One of my customers asked if I could write an article on ways to help his people overcome ‘selling on price’.
This customer operates in the price sensitive building and construction industry, and does not employ salespeople. Rather they rely on their engineers and estimators as their direct sales force. These engineers and estimators are in constant communications with their customers, yet, they lack formal professional sales training.
I thought about the different sales techniques I had learned in my years of selling and marketing in the building and construction industry, such as product bundling, value-added services, company reputation, multi-level relationships, project knowledge, testimonials, etc.
And then it struck me. Rather than compile a checklist of sales tactics and techniques to overcome the B2B price trap for these engineers and estimators (which they could easily obtain through an online search), perhaps a simpler and more effective way to help them is to propose a different way of viewing the customer price discussion altogether.
When a customer mentions ‘price’ – you hear ‘value’
A good way to get out of the ‘price trap’ with your customers is to reframe the discussion. So that when a customer asks you, “What’s your price?”, or tells you “your price is too high”, you substitute value for price in your mind. Hence, you hear “What’s your value?” and “your value is too high”.
Now you have an opportunity to open up with the customer and demonstrate the value you offer in terms of benefits. When asked: “What’s your price”; you hear: “What’s your value”, and respond with benefits and price, rather than just price.
And when a customer tells you “your price is too high”, what they are telling you is that they do not see the value they are getting for the price you are charging. In other words, you are not telling your customer the complete story of the benefits your business is offering.
The benefits of thinking ‘value’ to beat the B2B price trap:
- Provokes you to consider the many ways your company creates value for the customer when asked ‘what’s your price?’
- Removes pressure to immediately respond with a lower price when told ‘your price is too high’
- Defines correctly what the customer actually wants to know. And that is – what benefits is the customer getting at your price point relative to your competitors?
McKinsey & Co. have developed a precise equation of customer value that illustrates the importance of thinking in terms of customer value rather than price.
In other words, the value a customer receives is equivalent to the benefits they get from your product / service minus the price.
So having a higher price than your competition is not a problem, as long as the customer perceives they are getting greater benefits from using your product or service. And it’s up to you to make your customer aware of these benefits.
Let’s test this concept with an example:
I’m discussing with a customer the development of a strategic marketing plan.
Customer: What’s your price?
Me (habitual response mode): To help you develop and implement a strategic marketing plan the investment is $X.
Me (substituting value for price mode): I will help you uncover key insights about your customers and competitors by conducting market research & analysis. From here, we group your customers based on common behaviours and preferences to identify your target segments. Next we’ll develop your customer value proposition and marketing objectives. Then we formulate your overall marketing strategy and the tactics to use to fulfil the marketing objectives. The final step is execution and evaluation where we schedule the activities and measure the results. The investment for this strategic marketing plan is $X.
It’s pretty obvious which of these two responses provides the customer with what they really want – the ‘value’ you offer.
By changing your mindset to hear ‘value’ when the customer says ‘price’, you are removing the tendency to automatically reply with a short response based on a number. Instead you are giving the customer the benefits and price so that they can make a more informed and confident purchasing decision.
What if the customer says to me ‘your price is too high’ after I give them the ‘value’ response above. Easy, I reframe the question in my mind, and hear ‘your value is too high’.
And here are a couple of my responses:
Well, maybe we could look at amending the work program to fit your budget. For instance, if you have the internal resources to help develop and execute the marketing plan, then we could apportion some of the work accordingly. How does this sound to you?
Ok, let’s go through each stage of the marketing plan in detail so that we agree on the work required and the deliverables. Would you be open to that?
So next time you are speaking with your customer, and they ask you “what’s your price?” or tell you “your price is too high”…pause…reframe the question / statement in your head by substituting ‘value’ for ‘price’…and respond with benefits and price.
You might be surprised how this simple change in mindset can prevent you from getting caught in the B2B price trap!
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