You’ll probably have a very accurate idea about what your business costs you. The bricks and mortar (or your desk, laptop, printer and supply of chocolate Hob Nobs) Your people – either on your payroll or as associates or suppliers. Your manufacturing, purchasing or tech development costs. What you spend on marketing your business and your cost of sales. Not to mention your sanity! Value-based selling
But do you really know what you’re worth and how to use that to sell with value rather than to a cost?
If you’re a catwalk model or a Premiership football player, you can probably answer this down to exact pounds per minute. Linda Evangelista infamously declared that she didn’t wake up and get out of bed for less than $10,000. Probably far more than the cost of some of the outfits she shimmied down a runway wearing.
Although there’s fierce debate about whether he was responsible for their $4billion share collapse or just in the right place at the right time to offer the media an easy headline, Coca Cola did find out that they were worth much less to Ronaldo than they hoped when he deliberately moved their product placement bottles out of camera shot during his Euros pre-match interview and replaced them with his bottle of “agua”!
Are you pricing for value or for cost?
What about your products or services? Do you know exactly what they’re worth to your clients? And is this reflected in how you price your services and how strongly you defend your pricing structure?
In noisy, competitive markets there’s always likely to be someone with a cheaper offer, and of course clients aren’t daft – they will know where to look for price comparisons. But that shouldn’t preclude you or your sales team understanding your worth rather than just your cost to them.
What if you’re an HR expert helping a client navigate the tricky waters of changes to contracts for their employees: Is your pricing based on a cost per hour you’ve decided your time is worth? Or on the value for your client in knowing this entire process will run smoothly, avoid their own managers getting lost inside a process they don’t understand, and ensuring they don’t end up in a tribunal with a claim for constructive dismissal costing thousands?
One might be worth a few hundred pounds (assuming your surname isn’t Evangelista), the other significantly more.
What if you’re providing software: Do you or your team get bogged down justifying or discounting the cost of installation, monthly fees and maintenance, or engage in conversations about the productivity gains and error reduction your system delivers across your client’s organisation?
We’re not naïve enough to suggest that your pricing can suddenly quadruple because you’re reducing risk, enhancing insight or saving time. What we are suggesting is that having the confidence to explore this with clients and prospects allows you to position your pricing within this context and defend it when under pressure for discount.
Using strategic questions to identify value:
Value-based selling is about having the courage to ask value-based strategic questions that elevate the conversation to business level.
- How does your product or service support the strategy of your client or prospect?
- Where does it fit within their own plans or contribute to their goals?
- What role is it playing for them – reducing operational costs, improving productivity, removing complexity, creating flexibility, managing risk, increasing sales conversion rates, generating capacity, providing insight, enhancing reputation…?
- And what’s the value of this to your client – in hard cash, in resources, time or people and versus their competition?
How confident are you or your sales team to ask these questions and respond credibly to the answers provided? If you’re nervous about how to engage in value-based conversation, you risk your entire proposition being reduced to a debate about cost. And a race to the bottom will quickly ensue.
Back to our original question.
What are you worth?
How to identify your own value:
- Can you clearly articulate your uniqueness and why that’s of value to others? There’s little point in having a Unique Selling Point you think is amazing if it provides no value to clients. Eccentricities are not the same as USPs!
- Can you place your product within the key market trends and insights that affect your clients? Are you able to demonstrate where your solution helps capitalise on or reduce the impact of these dynamics? Research suggests that this becomes increasingly important in influencing senior decision makers and C-suite executives.
- Are you adding as much value as possible to your clients? In the way you interact, in how you listen to them, to the time you make available for them, in what you provide beyond the service or product they are buying from you?
The value of asking clients for feedback:
Feedback from clients is priceless. A few years ago one of our clients told us that what was immensely valuable to their executive leadership team was when we turned up to their meetings to update them on work, and at the same time provided some straight-forward feedback to them about what we noticed about their impact on their teams and why there was urgent need for change.
We were doing this free of charge whilst we were on-site delivering other work. It was a relatively easy give, but of huge value to a group of leaders who knew that honest, unadulterated feedback was in short supply and badly needed.
It led to a whole programme of Executive Coaching work – priced for its value and not at its cost.
To sum up:
There’s a simple formula to bear in mind when thinking about the value you provide to clients:
Value = customer benefits – cost of your product or service
An absence of perceived or clearly articulated benefits = an arm-wrestle over cost
A presence of clearly articulated, acknowledged, and desired benefits = value (which is inversely proportional to cost and discounting)
How’s your value adding up and can it be increased?