Selling Value

If you're selling a quality product—and you're doing it right—you shouldn't have to cut your price to close a deal.

by Jason Zigmont HowToSell.net [February 11, 2000]

One of the toughest challenges salespeople face is selling value over price.

I found myself on the phone with a prospect the other day, and the inevitable question of price came up. A competitor was also bidding for this prospect's business and had come in with a low-ball bid. The prospect asked whether or not I would be willing to match the competitor's bid, and was shocked when I said No.

In business if you get backed into the position of selling solely on price, you may put yourself out of business. I know for a fact that our service is better then our competitors', and we have a higher cost, so therefore every day I must sell value. It can be hard to sell value when your prospect says "If you give me X price, I will sign now," as it is every salesperson's instinct to close the deal right now! After all, it's much easier to drop your price than put in the necessary effort selling value.

Setting your baseline
In selling on value, you need to establish exactly what your value is. In our case it's reliability and our company's size and funding. In order to establish this value baseline, I asked the prospect whether or not he cared about service availability and a sustainable business model, and to my surprise, he said No. He then asked "Besides a service that is stable, what else do I get for paying you more?"

At this point I realized that it was time to move on, as I was not going to compete on price alone. As a salesperson, passing up a deal is very hard to do, but if it's not a win-win situation I always step away.

Learning from . . .
If you are a salesperson—or you manage sales people—you should always ask yourself after every deal (successful or unsuccessful) what brought you to where you ended up and what you might have done differently.

My mistake on this call was that I failed to establish value early enough in the sales cycle. Most of my prospects are willing to pay extra for higher quality service, but that is because I establish this value early and convince them to settle for nothing less.

Unfortunately, in this situation either I was not able to set up the value equation—didn't ask the right questions—or the prospect may not have been listening. The result is when they spoke to my competitor; my competitor sold them on price.

The moral of the story is that while you should always be closing, you do need to establish value first. Usually when I ask for the order, my client is already sold, but occasionally one slips through my fingers. But if I (or you) can learn from the experience, it'll happen less and less frequently.

Next week I will discuss closing techniques and how to increase your closing ratio.

—End