Purchasing and Negotiation Training

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Editor’s note: Stu Schlackman is a frequent contributor to this blog.

How does the prospect view your solution? Will they buy or decide to wait? Is there a sense of urgency on their part to make a decision? My favorite saying is, “If you can’t price your value, all you can price is your cost.” If that’s the case, the customer will more likely view your solution more as an expense than as an asset which means they can live without it. Perceived value must always trump the cost of your product or service. Customers buy when it’s obvious to them that the benefits of the gain or alleviation of a pain far outweighs the financial investment.

Let me give you an example. Let’s say Joe goes to the doctor for his annual physical and he’s told he needs to lose twenty pounds. The doctor tells him about a new diet that will help him lose the twenty pounds in six weeks and the cost for the diet is two hundred dollars. Joe weighs the cost versus the benefit of the weight reduction and comes up with the decision to hold off. Why? Well, Joe knows he needs to lose twenty pounds since his doctor has mentioned it the last five years. Is it too much money? Can Joe do it on his own (well he hasn’t in five years)? Let’s make one change to this scenario. Joe’s doctor says if he doesn’t lose the weight this time he’ll have to start taking medication to get his cholesterol down. Joe asks how much the prescription will cost and the doctor says roughly $250 per month until his deductible is met.  Now we have Joe’s attention to take a harder look at the diet for $200. Why? The perceived value of losing the twenty pounds just moved up becoming more important than the $200 for the cost of the diet.

Customers buy when they perceive that the value  outweighs the cost of the investment. What we need to realize is that there are three components of value; economic, business and personal. All three have an impact on the customer’s view of the investment.

Economic value is the financial impact of the investment. What will be your return on  investment? What will it do for the company financially? Will it cut operational costs, increase inventory turns, increase revenues or cash flow? Economic value is of most importance to the economic buyer – someone who makes decisions based solely on the financial elements of the solution.

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Business value is the primary consideration to the user of the solution. What can the investment do for the organization and how can it increase productivity, efficiencies and effectiveness for those that use the solution.  Even those sold on this value can meet obstacles when they try to convey the value to the C-suite.  The problem with business value is many times when we sell to the user group that sees great value; they can’t convey that value to the economic decision maker such as the CFO. In other words the business value needs to be conveyed in economic terms to other decisions makers involved.

Personal value is the third type of value that needs to be considered. This is more of an intangible value. What will the decision do for me personally? Will I get a promotion, a bonus, peace of mind, or improve my influence with other organizations? Personal value is equally as important as the business and economic and sometimes can be the determining factor in the decision. Why? We need to understand that in the brain emotions always trump logic. We make decisions based on emotion and then back them up logically. Personal value can only be uncovered when there is trust and a strong relationship with the decision maker. We also need to realize that personal value will be different for each person involved in the decision making process since personality styles influence what is valued.

As sales professionals we need to understand each aspect of value and how it impacts each of the decision makers. There is not a “one size fits all” for value. Asking the right questions will help you understand what’s most important to the customer.

Here are some example questions that address each type of value:

• What do you consider being the most important benefit of this solution?
• What is the most important financial consideration for this investment?
• What are the benefits of this solution for you personally?

Good Selling!