Written by Sean McPheat |
22 June, 2011
Many times, your buyer will take a look at your up-front price and reject it. This is because they don’t see how the goods or services you offer will solve their problems at the price stated. In other words, value has not been built up in the customer’s mind.
Value isn’t waht you think it is. Value is alwyas what the buyer thinks it is. If you think it’s goos and the buyer thinks it’s not, it’s not!
So here you need to really educate your buyer. You need to highlight the focal point of the conversation. Either you will focus on the price of your services or products, or on the value of your solution, that is, what is it worth to the buyer. Here are some tips on how to help the buyer perceive that value:
1) Remind him of the value of past services: If you’ve been partners with the company for some time, bring up the value that you have built up over that time with him. Remind him of what they’ve received from you in the past.Is the peace of maind and security you have provided worth something? If so, let him know how much that must be worth.
2) Check if price is the real issue: You could ask something like: “Mr Buyer, if you were to make a decision today on all the criteria except price, who would you go with and why?” The reasons the buyer comes up with will include a number of things other than price, and you can ensure that you build value on those other things. You can then convince the buyer that all those valuable things outweigh a small price differential between you and the competition.
3) Shift the focus off price: You don’t make apologies for high quality and great service. Explain how your services adds value to the offering you are making and explain how your back-up or other unique offerings benefit the buyer’s business.
4) Use testimonials to convince the buyer that price isn’t the be-all-and-end-all: It’s ok you saying that your quality and service makes up for the higher price, but you would say that, wouldn’t you? Use what other customers have said to reinforce your message that value is built in to the long-term service of your realtionship with them.
5) Build performance criteria into your contract: Here at MTD, we ran a Sales Development Programme with a company in the construction industry. We held back part of our fees until the end of the programme. If we delivered to the spec we had promised and the customer profited from that, we shared in those profits. If we didn’t deliver and their profitability wasn’t what we expected, we didn’t get those performance fees. Needless to say, we shared a good percentage of the extra profits the company made!
You can build some kind of performance contract into your relationship with the buyer. You could reduce the risk to your buyer by introducing a clause for failure to perform. This is known as a malus, and it occurs when the contractor must repay or forfeit some of their fees for failing to perform. If you are that confident you can deliver for the buyer, you might consider something like that in your contract to reduce the risks for them, and hence increase the value.
6) Confirm the basis for the value you are offering: If the buyer is still considering using your competitor, you can identify the best value offerings you have and reiterate them. Then you could say: “Mr Buyer, let’s go over our proposition together and I’ll highlight the benefits you will get by going with us. Then, let’s compare what the competitor is offering and we can see which of us would benefit your long-term business the most”.
It’s true that some buyers will fail to see the value of your products and services.Their objections appear as either value-based objections or equity problems. In the first case, the buyer falils to see the value of what you are offering. In the second case, they cannot see the difference between you and the competition. You need to reiterate your value and uniqueness.
Ask yourself, what are your definable and value-building differentials? Where is the value in your proposaition?” The ansers to these questions will build confidence in your customer and encourage them to identify, with you, the full value of your offerings.
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