Paul explains what perceived value is and how it influences your buyer’s expectations.
The buyer’s perception is reality. How they perceive your value does matter. Perceived value is the look and feel of your solution. Perceived value raises your buyer’s expectation.
“Price builds perceived value and impacts the buyer’s perception. It’s a good thing to be more expensive than your competition.”
Paul highlights two experiments that prove price builds perceived value. Even wine experts, ranking different wines, cannot resist the effects of price and perception.
The weight of your proposal matters, both in the words you choose and the paper you use.
The actual weight of your paper matters. A heavier proposal builds perceived value.
The buyer’s perception of you can either add value, or subtract it. Your level of professionalism matters.
“Is your level of professionalism consistent with the expectation you have set?”
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Does perceived value really matter to the buyer?
(Transcribed from podcast)
Today we’ve got a fun question. This question is all about perception and if it really matters.
In a recent training seminar, we were talking about the difference between perceived value and performance value. One of the participants in the training asked, “How important is perceived value?”
So we’re going to address that question on today’s session. Before we get into that, you’re going to need to know a little bit about the difference between the two: perceived and performance value.
Perceived value is really sensory. It’s the look and the feel of things. For example, it’s the packaging of your product. It’s the look and feel of your company’s website. It’s mainly sensory. Perceived value raises the buyer’s expectation. That’s what perceived value will do. It’s almost like a promise you’re making to that buyer.
Performance value is the actual outcome. Performance value is what you do for the customer. For example, in sales you hear the term sell the sizzle, don’t just sell the steak. The sizzle is the perceived value: the look, the feel, the smell, the sizzling and crackling of that steak. That is perceived value. It raises your expectations. It also excites the buyer. That’s what we mean by selling the sizzle. The performance value is when you actually take a bite of that steak and it tastes just as good as you expected it to, or even better. That’s the difference between perceived value and performance value.
So, let’s get to the question. How important is perceived value? It’s extremely important! Perception does matter because the buyer’s perception is reality to them. We’re going to give you a few tips. We’re going to talk about perceived value. We’re also going to talk about how price builds in some perceived value. With that being said, let’s get started.
The first thing we’re going to look at is how we present our price, because price does build perceived value. In fact, in the absence of all other information, price is the greatest indicator of quality and performance. In that case, it’s good to be higher priced than some of your competitors. In fact, one of the complaints that we often hear from salespeople is “I’m sick and tired of being the highest priced competitor out there.” I would argue that that’s a good thing. The reason why is simple. If your buyer knows that you are typically the higher priced alternative, and they’re stilling will to meet with you, that shows right then and there that they’re not just a price shopper. And your price builds perceived value. For example, if we were to take two pens that you write with. These two pens look almost identical but one pen costs $1.00 and the other costs 50¢. At some level, you would think that the one costing $1.00 would be better in someway; there’s something about it that makes it different, that makes it better. So, price is part of building perceived value. And, again, it’s good to be more expensive because price is an indicator of quality and performance.
There are a couple of experiments that really prove that price builds in perceived value. There’s one example I came across. I don’t remember the source (some book I read a couple of years ago). They had a couple of different groups that were going to test aspirin—just basic aspirin—and how it would help treat headaches. They had these two groups together. For the first group they said “You’re going to get this aspirin. We want you to tell us how it works out for you. The aspirin you get costs around $1.10. The other group is getting an aspirin that costs 20¢ but you’re getting the $1.10 aspirin.” So that group started taking the aspirin.
The other group… They said to them, “Here’s the aspirin you’re going to be taking. Let us know how effective it is. The aspirin that you’re getting costs 20¢. The other group received the aspirin that costs $1.10.”
Now, it’s not going to shock you that the group that received the more expensive aspirin rated that aspirin as more effective. The group that received the less expensive aspirin rated it as less effective. The interesting part about this is that they were the same thing—the exact same aspirin. Yet, because one was more expensive, it was rated as more effective. So, perception does matter. When we’re presenting our price, that builds in perceived value once again.
There’s another experiment. This appeared in the Wall Street Journal. There were wine experts that were ranking different wines. One group of experts was made aware of the price before they started tasting the wines. The other group was made aware of the price after they tasted the wine.
