Working the Value Machine

A Calculated Approach to Subtracting Price Objections from the Sales Equation

Oscar Wilde, the 19th century author, playwright, and poet, said, “The cynic knows the price of everything and the value of nothing.” Replace “cynic” with “customer” and you’ve got the chief complaint of thousands of salespeople right here in the 21st century.

But those salespeople couldn’t be more wrong – customers do understand value. In fact, it’s built into the way they think.

The Mathematics of Selling

Every customer is, essentially, a living, breathing pleasure/pain calculator. If your sales pitch works out to a positive pleasure figure, your customers will most likely buy – if they don’t, their pleasure numbers drop into negative territory. Once you understand this simple, unchanging fact on a gut level – and even some veteran salespeople don’t – you can begin to accept it, expect it, and use it to your advantage.

What Price Objections Really Mean

When a customer questions the price of your product or service, they’re very often saying two things to you:

1. I’m interested enough to care about price.
2. I challenge you to prove me wrong.

A price objection is a buying signal. It’s your customer saying that their pleasure/pain calculator is giving them a negative figure, but only just. It’s their challenge to you to move them onto the right-hand side of their mental number line by adding value.

In short, it’s your customer saying, “Sell me. Show me the value.” And in the next section, you’ll learn seven tips for adding value to every sales pitch.

7 Tips for Generating Positive Value in Your Customers’ Minds

1. Sell yourself first. If you don’t believe your offering provides value in excess of its cost, how are you going to convince a potential customer? If you find yourself in this position, it might just be that past customers have sold you on the idea that your offering isn’t worth at least what it costs. If, after reassessing your offering’s real worth, you can’t justify its price, you’re better off selling something else – something you can believe in.

2. Remind customers of the danger of spending “almost enough.” How many times have you bought into a “good deal” only to find that if you’d just spent a little more, you’d have gotten what you really needed and wanted? You’ve spent a good fraction of what you should have in the first place, yet your pain/pleasure calculator is still showing a negative number. Don’t do your customers a disservice by letting them waste their money this way.

3. Never be the first to mention price. A salesperson who talks price right out of the gate is a salesperson who doesn’t believe in the value of his or her product (see tip #1). To create a healthy surplus on the pleasure side of the calculation, you should be piling on customer-focused benefits from the outset. Do this well enough and the value you create in the mind of your customer will often smother price objections altogether.

4. Don’t assume you know your customer’s buying power. Selling your customer short is selling yourself short. Let your customers tell you what’s in the budget.

5. Focus on cost of ownership instead of price. The true cost of a product or service might not correspond to its purchase price – in fact, it rarely does. Maintenance, residual value, and intangible extras like prompt, friendly customer service and the security of knowing a company is likely to stick around into the future all affect the actual lifetime cost of a purchase.

6. Amortize costs. When it comes time to discuss the bill (after the benefits have been laid out), break the cost down into a per day figure. Your offering’s benefits remain the same, but the cost becomes much more manageable in the mind of your customer.

7. Always remember that cost is objective and value is subjective. Put another way: not all customers perceive value in the same way. What’s most important to one might be halfway down the list for another. Take the time to discover what a potential customer places the highest worth on and build your value proposition around that.

Zeroing in on Value Adds up to Sales

While it is true that price matters, it’s only one factor in your customer’s pleasure/pain – or perceived value – calculation. Learn to concentrate on the total package – the real value your product or service adds to your customer’s business. Help them compute a positive pain/pleasure number, and they’ll help you generate positively remarkable sales figures.

Bio: Danita Bye

Nationally recognized sales management and leadership expert Danita Bye has built her reputation on building and inspiring intentional, no excuse, high-performance sales teams that deliver bottom line results. With her unique Fortune-100 turned-entrepreneur perspective, Danita helps CEOs and company presidents take their national and international businesses to the next level. Her excuse-free approach to sales management, combined with her leadership acumen, enables sales staff and sales management to increase sales, boost profitability and create predictable revenue streams, all while reducing sales costs.

As a 10-year veteran of the Xerox Corporation, Danita consistently achieved award winning sales performance before leaving Xerox to become an equity partner and national sales manager for Minneapolis-based Micro-Tech Hearing Instruments, where she increased annual revenues from $300,000 to $10 million in just seven years. Danita has authored articles in Upsize Magazine, The Hearing Review, the Star Tribune, and Business Journal, where she was recently honored as one of the its Top 25 Women to Watch. Danita also featured as a guest on “The Ruthless Entrepreneur television show” which will begin airing on Oxygen Network in 2010. Her new book, Sales Management in the No Excuse Zone, is due for release in 2010.

Danita can be contacted at Danita@SalesGrowthSpecialists.com or 612-267-3320

© Copyright 2009, Danita Bye Sales Growth Specialists, All Rights Reserved.