How to enable value selling in a tough practice? Value Selling is a well-known idea in B2B sales and services: focus on the customer value of your solution and harvest satisfied customers at higher margins.
Yet many tech and machining companies continue to rely primarily on the customer relationship rather than the value they add to the customer’s business. And they calculate their prices based on costs instead of the value they offer to their customers.
The solution: encapsulate the idea into a practical process and tool that helps sales people to do their daily job better.
A B2B sales person advises on investment decisions
In B2B, you only sell something if customers need your solution for their own business. Your customers would rather not buy your product or service at all or acquire it for free. If that’s not possible, they’ll buy it at the lowest possible price.
As a result, it’s often about the price in B2B. Buyers versus Sales. Whereas what should matter most is the return-on-investment (RoI) of the purchase and the solution you can offer.
What a B2B sales person must know
In order to advise the customer about investing in your product or service, you need to know a few things:
- What is the problem the client needs to solve?
- The solution you are going to advise the customer?
- The advantages of the solution you offer?
- Which advantages are unique because the competition does not have them?
- The value of these benefits?
So B2B sales need to know what problem they solve for their customers. Besides, a unique selling point (USP) only has value if it offers an advantage. And in B2B, an advantage will always provide value to the customer. It couldn’t be simpler, could it?
Let’s check. Your price may be higher than the customer’s next best alternative (the reference value). However, your solution may also offer more value. If the value difference is higher than the price difference, your solution would provide the best ROI.
How to put value selling into practice?
Two things are essential for Value Selling:
- you need to know the customer needs and
2) you present the value of your solution in monetary terms.
You cannot base your investment advice to your client solely on his trust in you and your good relationship. Value Selling is done with hard figures.
In practice, Value Selling is therefore only successful if the sales team really wants to understand the customer and is used to collecting and using data. Because in B2B, value is not based on feelings but on relevant facts. Something that must be embedded in the sales culture.
Tools for daily use enable value selling in practice
Business culture can be cultivated with tools that help people to make their daily work easier and speak the same language.
To enable value selling into practice, you can use a simple 5 step process to help understand the customer better, and find the benefits of the solution you offer and monetize it.
A process that Marketing can use to create a value proposition for a new product or service, or Sales can apply to value-sell a specific solution.
Find the hidden potential
Obviously, it all starts by understanding the needs of the customer.
To understand the customer process, you ask questions and let the customer talk. An open discussion will allow new insights, for you as well as your customer if you do this right.
Talk about known requirements, wishes or pain points as well as hidden costs. Consider to use the metaphor of the Priceberg, illustrating that a large part of the total costs of ownership are often unaware and hidden.
Alternatively, you can use the 8 non-value-adding wastes that Toyota continually seek is another checklist to help you do your needs analysis:
- Unused talent
Waste categories from the Toyota Management system
Three steps to identify the differentiators and monetize
Once you have done a proper initial needs analysis. The logic of value selling can be structured in three steps. These steps support you to find the critical few factors that determine the value of your solution in monetary terms by:
First, listing the Features & Benefits of your product, service or solution. Besides itemizing the Features and Benefits, the trick is to also identify the Benefits that are specific for the segment or customer AND the possible quantified value they provide to the customer.
Next, you compare the Benefits with the customer’s next best alternative. Some Benefits will disclose a weakness of the alternate option. If they do, you have identified a potential Point of Difference. The trick is first to find the critical few.
To do so, you will need to validate your understanding of the needs by asking additional questions that relate to the likely Points of Difference. A conversation driven by questions that validate your assumed differentiator and also create awareness of the value of your solution with the customer.
When you have identified the Points of Difference, you will have to monetize them.
This is an open and fact-based process you do with your customer, using data and formula’s you both agree on, to help the customer to validate their purchase decision.
How to sell the concept to sales people?
If used this way, sales people will be supported in their daily work. It will bring abstract concepts such as product features, benefits, differentiators and customer value to life. Getting focus on customer value in a practical way, will result in better prepared sales calls and visits, better advises, satisfied customers and better prices. And it will enable value selling in practice.
To implement, you start by proving the concept: train your internal experts and create first successes. Subsequently, you build a structure and culture: ensure experience is shared and materials documented. Consider appointing a customer value manager to coordinate and maintain the process and tool to sustain the advantage. This way, you make Features & Benefits, Points of Differentiation and Monetization a common language of your sales team.
Ideally, your Value Selling experts are the managers leading marketing & sales teams. Incentivized by the organization and by the results they will soon see. Able to support and coach others to use it.
This is how to bring Value Selling into the practice of B2B sales and service.
For more information or a customized proposal on my practical approach to enable value selling in practice, feel free to contact me!
Value First Then Price
Edited by Andreas Hinterhuber and Todd C. Snelgrove
The Dollarization Discipline
By Jeffrey J. Fox and Richard C. Gregory