniture, and so on, not just your usual competitors. Expect your buyers to go with the projects that provide the greatest value and the greatest return.
I recommend that every company provide its salespeople with a model to assist them with value justification. Keep in mind that every prospective customer will have his or her own way of analyzing value and the return on investments. Nonetheless, you’re always better off being prepared and presenting a projected ROI based on what you’ve learned. Unless you’re asked otherwise, keep it simple, and if the customer wants to take the analysis further, you’ll gladly assist him or her.
Keith M. Eades CEO, Founder, President
Sales Performance International
www.spisales.com and www.solutionselling.com
Keith Eades is the founder, president and chief executive officer of Sales Performance International (SPI). In a career spanning more than twenty-five years, he has consulted with the senior management teams of dozens of leading edge organizations. In addition, Keith has personally trained more than 10,000 sales, sales management and executive management professionals on the principles of Solution Selling. Today, his clients include the world’s top selling organizations such as IBM, Microsoft, Compaq, Pitney Bowes, Lucent Technologies and many others. His newest book, The New Solution Selling was published by McGraw Hill in December 2003.