Paul shares three ideas to help you sell on value when your competitor is selling the exact same product or service.
Show Notes:
What if a buyer told you, “I can buy the same thing cheaper down the road?” Is that really a price objection?
“Price shoppers will take your value-added solution and strip it down to its most basic, naked core-commodity product.”
Price shoppers often try to commoditize your product and or service. They want to focus the conversation toward price. And if they convince your product is the same, you’re more likely to discount.
“Price shoppers take a narrow view of the buying process.” Some buyers view the end-to-end experience as a mere transaction, which focuses the conversation toward price. Expand the price shopper’s view of their own buying process.
Big change happens little by little. Focus on small wins to win over price shoppers.
The salesperson brings 25 percent of the total value. Identify all the ways you, the salesperson, can bring more value to the experience.
Differentiation is key. Even if you’re selling the same product, there are ways you can differentiate. “When you’re attempting to differentiate your alternative focus on your…”
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How do I sell value when my product is the same as the competition?
(Transcribed from podcast)
Today we have a wonderful question. This question comes from Scott. In fact, I was so excited to answer this question I only got ten hours of sleep last night. Let’s get right to it.
Scott is selling in the wholesale distribution business, selling outdoor power equipment, engines… things like that. Here is what Scott said:
Paul, how can we overcome the price shopper? I know that we have to show them the value we bring, but when a customer can buy the same exact product from the same manufacturer and another distributor will lead with a price discount just to buy the business, what can a salesperson do to get that business without cutting the price?
This is obviously a big challenge. The question we’re going to answer on today’s episode is
How do I sell value when the competition is selling the exact same product for less?
In the initial question, Scott says that he’s dealing with a price shopper. The first thing we’re going to do is talk about price shoppers. Price shoppers view this decision a little bit differently than everyone else. They view it in a very short-term sense. They’re very transactional. That’s their mindset. In fact, there was an economist who used the word “satisfice.” That’s a combination of the words satisfy and suffice. What he says is that when people make decisions, oftentimes they’ll choose a solution that is merely good enough. They’re going to say things like “all I need is an engine,” or “I just need the bare minimum.” They’re opting for a solution that will just get them by. That is how they view the world, in a very short-term and a very transactional sense. In fact, price shoppers will also look at that end-to-end customer experience as a mere transaction. Obviously, if they view it just as a transaction, they’re going to focus on price to make their decision.
One of the things you can do as a sales professional is expand that buyer’s view. We need to help them think long term. We also have to get them to take an expanded view of their buying process which means, it can’t just be a transaction. We have to explain to the buyer, “I understand that you’re buying an engine, but let’s look at the total impact that this decision will have throughout the overall experience.” And talk about it – share some insight – share some ideas. The key is that we want them to view it in a broader sense, not just as a mere transaction.
Another thing you’ve got to consider…Price shoppers like to commoditize your solution. They’re going to try to convince you that there’s nothing special about your product and they’re going to try to cut it down and strip it down to its most basic, naked, core-commodity product. I remember at a training seminar one time, I was working with a group that provided high-end industrial coatings and painting for different types of facilities. They said a procurement manager said to them one time, “All you’re doing is slapping paint on steel.” When they say slapping paint on steel, they’re commoditizing. They like to commoditize it because they can focus on price. But, here’s the reality—they’re not just buying a commoditized product from you—they’re also buying it from your company and they’re buying it from you as the salesperson. Together we call this the Three Dimensions of Value. It’s your bundled package, and it’s more than just a product. There are too many salespeople just selling product. You have to sell your value and your company’s value.
A few years ago, we did a study on top-achieving salespeople. We interviewed over 600 customers as part of this study. One of the questions we asked these customers was based on this Three Dimensions of Value. We asked them “How much value do you place on the product that you’re buying, how much value on the company, and how much value on the salesperson?” The results were shocking to us.
First of all, the product accounted for most of the value—57 percent—which I think makes sense. That’s what they’re buying. But, the company accounted for 18 percent of the total value, and the salesperson represented a full 25 percent of the value! Think about that for a moment… You, as the salesperson, bring a lot of value. In fact, our research shows that you, as the salesperson, are more important to the customer than the company that you work for. Remember that—especially when you’re asking for a raise. Just let them know “Hey, Reilly said that we’re worth 25 percent. The company’s only worth 18 percent.” See how it goes. Let me know.
But remember, you bring a lot of personal value. You bring that full 25 percent. So that’s part of the way you can differentiate your alternative. You can say to that customer, “I understand that you’re buying this product, but you’re also buying from me as your salesperson, and here’s some of the value I bring.”
So, remember those two key facts about price shoppers.
- They view it as a transaction; and
- They’re going to try to commoditize what you’re selling.
The next thing we need to do, though, is figure out how to approach these price shoppers. Here are three thoughts to help you sell to price shoppers:
Number One: Focus on a small-wins strategy. You’re not going to be able to convert a price shopper to a value shopper in one visit. It’s going to happen over a series of events, and by adopting a small-wins strategy. It’ll keep you motivated and keep you engaged in the process. Maybe on your first visit with this price shopper you say “I understand price is going to be part of the decision, but, in addition to price, what’s important to you when making this decision?” Get price out of there.
The next thing we want to do is focus the conversation a little long term. We ask that buyer, “You mention that price is important. I get it. But, long term, what sort of value-added support do you need after the sale? What are you really trying to accomplish with this product? What outcome are you looking for?” Try to get them to think a little bit deeper, a little bit bigger. And, always remember, you can change that conversation away from price by focusing on cost. We talked about that in previous podcasts. These small wins can help you, slowly but surely, convert a price shopper into more of a value-focused buyer. But, it doesn’t happen in one visit. It’s not like you can just show up and say “Get ready, I’m going to whip some value added out on you.” It doesn’t work like that. It happens over a number of interactions and exposures.
