Two pickle vendors were competing on the Lower East Side of New York City in the early 1900s. A man walks into Joe’s Pickles and inquiries about prices. “Pickles are two for a nickel,” Joe responds. The man says, “For a nickel I can get three pickles at Sam’s.” Joe responds, “So buy your pickles at Sam’s.” The customer says, “Sam is out of pickles today.” Joe says, “When I’m out of pickles, they’re also three for a nickel.” The lesson?
If you can’t communicate the real and tangible value you can deliver, no price exists that is going to be low enough to satisfy your prospect. Knowing your value and being able to express it in terms of the prospect’s business puts pricing in perspective.
Before you meet
Here are three questions to ask yourself before you meet with a prospect:
- How are your products or services going to be used by the prospect?
- How are your products or services different from what the prospect is using now?
- What is the difference worth to the prospect?
During the meeting
Then ask the prospect open-ended questions that focus on how they operate and how they could use your product or services:
- How would your solution make a difference to them?
- How would the solution set you apart from your competitors?
Getting the proper info
Here are three tips to help get the information you need:
- Keep your questions and your analysis simple. Clarity is what you are seeking. Focus on finding all sources of value for a prospect and how you may impact his or her operation.
- Focus on costs and profits. A lot of value-added selling focuses on trying to reduce costs for prospects. Cost reductions are important, but they are often less than half the story. Think about how your products and services will help prospects sell more, too, or deliver more value to their customers.
- Be conservative. Use prospects’ estimates of how much value you’re solutions will bring. Let them give you current efficiencies and operating values. If you have to make estimates, stay conservative. Doing so builds your credibility and increases the likelihood that the customer will believe your value estimates.
- Establish trust. If you don’t develop trust with the prospect, all the value in the world won’t close the sale. Trust is a key driver of closing the sale. The value you provide and the trust that a prospect has in you is what provides you with power and leverage in negotiations.
Give-get options
A give-get is a sales tactic that kicks in when a prospect demands a price discount. Give-get is a tactic that salespeople use to send the message that they are willing to negotiate to provide lower prices, but they are confident enough to connect the discount with changes in value as well. “You get something, you give something,” is the message to the prospect.”
Adapted from: “Negotiating with Backbone,” by Reed K. Holden, CEO and Founder of Holden Advisors and a world-class pricing expert who has spent the past 20 years helping clients build go-to-market strategies to drive price leadership and profitable growth.
