Paul delves into the difficult challenge of competing on value against large, multi-faceted entities.
“Stretch the time horizon to emphasize your long-term value.” Get procurement past the transaction and into the end-to-end experience.
“Enlarge the conversation beyond price.”
Emphasize how your solution impacts the customer—the outcomes it will help them achieve.
Be sure you are talking to the right decision maker!
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How do I compete on value when I am outmatched?
(Transcribed from podcast)
Today we have a question from Bart. So this is a reminder to all of you, make sure you go and visit TheQandASalesPodcast.com. There you can ask a question. I’ll turn it into a show.
So let me give you a little background on Bart. Bart is a sales executive with a consultancy firm. And I’m not going to read the whole question for you, but I am going to provide some background. So, here’s the basic deal. Bart is competing against other larger consultancy firms. Now these other firms, they might have 1200 consultants, whereas Bart, his team, they’ve got about a hundred. So he has to compete in a different way. Size is not going to be the way he can go to market. Now, as part of this challenge that he’s facing, the other larger consultant firms are offering different pricing models that make it harder for him to compete. Bart’s going to be more expensive than the other consultants. That’s, the basic gist of it. And to add a new dynamic to this, the industry that he is working in will get audited on a regular basis, where outside auditors are looking at the cost of whatever they’re charging per hour and they’re comparing that to other options. So Bart has a lot of dynamics at play. And Bart wants to know, how do you compete in this environment when you can’t compete on price—when that price is being audited by several other entities that are involved.
So to give you a little more background, Bart is actually in The Netherlands. So, what’s interesting, I looked at this recording, or I looked at the downloads, rather, before today’s episode, and the top five countries that download the podcast: Number one is the U S [of] A, my home country. Australia is number two, which they surpassed Canada a little while back. Canada is number three; the United Arab Emirates is number four, and number five, we’ve got Bart’s native land [The] Netherland[s], so a big shout-out to all the Netherland[s] folks out there.
So let’s get back to the question. How is Bart going to sell value when he is outmatched by a larger competitor? We’re going to answer that question.
Before we get into that question though, a quick shout-out to our sponsor, Andrea, over at The Creative Impostor Studios. Andrea does a wonderful job. You know, I mentioned the top countries that are downloading the podcast and, what’s interesting, the podcast continues to grow. It’s in like 75, 76+ countries now, and that wouldn’t happen without Andrea’s help and her team over at The Creative Impostor Studios. So if you’re thinking of starting a podcast or you have one and you’re just keeping it going, reach out to Andrea and her team.
Also keep in mind, Selling Through Tough Times is almost here. The book did get delayed due to some COVID-related publishing issues. That’s the kind of stuff that’s happening right now. I know everyone is facing supply shortages, labor shortages. You know what? It’s interesting. We’re all facing tough times in that realm. I know people are trying to find product to sell. People are trying to find people to help support the products that they are selling. It’s interesting how labor shortages, supply shortages, also will create a tough time. And when we’re going through tough times, we need guidance, and that’s what Selling Through Tough Times is all about. So pick up your copy of Selling Through Tough Times. You can pre-order it still. It’s available on Amazon, Barnes & Noble, wherever you get your books. We’re going to have links to both of them on this episode’s webpage.
So, let’s get back to that question: How do I sell value when I am outmatched? Let’s begin with just a couple of thoughts, some general basic principles, when it comes to selling on value. So as Bart mentioned in his explanation, a lot of times, he will have to communicate with procurement. Procurement is going to look at the fee that he is charging for his consultants, and also, they’re going to look at the fee of other competitors. And he’s mentioned that, basically, the other competitors are coming in at a lower fee. So procurement is challenging Bart. And procurement wants to know, “Why should we pay more,” and we’ve got to answer that question. So, here’s a couple of tips and ideas on how we can do that.
Tip number one: stretch the time horizon to emphasize your long-term value. Bart, this is going to be extremely important. When you’re talking to procurement decision makers, keep in mind that they have a short-term mindset. They’re going to view the interaction as more of a transaction than an end-to-end experience. And the reason why is pretty simple; procurement people, they get involved during the negotiation, transaction, and acquisition of products or services. They have a very narrow view of the overall organization’s needs. And since they have a transactional mindset, they’re likely going to focus on price. That’s just part of it because they have that short-term mindset.
So, what you’re challenged to do is to stretch their time horizon. Ask questions that will cause the procurement folks to think long term. For example, you might be talking to a procurement person, and Bart, you can ask them, “Long term—when you think about our services, you think about the impact on other departments—long-term, what do you think is going to be important when we make this decision, when you’re deciding who to partner with?” What we’re doing there is we’re getting them to think long term. We’re also reminding them that this decision will impact other departments other than just procurement. So we want to stretch that time horizon.
