What is value? It is more than just a dollar amount. Rather, it’s the customer’s mental estimate of the product’s value. Your customer’s perception of value is her reality.
This recession has changed much. Business is harder to come by. Consumers are more price-conscious and are shopping more stores. Competition is keener. Going by the wayside are the perceptions: bigger is better; and a high price means quality. People are downsizing; excess is out, and thrifty is in.
But what hasn’t changed is consumers don’t necessarily want the cheapest product. They do want a good price, but will pay more if they feel the product is worth it. Before customers will exchange their money for a product, however, they want to believe the product will provide them benefits that they value, and that these benefits should at least equal the cost. They’ll become emotionally hooked when they believe the benefits exceed the cost.
You’ll need to convince your customers that they’re not just spending, but actually investing and will reap a good return. Millions of consumers will say that they will invest gladly when they recognize that the product will give them more value than it cost.
Value is defined as an equivalent, or fair-to-both-parties, exchange of money for goods or services. A customer believes she’s getting value when she perceives that her benefits equal her costs. However, she will consider her purchase a good value when she believes the product’s benefits exceed her cost. It is the relationship between the consumer’s perceived benefits and perceived costs that persuades her to buy or not.
The product’s value is not a certain dollar amount that an expert might dictate. Rather, it’s the customer’s mental estimate of the product’s value. Customers judge value by what they get in return for the dollars they pay. So when a customer grumbles, “Your price is too high,” She’s actually saying, “The value or benefits you have shown me are less than the product’s cost.” The value does not equal the cost. Or, in other words, “the value or worth for me does not equal what I will pay.”
Your customer’s perception of value is her reality. Seldom will shoppers pay exactly what your product is worth. They will pay either less or more than its worth--depending on their perception of value. Your and your salespeople’s ability to manage customers’ perceptions and to increase that perceived value is a master selling skill. Your business’ survival in these times may very well boil down to how well you and your people are able to be value creators. You must cease being price merchants and become value creators!
Perceived value is what matters, but it is subjective. That makes value different for everyone. Since everyone perceives value differently, you must approach each customer in a way that speaks to her mind and her needs. Each customer is a new challenge.
As salespeople, we understand customers buy for their reasons, not ours. We also know they don’t buy a floor for what it is. They buy it for what it does for them. So, they buy consumer benefits rather than product features.
You build perceived value in the customers’ mind by promoting the consumer benefits. Not just any benefits, but those benefits that relate to the customers’ needs and wants. That’s the crux of selling skills and that’s why mediocre salespeople lead with price, while professionals lead with questions to truly understand the customer.
The best way to know which benefits she cares about is to discover her needs. Your discovery must be both skillful and in-depth. As you ask questions, you need to watch and listen to the customer’s response. Good listening skills are also crucial to success in sales.
Price is only one of several elements in her decision, but not the only one. For nearly all customers, price is only one variable in their decision. They won’t buy low quality just to save. They want quality and a justifiable price. Customers will not pay more just because they like you.
Professional salespeople, instead of defending the price, create value that transforms the price into a bargain. In fact, the only effective defense to a price objection is to relentlessly focus on what adds value for the customer…and ignore what doesn’t.
You and your salespeople must create value – increasing the worth in the customers mind. You can’t do that if you or they (your customer) are worried about price. Creating value is a three-step process.
Step One: Ask questions and listen so that you understand your customer and your customer feels understood. There is no other tool more important to a salesperson than this ability to engage with the customer. Most salespeople don’t ask enough questions. They want to show product way too soon. They are product focused, instead of customer focused.
Step Two: Never, ever admit sameness between your products and a competing product. Remember, all buying decisions are primarily emotional. Customers want to feel emotionally good about what they buy. Customers have a strong psychological need to compare two or more offers. They like to compare apples to apples and oranges to oranges, so they can narrow their decision down to price.
To hold your margins and sell at prices higher than your competition, you must never comment that your products and services, your personal expertise and honesty, and your company’s integrity are comparable to a competitor’s offer. Instead, emphasize the differences. By analogy, show that the competitor’s offer is an apple, while yours is an orange. Don’t let customers think both are apples. If they were, then price would be the only difference.
“To concede sameness is to give away your competitive advantage.” While customers are busy commoditizing, we must be busy differentiating. If your customer’s perception is that your product and service are the same as your competitor’s down the street, then she’ll always pick the lower price.
Remember, even if the product you are selling is the same, your service and installation, the reliability of you and your company never are. They differ and are better. Your job is to emphasize them, so the customer realizes that you create more value.
Step Three: Tell the customer why buying your product from you will increase the value of her purchase; tell her how your product precisely matches her particular needs. Superiority won’t matter to her until it relates to her needs. Of course, you can’t do that unless you listened to her at the beginning, as you asked her questions about her wants and needs for new floor covering.
She will follow your recommendations if you can quote her very words about what she wants, and then articulate how the benefits of a particular product either satisfies or exceeds her desires.
This is where you need to rehearse and develop both your speaking and demonstration skills. It’s about learning to articulate clear, customer-focused benefits, rather than general product features.
Let’s face it; it is easier to be a price merchant. It takes thought, patience, understanding and skill to be a value creator. However, your customers will be more satisfied and you will be better able to pay the bills. You choose.