The second thing (and this is going to be the biggest) what kind of personal value are you bringing as the salesperson? Think about it… If you’re selling the exact same product as the competition, you and your company are the only ways that you can differentiate. So my question to Scott would be, “With this customer, what kind of personal value do you bring to the table? Are you bringing that full 25 percent that your customer expects?”
This reminds me of a group I worked with earlier in the year. A salesperson got a call from one of his top customers (he’s in the equipment rental business). A customer called him up—the superintendent out on a construction site—and said “We need to get this piece of equipment here. Can you find it? Whatever you do, we need to get something here.” The salesperson went on a scavenger hunt. They researched every department, every location. Where can I find this equipment? And they found it. The only problem was, the project and the salesperson were in northern California, and the piece of equipment was in southern California. The salesperson contacted the branch manager. By the way, this was all on a Saturday. They agreed to meet midway up the coast. One drove down, one drove up. They met half way. The salesperson ended up driving the equipment to the job site for the customer, and the customer was thrilled. Afterwards, he put the invoice together. He sent in the invoice to the procurement manager. Well, the procurement manager called this salesperson and said “There was something incorrect about the pricing. I noticed the equipment that we rented from you…we could get this cheaper somewhere else. You need to adjust the pricing on the invoice.” The salesperson explained the situation, but again, the purchasing person—that price shopper—said “You just need to adjust the invoice.” So the salesperson did adjust the invoice, but he didn’t adjust the price. In fact, he added a line item to the invoice that said Saturday delivery which required me to miss my kid’s soccer game. NO CHARGE. He sent in that invoice to the superintendent and to the procurement person and he had no problem getting paid. I’ve got to applaud that salesperson. Anytime you get someone—a price shopper, procurement buyer, whoever it is—and they challenge your price, you need to challenge them back with the value that you bring to the table. I thought that was a great example of demonstrating and selling that personal value.
For Scott, in this case, I would ask: How could I help this decision maker buy better or more effectively? How could I solve a common problem they’re having with their inventory? What is the outcome that they’re going for and how can I leverage my expertise in the industry to help them achieve it? You’ve got to bring that personal value. That’s what can differentiate you.
The first few tips again…focus on small wins and, number two… focus on your personal value.
The final thing we’ll give you is Differentiation. You can still differentiate your product. Think about it… any product that is viewed as a commodity, as soon as you bundle it with your value added, it becomes a completely different solution.
Here are a few tips to help you when it comes to differentiation.
Don’t focus too heavily on the competition. A few years ago, my oldest daughter was running track. As we went out to the track meet, she was running down the track, however, she does have my genes, so she’s not always the fastest kid out there. She just can’t help it. But, I did notice that on some of the other heats—the 100-yard dashes—there were always one or two kids that were running ahead of everyone by a noticeable amount. While they were racing and barreling down the track, I noticed that when they were running, they were looking straight ahead at the goal. The other kids that were falling behind, the whole time they were looking to their left and right. They were looking at the competition. What do you think happened every time they looked to the left and to the right? They slowed down just a tick. When you look at your competition, it also slows you down. Think about that for a moment…For every ounce of energy you focus on the competition, focus ten times that amount on your own potential. Because, every time we look at the competition, we end up limiting ourselves to the edge of their creativity. So, instead, look at your own potential.
This next thing we’ll talk about in Differentiation; you can differentiate yourself by solving a common problem that this customer is facing, or you can solve a unique problem in a common way. Either way, solving a problem is always going to help you stand out among the crowd. For example, let’s say in this scenario, one of the biggest problems this customer has is related to cash flow or turning over inventory quicker. If you can help them with some ideas—some ways to improve on their inventory turns—you’re able to solve a problem. If you can help with a promotional item or a promotional event that will help stimulate demand, you’re solving a problem for them in a unique way. That’s differentiating yourself. That’s helping you stand out amongst the crowd.
The third thing you can do… Study your key differences along the three dimensions of value. If you were to sit down with your team and say, “We’ve got three ways that we can differentiate: our products, our company, and us as the sales team. What makes us different in each one of those categories?” When you look at your product, think about every element of the product. Your ability to customize it, the warranty, they way you ship it, warehouse it, inventory it. All of the different facets provide an opportunity to differentiate.
Think about your company… What is it that your company will do to help the customer? Better yet, what can you do to make it easier to do business with you versus the competition? What can you do for your customer that they absolutely hate doing. That could be a way to add a little bit of value. Think about technical support. There are a number of things you can do.
Finally, how about you, the salesperson? Differentiate based on your expertise, your ability to follow through, and follow up. These are all different areas where you can differentiate your alternative.
Just to recap… When you’re dealing with a price shopper, remember, they take a narrow view. They view the end-to-end experience as a transaction.
Price shoppers like to commoditize your solution. They’re going to try to tell you that you’re the same as everyone else. And then how we respond to this… Number one – we’ve got to focus on some small wins that will keep us motivated and keep us engaged in the process, because we can’t just convert a price shopper in one interaction. Number two – ask yourself, “How am I bringing some personal value?” And, third – “How am I differentiating?” And when you differentiate, remember to look at your own potential first. Figure out a way to solve a problem. Then finally, study your differences along the Three Dimensions of Value. Remember, when the customer tells you, “I can get this down the road cheaper” they’re telling you they don’t really see anything different. That’s not really a price objection, that’s a lack-of-differentiation objection. When we respond to that customer, we say, “Look, I understand there’s a difference in our price, but it’s because there’s a difference in what you’re going to get with us.” Then, you launch into what’s different. Now you’re selling some value.
Make it a big day!