The other way we can do this is by presenting our long-term value. So Bart, one thing I would do is take your end-to-end experience (in Value-Added Selling we call this the Critical Buying Path®. It’s the sequence of steps that you go through with your customers from the moment the need exists up to complete satisfaction of that need). And what we’re going to do on this Critical Buying Path® is identify all the ways that you and your company will bring value—from the very beginning in the presale phase, during the transition, and also in the post-sale usage phase, when you’re delivering on your services. Identify all the ways you bring value, and present that long-term value to your client. When you’re presenting that long-term value, naturally, they will think long term. And as they’re thinking long term, price will become less of an issue. So that’s one tip: stretch their time horizon.
Number two: enlarge the conversation beyond price. You know, a lot of times competitors will try to convince—, they’ll try to convince your clients that there’s nothing special or unique about what they need. And they do that so they can sell them a one-size-fits-all option. So, what I would do is enlarge the conversation beyond price by asking bigger questions. Ask your decision makers, “How do you define value on this project? What’s important to you when making this decision?” And as you focus in on those key areas, you’re getting the buyer to think beyond price. And if you ask the question, “What are your biggest concerns on making this decision,” and they say, “Well, we want to make sure the price is fair,” I would set price aside and I call it a set aside. So, you go to the buyer and say, “You know, putting price aside for a moment, in addition to price, what else is going to be important to you when making the decision?” So, you can set that aside and refocus the conversation on value. So, tip number two: enlarge the conversation beyond price.
The third tip: you know, the number one reason why buyers object on price is because they don’t believe that what you are offering is worth what they’re paying. That’s what we call an equity gap. An equity gap—it is the difference between what they’re paying and the value that they are receiving. And if there’s a big enough gap between those two, the buyer’s not going to move forward. They’re not going to purchase because they just don’t believe it’s fair. So, what I would encourage you to do with tip number three here is emphasize the impact of your solution. When you’re talking to procurement, be able to emphasize not just what you do for them, which, Bart, I think you mentioned you’re in like a, perhaps an IT consultancy type role. I think that’s what it is. Emphasize not what your product or service will do, emphasize how it impacts the customer, the client. How does your solution impact them? Does it impact them by helping them connect their different offices together, which, in turn, can lead to greater synergy with their team, lead to greater profitability, better communication. Whatever it is focus on the collection of outcomes that you provide your client. So emphasize the impact. That’s going to be critical.
Number four, this one’s important. Number four: we’ve got to remember, the buyers, they crave to see what makes you different. They’re craving to see that difference between you and all the other alternatives. Even when you’re in a specialized role, like a consultancy, they still want to know what makes you different. Because if two consultancies sound the same, look the same, provide, I don’t know, similar products and provide similar outcomes, things start to blend in. As things blend in, buyers focus more on price.
So, Bart, go back and take a look at your company, and take a look at your competitor, and do a side-by-side comparison. Highlight those aspects of your solution that are unique and different or better than the competition. And what you want to do is you want to present those key differentiators as the criteria they should use to decide on who they want to partner with. Because when you’re taking your strengths and you’re using that as the benchmark, you are naturally going to look better to that buyer. So I would highlight your key differences. We call that a positive comparison. So again, highlight those key differences.
In the last piece here Bart—. Bart, you mentioned that you are a fan of the show. Thank you very much. You’ve listened to so many of the episodes. In fact, you said you are addicted. I love that—thank you. So on previous episodes, Bart, you’ve heard me say, you’ve got to make sure you’re talking to the right decision makers. In what you’re selling, you mentioned the procurement department is focusing the conversation on price. My question to you is, why are you even talking to the procurement department? Procurement is the one type of decision maker that is the least likely to buy your value-added solution.
Now, I understand that they are going to be part of the process, that they’re going to be part of the contract, PO, tender, whatever you want to call it. But we’ve got to remember, the key decision is being made at higher levels within the organization. So, I have no doubt, Bart, that you are meeting with some of those higher-level decision makers. You need to leverage the relationship you’ve built with those higher-level decision makers and ask for their help to sell your solution internally to other stakeholders, other departments, including the program team. So again, we’ve got to make sure we’re talking to all the right people. So, use your influence, use your influence with some of these higher-level decision makers to persuade the procurement team. When the procurement team is getting pressure, not only from their internal team and higher-level decision makers, and you, naturally that is going to persuade them. It’s going to give them the nudge they need to take the focus off of price.
Well, Bart, I hope that helps out. Thank you for submitting the question. Again, just a reminder to all of you, make sure you go to visit TheQandASalesPodcast.com. While you’re there, you can ask me a question, just like Bart did. Go there. Ask questions, search for previous questions to see if we’ve already answered it. But it’s there as a resource. Thanks for tuning in. Make sure you hit that follow button. Make sure you share this with your colleagues, but most importantly, make it a big day.