The group that was made aware of the pricing before they tasted the wine—obviously, the more expensive wine was ranked higher. But, the ones that were made aware of the price afterwards were surprised to find that they ranked some of the mid-tier wines as better than some of the more expensive wines. Pricing builds perceived value, and it’s a good thing. Remember it’s a good thing to be on the upper end of the pricing scale. What do you think? Would you rather go in and be known as the cheapest alternative? Pricing does matter. Make sure you present it with confidence. One tip…Use these words when you’re presenting price:
…THE PRICE IS…
Those three words are simple, easy to remember, and confident. When you’re presenting your price, remember, you’re building in perceived value, so you want to be completely confident and show no wavering or any flexibility in your tone or in the words that you choose. Just remember, the price is.
The other thing… Perceived value sets an expectation. This is a big part of Value-Added Selling. It’s really just setting the buyer’s expectations. We want to set a very high bar for ourselves because that becomes the benchmark from which they grade every other alternative. Perceived value can influence a buyer’s expectations and there are several ways we can build in perceived value. We already talked about price, but, think about proposals; how you’re presenting your proposal; the look and feel of your proposal. Weight matters when you are presenting value, and that’s why we recommend, in your proposals, use very thick, heavy paper. The weight of your proposal can be a differentiator that builds in perceived value.
Speaking of proposals… There was one great example a seller was using in one of our training seminars. He was talking about how he likes to build perceived value in his proposals, and the one thing he’ll do is go to the company’s website that he’s presenting to, and he will use their font style from the website in his proposals. The reason he does that, he says “I try to make it look and feel like it’s familiar to them already.” His argument was pretty clear. He said, “If they’re looking at my proposal and three of my competitors, mine’s the one that’s going to look and feel like it’s already their solution.” That’s very much perceived value. We want to make sure we build in that perceived value.
Another example… We had a salesperson in one of our training seminars who talked about how he would demonstrate some of his tools. He said, “When I would bring the tool out of the case, I wouldn’t want dust all over it. I didn’t want it to look dirty; I wanted it to look new. The case – I didn’t want to have a scratch on it.” The way he would use it… he handled it like it was a precious metal almost. And he said, “The reason I do that… it helps build in value. The person that is watching me demonstrate this tool views it as a little more valuable.” That’s just one of those subtle, little things you can do to build in value. So, think of some other things in how you can build in that perceived value, because, again, perception does matter.
Another example—and this was in a recent book I read. The book is by Robert Cialdini called Pre-suasion. He was also talking about perception. One interesting example he highlighted was an online mattress company. With this mattress company, they change the background of the website. One of the versions of the website had a background that had pennies in it. It’s obvious that what they’re focusing on is cost savings. That’s what they’re looking for. A different version of the website had clouds on it. So, you have two different versions of the same website: one focusing on pennies in the background, one focusing on clouds. They found that the people who visited the website that focused on clouds were more focused on comfort, therefore, they were buying more expensive mattresses. The group that was visiting the penny-background website would focus more on the less-expensive alternative. Perception matters. These little things that we do are important.
There is one last thing that you can do. You as the salesperson, the perception of you will matter as well. So the thing to think about is how professional are you? Think about how you dress; how you look; the words you use; showing up on time; being prepared; having a plan in place. Our research shows that most salespeople don’t appear to be prepared when they show up to a meeting. We found that in our decision-maker survey that we included in our new edition of Value-Added Selling. But most salespeople don’t appear to be prepared. That speaks to your professionalism, and you have to ask yourself, “Is my level of professionalism consistent with the image my company and my product is projecting?” Your professionalism builds in more perceived value.
Remember, when you’re presenting price, present it confidently. Price builds in perceived value. And it’s a good thing to be the most expensive option. If you’re the most expensive option out there, remember, price equates to quality and performance – that’s what buyers think. It’s important that we are on the upper scale when it comes to pricing; you don’t want to be known as the cheapest. And by them willing to meet with you, that shows that they’re not just a true price shopper.
Also, remember that perceived value sets expectation. It’s important that we set a high bar because that becomes the benchmark from which every other option will be graded. In sales, we do have to make big promises then deliver on those promises. It’s not like we can show up to a prospect and say, “I know you’ve got a lot of choices, but we’re by far the most mediocre of all of them.” That doesn’t work. Nobody gets excited about that. So, you’ve got to make big promises, but you do have to deliver on those promises.
A few tips on building perceived value…Your proposals – dress them up; make them look good; use heavy paper; use their company’s font style on that proposal. When you’re demonstrating your tools, products, whatever that might be, make sure that you are comfortable handling that material – practice. Also you, as the professional salesperson, build a lot of perceived value as well.
Make it big day!