Thoughtful Thursdays - Is it worth it?

Today's thought is about the age old topic of price versus quality. I will start with a quote from many years ago that has helped  me to remain grounded when the subject comes up.

"It's unwise to pay too much but it's unwise to pay too little. When you pay too much you lose a little money, that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing you bought it to do. The common law of business balance prohibits paying a little and getting a lot. It can't be done. If you deal with the lowest bidder, it's well to add something for the risk you run. And if you do that, you will have enough to pay for something better!" John Ruskin (1819-1900)

Price is simple - dollars and cents

Quality can be interpreted in several ways, encompassing many things. In every case, a sale most likely to be made when the price is equal to or less than the perceived quality of the product. No one wants to overpay.

From a sales point of view one of the most common objections we face is typically to do with price. Sometimes it is legitimate, but in most cases the prospect is testing us. How hungry are we for the order and are we willing to sacrifice profit margin at the expense of the value of the product/service we are representing.

On the other side of the coin, at what point is the risk John Ruskin talks about too high before the potential customer decides not to buy?

When you find yourself in a situation where the easy way out is to compromise on price, don't do it without giving due consideration to the consequences.

• The value of the product/service is immediately lowered to that point
• Decreased profit margins
• Ultimate quality may be at risk
• Potential of customer dissatisfaction
• Continuing profit erosion as a result of lowered value

Is it worth it?

Good selling,
Richard

Thoughtful Thursdays - What does it cost to change suppliers?

All of the above are objections we encounter on a daily basis and can be captured in the two letter word "No".

The immediate internal response is usually "Why?" and back we go to the list of objections.

Today's thought is about a very real reason you may be on the receiving end of one of these objections when you are trying to dislodge competition.

Consider what it will cost your potential customer to switch to your product/service.

Here are a few factors that may help you to quantify the cost of changing suppliers. Once you have this information you will have added an essential sales tool to your arsenal.

• Administrative costs of setting up a new supplier
• Costs of adding additional SKU's
• Disposal of existing inventory
• Time to train staff
• Plant costs if trials are required
• Additional raw material costs beyond your product to run trial
• Costs of sampling if required

In fact, every part of a business may be affected when taking on a new supplier. I am referring to marketing, operations and finance. It can be a decision that is not taken lightly and can often manifest itself in a common objection.

Although price is always important, thinking about the costs of changing suppliers will provide further insights to the real cost. It will enable you to talk intelligently about time to recover those costs and focus on the longer term value by dealing with your company.

On the surface it  may not make sense to change. Take on the responsibility for understanding your customer's concerns and do the research so you can provide a viable response.

It is more than the your price that will make the difference.

Good selling,
Richard

Thoughtful Thursdays - The other price objection

Today's thought is about the other price objection. Not every business will face this price objection, but it is worth discussing, especially if you submit price quotations and proposals.

This objection may not be verbalized yet almost always results in loosing the business.

You work hard determining the needs of your potential customer and establishing the value of your products/services. Everything is looking favourable and you are ready to prepare and submit your quotation.

If you look at the accompanying image, at first glance everything looks okay, but upon closer examination something just is not right. Graphic artist M.C. Escher is famous for his so-called impossible structures simplified by this impossible triangle.

The objection I am referring to is the opposite of the most common "Your price is too high."
It is "Your price is too low." The value that you worked so hard on establishing has been betrayed by a low price. The customer has decided that the products/services being offering can not be delivered for the indicated price.

You have heard the phrase "If it sounds too good to be true, it probably is."

Be competitive, not unbelievable.

Good selling,

Richard

Thoughtful Thursdays - Is knowing customer needs enough to make the sale?

Every good sales person will tell you that one of the keys to success is to correctly identify the needs of the customer. They will go on further to say that the skill set required includes the ability to pose the right questions and to listen carefully to what the customer is telling you.

These are all characteristics of a good sales person. A great sales person will add one more skill and this is the subject of today's thought.

Is it enough to nail the needs and offer solutions to meet them? Can you do more to make it easier for your customer to choose your business as their supplier?

