Is that coffee on your desk really worth $5, or would you have preferred to have paid $2.50 for it? It depends, right? Does it taste as nice as you expected, was the barista efficient and friendly, did it hit the spot?
When I talk to business owners and decision-makers about cost versus value, it’s interesting to hear what people say. When we talk about value, most of the time, we are talking about perceived value. The actual value is not known until after a product or service is delivered, and in some cases, not until well after it was delivered.
So how can you, as a professional salesperson, establish the value of your product or service? Let’s break it down, so you can build:
When you are in buying mode, you recognise the value that something may bring to you. That value could be time saved, prestige, or it could you calculate it (we’ll cover that in a minute)?
Let’s explore the time saved. How much of our free time do we spend on mowing the lawn? Especially in warm and humid weather, the grass grows like mad. If you decide to hire a gardener to do that job for you, you free up an hour or more every weekend.
That hour could be spent with your family – incredibly valuable but also hard to quantify a dollar figure for - or it could be an extra hour of work or billable time that you can get done.
You perceive that the value of the time you save is more than what it costs you to hire someone to do the job. That makes it a simple calculation. You book a lawn mowing contractor and move on.
Prestige is a little less tangible. This is all about making yourself look good and stroking your ego. If you buy a Toyota, one that everyone has, you know it is reliable and gets you from A to B. But if you buy a BMW, which fewer people have, you become “a member of the club”.
The extra cash spent on a BMW might be worth it if you love the way it drives, or if it is important to you what people may think of you. It may also get you more business. In that case, it may well justify the purchase.
For the record, I drive a Honda.
Once you’ve had your lawns done for a few months, you appreciate arriving home to a perfectly manicured lawn. I know I do! You’ve spent the hour it takes each week either making more money or hopefully by spending it with your family and friends. You now know the value of that hour, to the penny.
If you’ve purchased a prestige product, you’ll know whether it was worth the money three to six months on. If it wasn’t, you might have sold it and changed back to your trusty Toyota, or you grudgingly keep making the repayments on the BMW that you’re just not entirely satisfied with.
We have all had a purchase like this, where we are committed but not 100% happy with our decision. Wouldn’t it be nice to avoid those choices?
In my world, what we sell does not exist until it is delivered. We work hard to make sure that the value we provide exceeds the cost of it. If you take our BMW example, you can probably buy two Toyotas for the price of a BMW. If you have buyer’s remorse, you will be trying to work out what the balance would be if you had only purchased the Toyota, and what that could have delivered for you.
When we work with clients, we help them understand the problem their prospect has, and what that problem might be worth to them to solve. This is not something most prospects know upfront, so you cannot just ask them. Most salespeople ask questions like “what is your budget?” when they’ve barely got to know their prospect. So how do you ask?
You don’t always need to know their budget. Sometimes it’s good to see if you’re in the ballpark, but often there are other options.
You do need to know what their biggest problem is, and why it is a problem for them. Understanding what you need to solve, upfront, helps focus your prospect’s mind to the problem they have sought your help with.
You also need to know what other options your prospect has. One of those options is doing nothing! Yes, that is right. If solving my problem costs too much, I can decide it’s not a big enough problem to solve.
You can ask your prospect what solving this problem would mean to them. This will help you, and your prospect, understand the value.
Recently, we worked with a client who we asked to do a simple time in motion study (something they had not considered before).
They calculated this job is costing them $10,000 per year. The problem could be solved for less than $5,000, but our client did not know that. If they did, upfront, they would have thought it was too expensive.
If you add our service fee on top for a short time we have been working with them on a few of the challenges they brought us in for; we have already covered our service fee for the next few months. They still get change from $10,000! How’s that for real value?
We helped our client work that out upfront before they spent a penny (other than our fee).
Do you want to know how we can help you help your customer more effectively and close more sales? Try one of our specialised sales training programmes, as they will guide you step-by-step through the process that matches your sales cycle. Why not start with booking a coffee meeting, and find out how we can add value to your business. We’d love to hear from you.
~ Arron Edwards, Bravesight CEO