Too many salespeople and business owners let customers put them in a shootout at the price corral. When you and your competitors all uncover the same needs and offer similar solutions and benefits, you leave the customer no choice but to treat all these offers like they were commodities. That drives the price down sometimes into no profit territory.
We make this worse by calling it a price objection. If the customer is raising a price issue, it is not an objection that can be overcome using fancy sales techniques. Price resistance tells you that you failed to learn what the customer values and connect that to what you offer.
A Sales Insights Labs survey showed that 33% of deals fall apart because of budget. The customer isn’t willing to spend enough money for the purchase or considers the price too high. Whether you call it budget or price, the customer doesn’t see enough value in what’s offered.
Too many salespeople and business owners don’t fully understand customer value and how customers figure it out. Take a journey through the eyes of the customer and learn how they arrive at the amount of value they see in what you offer. Understanding that can boost your sales by 20% or more.
Sales Are Made and Lost During Discovery
Top performing salespeople don’t get price resistance in the first place because they’ve laid the groundwork during discovery to help the customer assign enough value to justify their price. Sales are won and lost during discovery.
Research released in Neil Rackham’s book SPIN Selling showed that salespeople who go through all the steps of discovery are 64% more successful in closing sales than those who don’t cover all the bases. This research observed 35,000 sales calls and connected what the salespeople did and didn’t do with their results.
His research proved that closing and objection handling techniques had no effect on sales performance and the final presentation only had a minor effect. Sales is all about using discovery to uncover what the customer considers value then connecting that with the issues they face.
In discovery, you learn all about the customer and help them become aware of their issues. Then you show how much these issues affect them and finally help them see how much better off they could be if they addressed them.
A buyer becomes motivated and finds enough value to justify paying a profitable price during discovery. When salespeople rush through discovery so they can present their offer, they set themselves up to lose deals or sell at too low of a price. You can’t win a lot of deals by pitching or taking shortcuts.
Stealth Customer Value
Inside every customer lies stealth value. There’s a lot more going on inside customers than most salespeople and owners believe. That stealth value lies deeper below the customer’s needs, pain points, situation, challenges and goals.
When you address stealth value, you can build your own corral that separates you from your competition. That’s how you increase both the number of qualified leads who buy and the prices they pay. This corral is built on a deeper understanding about how the customer decides what they do and don’t buy.
To find stealth value, first salespeople have to understand what customer value actually is, how customers figure out the value they assign to your offer, and how customers use value in their buying process.
Only the customer can define value. Whatever you and your company say about the value of what you offer is only potential value. Real value is inside the mind of the customer.
I’ve studied customer value by listening to over 2500 salespeople talk with customers, personally interviewed customers, and reviewed my experiences when over 1000 salespeople called on me. I’ve reviewed research studies on how customers view their situation compared to those selling the customer to confirm my discoveries.
This is what’s going on deeper down inside your prospects and customers minds.
1. Customers rank how important and unimportant they consider every need they mention and every benefit they hear
You could uncover many needs that have helped them make a sale in the past. That doesn’t mean those same needs will do this for every prospect. In some cases, a customer may not consider those needs important enough to buy anything or pay a profitable price for a solution.
The same is true with all those wonderful benefits you love to present. One customer may buy from you at a high margin because of those benefits. Don’t assume every customer sees the world the same way as that customer. Other customers might agree those are benefits but don’t consider them important enough to spend money on.
When a customer talks about their problems or agrees there may be some benefits, too many salespeople think this is a buying sign. They jump into making a presentation only to discover the customer isn’t interested. Train yourself not to see every positive thing the customer says as a confirmation they want to buy anything or will pay your price.
Just because a customer complains about problems or likes some of your benefits in no way means they want to buy from you. They have to see enough value based on their own way of figuring out value which is very different than the way your company sees things.
Here’s an example to help understand the way customers figure out what they value based on what’s important and unimportant to them. Consider two prospects of the same size, in the same industry, who have mentioned the same needs and heard the same benefits. This chart shows how each prospect ranks the importance of each of these using a 1 to 10 scale with 10 being the highest and 1 being the lowest.
Source: Don Shapiro
Can you see why one prospect would buy and the other wouldn’t? Or why one would pay a higher price and the other wants it below cost? Yet, they both have the same needs and have heard the same benefits.
Salespeople have to dig down deep to learn about these rankings of importance so they can influence them instead of thinking the customer may be ready to buy. Too many sales are lost because salespeople failed to consider what is and isn’t important to the prospect.
2. Customers assign a value to your company and what you offer. They assign that value without knowing your price.
Value is not a comparison between the benefits you offer and your price. Big misconception. Customers don’t need to know your price to determine the amount of value they see in what you do.
Your prospects and customers actually assign a value to what you do and what you offer that has nothing to do with your price. They will use that value when considering your price but this value is a completely separate calculation they make.
Salespeople need to dig down to learn about how the prospect figures out this value and the amount of value assigned so they can influence it. Normally, you can’t influence the assigned value in your presentation. Price and value issues are based on a complex formula the customer calculates.
You have to understand what the customer has put into their value formula to influence their calculations. This is addressed during the discovery and demo phase of the sale. Sales are lost and margins are too low because salespeople are unaware what value the customer has assigned to the offer and how they figured that out.
Don’t rush to present your offer until you have learned how the customer figures out value.
Here’s the formula for a customer’s perception of value:
Importance + Visibility = Perceived Value
Only what’s important to the customer can contribute to their perception of value. It doesn’t matter if your company thinks something is valuable or important. It doesn’t matter if you believe your benefits are the greatest. If they are unimportant to the customer, then zero value will be assigned to them.
Needs, pain points, and benefits can only create value when they are important to the customer. It’s not what you consider important that counts. It’s what your customers consider important and unimportant that count.
Only the customer can define value. A company and a salesperson cannot do that. The sale only occurs inside the mind of the customer.
Even if something is important to the customer, they have to be aware you offer it. It has to be visible to them. A customer’s perceptions of value are about those things that are important to them which are also visible to them. Out of sight, out of mind.
Get outside your own mind, your own company, and your own way of thinking. See through the eyes of the customer and learn how they figure out what they do and don’t value.
This knowledge will give you the keys to unlock any sale.
3. Customers will place all competitors in the same corral for comparison unless a competitor deliberately builds a separate corral.
If your firm ends up in the customer’s corral, you are seen as a commodity leaving the customer no choice but to pick the firm with the lowest price. Or one of your competitors has influenced the customer to evaluate them differently. They’ve built their own corral while the rest of you are in the customer’s corral.
Who do you think is going to win that sale?
Salespeople have to influence the way all offers will be evaluated. That means the customer compares your competitors based on criteria that favors you and doesn’t favor them. Influencing customers isn’t just about your solutions and benefits. You have to draw the playing field you compete on or someone else will draw a playing field that puts you at a disadvantage.
You draw that playing field based on what the customer values. You know more about what’s important and unimportant to them than your competitors. You use this information to paint a picture that shows you understand the customer and their situation better than your competitors.
You understand how the customer defines value and what’s important to them.
Now you aren’t a salesperson anymore. You’re a trusted adviser who is helping the customer find the best ways to address their challenges.
A Salesforce research study recently found that “78% of buyers seek salespeople that act as trusted advisors with knowledge of their needs and industry.” Dale Carnegie conducted a study that found “71% of respondents would rather buy from a salesperson they trusted over one who gave them the lowest price.”
Salespeople have been able to boost their sales at profitable prices by over 20% when they consistently address stealth customer value and influence how their offer is evaluated in a way that favors their firm.