A great value proposition is like a promise to your customer that you can help solve a problem for them.
Think about an upcoming sales call with a specific customer and a specific product or service that you want to sell to them. Follow these steps to prepare your value proposition.
- Identify your Sources of Value. List all the sources of value of your company, products, and services (other than price) that are most relevant for this customer and for this sales opportunity.
- Identify your Competitor’s Sources of Value. List the competitive products or services your customer will be comparing you to. Identify what you can say to respond to the competition’s strengths and differentiators.
- Identify your Value Differentiators. Identify which of your sources of value that will distinguish your product or service as superior to the competition. Include sources of value that offer customization or post-sales support. These sources of value are your Value Differentiators.
- Write your Value Proposition Statement. Now you are ready to incorporate all this information into a value proposition statement. Be sure to customize the value proposition statement and quantify the value for this customer.
A great value proposition is like a promise to your customer that you can help solve a problem for them. Visit STAR’s Essential Selling Skills online Module 9 Selling on Value. The Essential Selling Skills 12-part series includes practical exercises, planning forms, and quizzes.
Haggling over price is not what any sales professional should be doing. Unfortunately, when tight budgets dominate, the conversation circles back to pricing much too frequently.
Move away from haggling over price, to explain instead the value that you, your company, and your product or service provide. Differentiation is key to justifying to your customer that you are worth the higher price. In some cases when you communicate your value you will win the tie-breaker between you and a competitor at the same price.
How do you sell value when communicating with your customers? First, use benefit language. Average sellers talk in features whereas successful sales professionals use benefit language. It isn’t a benefit unless the customer understands the WIIFM (the "me” in What’s In It For Me refers to the customer). A benefit is a clear statement about how your company and your products/services can help the customer. For example, suppose that your company is a global manufacturer. What is more persuasive? To say, "We are a global manufacturer” (feature) or "Because we are a global manufacturer, we can supply all of your worldwide locations at minimal shipping expense to you.” (benefit)
Second, whenever possible, quantify the value. Your sales message will be much more compelling when you can demonstrate to the customer the quantifiable value that your company and products/services can provide. For example, highlight the cost reduction, time savings, or other relevant financial and time-related measures. For example, "Based on your annual usage, the performance advantages of our product will save you at least $500,000 per year.”
For more information visit our Selling on Value Workshop and Selling on Value Not Price Sales Meeting Kit pages.
Many top sales executives believe that few of their salespeople sell well on value. Does this surprise you?
It doesn’t surprise me because I see firsthand that many salespeople we work with find it very difficult to effectively utilize value selling with their customers. In particular, they have difficulty quantifying and communicating the value in both tangible and intangible terms.
If you feel that you (or your sales team) can improve selling on value, then this blog is for you (consider also reading an earlier blog "Three Principles of Value Selling”). Also visit our Selling on Value Not Price Sales Meeting Kit page. Let’s first highlight two key premises that will make it easier for you to sell value.
Premise #1: You already use value selling in your personal life when you make buying decisions. There are numerous examples but let’s use two examples that we can all relate to.
Imagine the last time that you bought a car. What factors were important to you in making the decision? If it was miles per gallon so that you could reduce your costs of fuel, you could easily calculate how much money you would save on fuel expenditures compared to your current car. If it was to reduce the cost of service/maintenance, perhaps you selected an auto dealer that provided free service for the first three years. Again, you could calculate how much money that would save you. Or, perhaps you upgraded to a safer vehicle that you could use with your insurance company to justify a lower annual insurance premium.
As a second example, imagine that you’ve recently decided to buy a tablet rather than a new laptop computer. What convinced you to do so? Was it the lighter weight (which is a big benefit for someone like me who flies a lot)? Was is the fact that your tablet allowed you to use one device in place of two or more other devices, such as negating the need for an e-book and a laptop? Was it the startup speed? Clarity of the screen? Ease of use? I’m sure that you can think of other advantages of a tablet.
Notice in the above two examples that you could often quantify the savings/gains in actual dollars or improved speed (time savings). Let’s call these factors "tangible value.” This tangible value was used by you-as-customer to select your preferred car or preferred tablet.And, in cases where you couldn’t necessarily quantify the value, the other benefits of the product were quite compelling. Lighter. Safer. Easier to use. Let’s call these factors the "intangible value.”
Premise #2: Now, apply what you already know about value selling but express it from your customer’s perspective. When your customers make buying decisions based on value, they are doing exactly the same thing that you do when you make buying decisions as a customer. They are assessing both the tangible and intangible value that your product/service will provide to them.
So, do exactly the same thing when you prepare your value proposition to a customer. Quantify the cost savings or time/productivity gains that your customer will experience by using your product or service. Highlight the two or three strongest benefits for the customer.
Average sellers don’t do this. Instead, they take a product-centered approach and fail to communicate clearly to a customer the tangible and intangible value that a customer will receive by using their product. Don’t make this mistake.
The Difference Between Price And Value
If you are a professional salesperson today, you know the difference between price and value. The challenge is to SELL THE VALUE to the customer. If you can't do this and your sales strategy is based only on "sell low" or "sell on price," you will set yourself and your company up for failure.
In our experience, there is no doubt that the process of selling has evolved. Regardless of whether you are new to sales or are a sales veteran, you must incorporate value added selling into your sales toolkit. To do this, a good starting point is to look at the three key principles behind every value added sales strategy.
Three Principles of Value Selling
Principle #1: Look at value from the customer's perspective.
This is the most important principle because you can't apply the other principles if you don't or can't identify a particular customer's value drivers. A product or service has value only when the customer perceives it to be so. This may sound like common sense, but surprisingly, it is not common practice. Avoid these two common mistakes: first, offering something to a customer that is value-less; and, second giving something of value for nothing.
What are the key skills needed to implement this principle? Quite simply, the ability to ask good questions, what we call "value creation questions," is essential as the first step in your value selling strategy.
Principle #2: Sell to the highest decision-maker possible.
Higher level decision-makers are more likely to appreciate the value elements of your offer. Conversely, lower level contacts tend to look at price and cost only. We realize that you shouldn't ignore lower level customer contacts, but you limit yourself if you don't sell "up."
Of all the principles, this is often the most frustrating and difficult for salespeople. For example, here are some of the challenges that we've heard from other sales professionals:
- how do you identify the key decision-makers?
- how do you gain access to the higher level decision-makers?
- what should you do if a "gatekeeper" is blocking access?
- how do you influence a committee?
- If you succeed in getting in front of the decision-maker, what should you do?
Principle #3: Quantify your value proposition.
After you succeed in getting an appointment with the decision-maker, the last step is to communicate your "value proposition" as persuasively as possible. One guideline that will help you to do this is to use specific, quantifiable terms that are in "units" that the customer will appreciate (such as revenue gain, productivity increases, market share growth, and so on.)
An example illustrates this point. Which of these two statements is most persuasive? Assume that both statements are true and that the same customer is listening to each of the statements.
"We have experience in helping pharmaceutical companies work with regulatory agencies such as the FDA."
"We can generate $30 million in additional revenue for you by accelerating your ability to get new drugs approved by the FDA."
STAR has many resources to help salespeople become better at selling on value, notably our Selling On Value Workshop, Selling on Value Not Price Sales Meeting Kit, 1-on-1 sales Coaching service, and our online training series entitled Needs Based Selling.