- Blog post
When you let the customer define value, you will see sales rise
The idea that salespeople must provide added value for their customers seems obvious. But what does that really mean? Free technical support? Extra bells and whistles? Playoff tickets? Does it mean spending more time with customers, troubleshooting problems and acting as a consultant? Or do those efforts detract from the real value you provide?
Tech support may be a liability if it’s delivered poorly. Bells and whistles may make customers feel they’re paying for stuff they don’t want. Those playoff tickets may feel like a cheap bribe. And all that extra TLC? The customer may be thinking, “I wish they’d just leave me alone so I can get some work done.”
The reality: Added value is all in the eye of the beholder.
The value definition
You might think that you can lavish so much extra value on customers that you’ll automatically win more of their business and make competitors wither away. But many who have pursued this path discover they’ve added costs (in time, if not money), and that the “added value” isn’t valued or rewarded by the market. Instead of becoming more competitive, they become less so.
The problem: This approach assumes that customers see value the same way you do.
Value is defined by a simple equation:
Value = Benefits – Cost
The salesperson who is able to deliver the greatest benefit at the least cost wins every time.
But who defines each part of that equation? The customer. And different customers, even within the same industry, have different notions of value. The key to adding value is understanding what your customer considers a benefit, what your customer considers a cost, and how he or she calculates the relative value of each.
Some buyers, for example, will think the greatest benefit you can offer is not to waste their time. They don’t want to meet with you to talk about their business problems. They won’t read the news clips you diligently mail to them every month. What they truly want – and will gladly pay for – is for you to make problems quietly go away.
Other customers do the calculation differently. They may define value in terms of the attention they get from you. If things run too smoothly, they may wonder why they need you.
Accept thy customers
Like anyone else, salespeople have their own value equations. And when a customer doesn’t see value the same way, many salespeople assume the customer just needs to be educated more.
Yes, sometimes buyers truly don’t understand what you’re offering. But more often, they just value it differently. You won’t make headway trying to persuade the buyer to accept your definition of value. It’s more effective to align your values with theirs.
For each individual customer, understand how they calculate the value equation. Ask yourself:
- What does this customer consider a benefit?
- How much value does he or she place on these benefits?
- What does this customer consider a cost? How big are those costs?
- Based on the customer’s value equation, how can I add benefits without increasing costs?
- How can I reduce costs without cutting benefits?
Source: Neil Rackham is the founder of Huthwaite, a provider of customized sales training. Info: Huthwaite, 540-882-3212.