Do you know why your customers think they need what they say they need? You can gain great insight into the real benefits they will realize by having a clear understanding of the reasons these needs have been identified. Once you quantify the benefits, you will have a more compelling story to tell and make it easier for the customer to say "yes".

Taking the time to fully understand the needs and resulting benefits of meeting them can result in a shorter sales cycle.

Good selling,
Richard

Thoughtful Thursdays - Value selling, quantifying the benefits

You have examined the features of your products/services and defined the benefits. The thought for today is to take the process one step further and quantify the benefits you have worked so hard to identify.

I have not yet run across a benefit that could not be quantified in dollars. Doing the arithmetic is another way to make it easier for your customer to say yes.

Does your product save time, increase productivity, reduce down time or cost less?

Being able to quantify the benefits requires research and is often a subject does not always come up in the first meeting. You will need to ask your customer questions to correctly convert the benefits to a realistic dollar value.

• If your benefits relate to time saving, hourly costs X the time saved equals a dollar benefit.
• Productivity could mean making more units per hour, thereby reducing costs
• Productivity could also mean reducing time consuming activities, again time X costs of that time equals a dollar benefit
• Downtime is expensive. If your product/service can eliminate down time, the dollar benefit is equal to the cost of down time X the down time eliminated

Take the time to do the research and calculate the dollars that your business will add to your customers bottom line. The sooner you can quantify the benefits, the sooner the sale will close.

Good selling,
Richard

Thoughtful Thursdays - So you want to sell value?

Last week in "Music to my ears", I mentioned value selling and the fact that you will be challenged to do it once a competitive situation is identified. This week's thought talks about the value selling.

Value selling has been around as long as there has been competition. In order to be successful, one must be able to quantify the value that is being talked about. That means coming up with a concrete number - dollars or units of time are examples. This is what will ultimately contribute to your competitive advantage.

In order to come up with this number, you must do the math.

In order to do the math accurately, you must know how your customer operates. What are the costs of providing their products and/or services. The number need not be exact, but it does need to be believable and more importantly, quantifiable.

As you are probably figuring out, this takes time and a significant amount of effort.

Continue to develop your business relationship. Demonstrate to your customer that you care about their business - show an interest in what they do. You may be surprised at what information begins to come your way. All other things being equal, people buy from people they trust.

When you have enough information, calculate how much time they will save or how profits will increase by working with your company. If the numbers are correct, they will listen.

Good selling,
Richard

Thoughtful Thursdays - Music to my ears

"We already have a supplier that we are happy with for insert your product/service here."

While some may interpret this as a negative response, I see the gauntlet being thrown down, lying there waiting for someone to rise to the challenge and pick it up. Game on is how I see it.

All things being equal, it will only be a matter of time before this prospect is buying from me. The key is to make sure that all things are indeed equal and if they are not, to make them so. Then make those things that are measurable once again unequal, but in my favour.

It can be a lengthy process depending on the sales cycle, but extremely rewarding as well. I learned value selling with a Fortune 500 company many years ago. The tools have changed, but the process remains the same.

Rest assured your competition is using similar relationship building tools to establish credibility and trust. You must do the same and be relentless. That is the first step in making things equal. The prospect must buy you first, the sale of your product/service comes later.

Credibility and trust are built on factors including, but obviously not limited to:

• Meeting commitments that are made
• Consistent calling patterns
• Industry knowledge
• Honesty and clarity
• Humility

As the door of opportunity opens wider you learn more about your prospects needs and the real competitive situation - the playing field will start to level out. The more you learn the easier it will be to establish the reasons this prospect will become your customer. The value of dealing with you will become clearer and easier to articulate. After all it is all about value, isn't it?

It is now that all your value selling skills will be put to the test. But don't fool yourself into thinking it will be easy. In many cases you will be given a opportunity to work on a problem that has been around for years. This is the one that no on has yet solved. Take pride in making it this far, they now have sufficient confidence in your company  to test your problem solving skills.

Next week some tips on value selling.

Finding out that my prospect has a need that is currently being fulfilled by my worthy competition is music to my ears.

Good selling,
Richard